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31) A firm wants to develop a level material use schedule based on the following data. What should be
the setup cost?
Desired lot size:
60
Annual demand:
40,000
Holding cost:
$20 per unit per year
Daily production rate:
320
Work days per year:
250
A) $0.45
B) $4.50
C) $45
D) $450
E) $500
32) A product has annual demand of 100,000 units. The plant manager wants production to follow a four-
hour cycle. Based on the following data, what setup cost will enable the desired production cycle?
d = 400 per day (250 days per year), p = 4000 units per day, H = $40 per unit per year, and Q = 200
(demand for four hours, half a day).
A) $2.00
B) $7.20
C) $18.00
D) $64.00
E) $1,036.80
33) Which of the following is TRUE regarding the steps to reducing setup times?
A) The first step involves performing as much setup preparation as possible while the process/machine is
operating.
B) The cycle of steps is repeated until setup time is reduced to under a minute.
C) The standardization of both tooling and work procedures is advantageous to setup time reduction.
D) Move material closer and improve material handling are done before operator training.
E) All of the above are true.
34) If a factory wants to cut its current lot size in half, by what proportion must setup cost change?
A) Setup cost must be cut to one fourth its current value.
B) Setup cost must also be cut in half from its current value.
C) Setup cost must double from its current value.
D) Cannot be determined.
E) Setup cost must quadruple from its current value.
35) Which one of the following statements is TRUE about the kanban system?
A) The quantities in the containers are usually large to reduce setup costs.
B) It is associated with a push system.
C) It is useful to smooth operations when numerous quality problems occur.
D) The supplier workstation signals the customer workstation as soon as a batch is completed.
E) The customer workstation signals to the supplier workstation when production is needed.
36) Kanban is associated with all EXCEPT which of the following?
A) small lot sizes
B) signals, such as cards, lights, or flags
C) moving inventory only as needed
D) increased material handling
E) reductions in inventory
37) What does the Japanese word "kanban" mean?
A) low inventory
B) employee empowerment
C) card
D) continuous improvement
E) lot size of one
38) Which one of the following scenarios represents the use of a kanban to reduce inventories?
A) A supervisor tells the operators to stay busy and start producing parts for next month.
B) A "supplier" work center signals the downstream workstation that a batch has been completed.
C) A supervisor signals to several work centers that the production rate should be changed.
D) A "customer" work center signals to the "supplier" workstation that more parts are needed.
E) An operator asks the next station's operator to help him fix his machine.
39) The number of kanbans should be equal to which of the following?
A) one
B) the ratio of (demand during lead time + safety stock) to container size
C) one-half of the EOQ
D) one full day's production divided by the EOQ
E) the ratio of demand during lead time to (container size + safety stock)
40) Lead time for cakes is 2 days with daily demand of 10 cakes and a safety stock of ½ a day. Each
container (kanban) holds 1 cake. What is the correct number of kanbans?
A) 4
B) 1
C) 5
D) 10
E) 25
41) The cook in a fast-food restaurant knows that 2 hamburger patties and an order of fries should be
started for each car that is waiting in line. This is best an example of:
A) keiretsu.
B) kanban.
C) push production.
D) kaizen.
E) EOQ.
42) Lead time for computers is 7 days with daily demand of 5 computers and a safety stock of 1 day. Each
kanban holds 8 computers. What is the correct number of kanbans?
A) 4.5
B) 1
C) 5
D) 7
E) 8
43) Lead time for computers is 5 days with daily demand of 25 and safety stock of 5 computers. If
management wants to use 10 kanbans how many computers should each one hold?
A) 25
B) 1
C) 5
D) 10
E) 13
44) A grocery store is attempting to implement a kanban system. Which of the following would not be an
application of kanbans?
A) An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts.
B) A line of 5 people in the Chinese department signaling the department to heat 5 Crab Rangoon.
C) A red light on top of the cashier's lane signals that the cashier needs additional change replenished.
D) The meat department stocking up on turkeys before Thanksgiving.
E) All of the above are kanban applications.
45) Which of the following is FALSE regarding the links between JIT and quality?
A) Inventory hides bad quality; JIT immediately exposes it.
B) JIT reduces the number of potential sources of error by shrinking queues and lead times.
C) As quality improves, fewer inventory buffers are needed; in turn, JIT performs better.
D) If consistent quality exists, JIT allows firms to reduce all costs associated with inventory.
E) JIT increases the cost of obtaining good quality.
46) JIT makes quality cheaper because:
A) the cost of low quality can be hidden in inventory.
B) JIT adds more buffers to the system.
C) JIT prevents long runs of defects.
D) B and C
E) A, B and C
47) Great Lakes Barge and Baggage Company makes, among other things, battery-operated bilge pumps.
Which of the following activities is NOT part of JIT? They:
A) communicate their schedules to suppliers.
B) produce in long production runs to reduce the impact of setup costs.
C) use a pull system to move inventory.
D) continuously work on reducing setup time.
E) produce in small lots.
48) A manufacturer took the following actions to reduce inventory. Which of these is generally not
accepted as a JIT action?
A) It used a pull system to move inventory.
B) It produced in ever smaller lots.
C) It required deliveries directly to the point of use.
D) It picked the supplier that offered the lowest price based on quantity discounts.
E) It worked to reduce the company's in-transit inventory.
49) ________ is the minimum inventory necessary to keep a perfect system running.
50) ________ is the Japanese word for card that has come to mean "signal."
51) When suppliers are encouraged to locate near manufacturing plants, the goal of the JIT partnership is
to reduce ________ inventory.
52) ________ allows manufacturing work cells and offices to be easily rearranged.
53) ________ involve scheduling products so that each day's production meets the demand for that day.
54) What are the goals of JIT partnerships?
55) What are the five reasons given by suppliers for their reluctance to enter into JIT systems?
56) Identify the layout tactics appropriate for a JIT environment.
57) Identify the inventory tactics appropriate for a JIT environment.
58) What is a kanban?
59) Describe level schedules. What purpose do they serve?
60) Identify JIT scheduling tactics.
61) Identify some of the signals that kanban systems use.
62) Weekly usage of a product is 8 units. Since the plant operates 50 weeks per year, this leads to annual
usage of 400 units. Setup cost is $40 and annualized carrying cost is $80. Weekly production of this
product is 12 units. Lead time is four weeks, and safety stock is one week's production. What is optimal
kanban size? What is the optimal number of kanbans?
63) Daily usage of a product is 10 in a facility that operates every day of the year. Setup cost is $68 and
annualized carrying cost is $100. Daily production of this product is 20. Lead time is 14 days; safety stock
is one day's production. What is the optimum kanban size, and number of kanbans?
64) Daily usage of an assembly is 100 in a facility that operates 300 days of the year. Setup cost is $5 and
annualized carrying cost is $160. Production of this assembly occurs at the rate of 400 per day when
production of the assembly is underway. Lead time is 3 days; safety stock is 1/2 day's production. What is
the optimum kanban size, and number of kanbans?
65) Daily usage of a part is 20 in a facility that operates 250 days of the year. Setup cost is $20 and
annualized carrying cost is $210. Production of this part occurs at the rate of 50 per day when production
of the part is underway. Lead time is 1 day; safety stock is 1/2 day's production. What is the optimum
kanban size, and number of kanbans?
66) A certain product has been effectively managed in the past, according to its managers. The previous
technique used the economic production quantity model, and resulted in an optimum lot size of 100. For
this product, setup time is directly proportional to setup cost, and setup time is currently 40 minutes per
batch. How much must setup time decline in order for the lot size to fall to 50 units? 25 units? 10 units?
67) A repetitive manufacturing firm is planning on level material use. The following information has been
collected. Currently, the firm operates 250 days per year.
Annual demand
22,000
Daily demand
88
Daily production
250
Desired lot size (2 hours of production)
63
Holding cost per unit per year
$50
a. What is the setup cost, based on the desired lot size?
b. What is the setup time, based on $40 per hour setup labor?
68) Labor cost for set-up is $500/hour. If the plant plans on level material use and operates 50 days per
year, determine the time it takes to setup.
Annual demand
5000
Daily production
1000
Lot size
700
Annual holding cost per unit
$25
69) A bakery uses 5 kanban containers that each hold 5 cakes. If daily demand is 20 cakes and lead time is
1 day determine the safety stock.
70) A bakery uses 6 kanban containers that each hold 4 cakes. If safety stock is 2 cakes and lead time is 11
days, determine daily demand.
71) A bakery uses 5 kanban containers that each holds 3 cakes. Daily demand is 10 cakes and safety stock
is 5 cakes. What is the lead time?
Section 3 Lean and the Toyota Production System
1) Employee empowerment is unnecessary in the Toyota Production System, because automation and
powerful information systems reduce the need for employee creativity and decision making.
2) The Toyota Production System requires that activities have built-in, automatic tests to signal problems.
3) Which of the following is an illustration of employee empowerment?
A) UPS drivers are trained to perform several motions smoothly and efficiently.
B) Unionization of the work place brings better morale and therefore better quality.
C) "No one knows the job better than those who do it."
D) all of the above
E) none of the above
4) Which of the following is not characteristic of a TPS employee?
A) knowledgeable
B) strict job classifications
C) know more about their job than anyone else
D) empowered
E) All of the above characterize a TPS employee.
Section 4 Lean Organizations
1) Which of the following is NOT an attribute of lean operations?
A) eliminating almost all inventory through just-in-time techniques
B) minimizing space requirements by reducing the distance a part travels
C) pushing responsibility to the highest level possible through centralized decision making
D) educating suppliers to accept responsibility for helping meet customer needs
E) building worker flexibility through cross-training and reducing job classifications
2) Lean operations are known for their:
A) employee development.
B) supplier education.
C) supplier partnerships.
D) challenging jobs.
E) All of the above are attributes of lean operations.
3) Which of the following is characteristic of lean operations?
A) inventory buffers between each workstation to minimize system downtime
B) easy, mindless jobs
C) specialty workers with no cross-training
D) low space requirements
E) no supplier partnerships
Section 5 Lean in Services
1) Because most services cannot be inventoried, there is little place for JIT to help service organizations
achieve competitive advantage.
2) Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen
represent which of the following wastes?
A) overproduction
B) queues
C) transportation
D) inventory
E) defective product
3) Which one is NOT an application of lean principle in services?
A) JIT in food supply management
B) improving kitchen layout at McDonald's to drive seconds out of the production process
C) inventory sharing among members of the pharmaceutical network
D) scheduling personnel availability at 15 minute increments to meet demand fluctuations
E) securing more inventory to prepare for disruption in production
