Book Title
OM 5 5th Edition

Operation Management 70627

November 15, 2016
A company manufactures tractors and lawnmowers. They have received an order for six
deluxe custom riding lawnmowers for a local golf course. They must develop a cost
estimate for the order. It is estimated that the first lawnmower will take 90 hours of
shop time and a 75 percent learning curve is expected. The labor rate is $18.00 per hour,
and the pricing policy of the company is to charge 2.5 times the cost of labor for the
a. How many hours should the sixth lawnmower take?
b. How many labor-hours should the whole order take?
c. What is the customer's price for the whole order?
d. What is the price per lawnmower?
e. If the original time estimate for the first lawnmower is too low, and it actually takes
80 hours for the third lawnmower, what is the labor hour estimate for the first unit?
f. If it actually really takes 80 hours for the third lawnmower, what is the new total labor
cost for the entire order?
A high definition television manufacturer in Asia wants to develop a new smart
television as fast as possible using Program Evaluation and Review Technique (PERT)
and must complete the design and testing work first. The objective is to be the first to
market the most innovative smart television on the planet and capture the first adopter
market share. The manufacturer has determined the following activities, precedence
relationships, and time estimates in days for the project:
What is the slack time for Activity B?
a. Zero days
b. Greater than zero but less than or equal to 1.0 days
c. Greater than 1.0 but less than or equal to 2.0 days
d. Greater than 2.0 days
The United States has experienced three waves of outsourcing. Which of the following
is NOT one of the waves?
a. Skilled knowledge work
b. Mass customization
c. Simple service work
d. Goods-producing jobs
A company is investigating two automated approaches for its production process. It has
collected the following cost information about each:
a. At what point of production will the firm be indifferent to which process it wants?
b. Which process is more economical for an annual production volume of 50,000 units?
c. Which process is more economical for an annual production volume of 100,000
A company that makes handheld computers is trying to improve one of its poorer
selling products. They conducted some customer surveys and found that customers
prefer the product to weigh between 10 and 14 ounces. At present, the mean of the
process is 12 ounces and the standard deviation of the process is 0.4 ounces. They want
to ensure that the production process will meet customer expectations; that is, the
process capability index (Cp) will be greater than or equal to 1.00.
A company has normal capacity for 2,500 units a month. If, x11 and x21 represent the
production decisions variables, which of the following equations represents the
occurrence of change?
a. x11 + x21 − 2500
b. x11x21 − 2500
c. x12x21 − 2500
d. x12 + x21 − 2500
Kelly opens an aquarium store in a lively shopping mall and finds business to be
booming, but she often stocks out of key items customers want. She decides to
experiment with inventory control methods such as using a fixed order quantity (FQS)
and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and
profitable pump, is one of her best sellers, but it stocks out frequently. She collects the
following data about the pump's sales.
Demand = 10 units per week Store operates 45 weeks/year
Order cost = $30/order Lead time = 3 weeks
Item cost = $80/pump Standard deviation of weekly demand = 4 units
Inventory-holding cost = 15% per year Desired service level = 90 percent
The reorder point with safety stock rounded to the next highest whole number is:
a. less than 15 pumps.
b. more than 15 but less than or equal to 25 pumps.
c. more than 25 but less than or equal to 40 pumps.
d. more than 40 pumps.
A print shop has five large commercial printing jobs to finish. They are trying to decide
whether to use the shortest processing time (SPT) or the first come, first served (FCFS)
sequencing rule. Data on estimated processing time (in hours) and time to promised
completion (in hours) is as follows (jobs shown in order of arrival):
a. What is the average flow time in hours using the FCFS rule?
b. What is the average job lateness in hours using the FCFS rule?
c. What is the average flow time in hours using the SPT rule?
d. What is the average job lateness in hours using the SPT rule?
Table 1
The mean absolute percentage error (MAPE) is:
a. less than or equal to 5%.
b. more than 5% but less than or equal to 10%.
c. more than 10% but less than or equal to 15%.
d. more than 15% but less than or equal to 20%.
Promotion of weekly discount airfares by an airline would be an example of _____.
a. demand management
b. production-rate changes
c. inventory changes
d. facility, equipment, and transportation changes
Consider the following project network. Time estimates are in weeks.
Complete the following table and questions 6, 7, and 8:
Slack for activity E is:
a. less than 4.
b. between 4 and 6.
c. between 6 and 8.
d. greater than 8.
_____ is the process of delaying product customization until the product is closer to the
customer at the end of a supply chain.
a. Postponement
b. Sourcing
c. Deferral
d. Multisite management
Assembly-Line Balancing ProblemTable 1 below
The Florida Appliance Company is installing an assembly line to produce vacuum
cleaners, and Patrick, as an operations manager, is responsible for balancing the line.
The work elements to be performed are listed, along with their items and immediate
Use the information in Table 1. What is the efficiency using the longest-task-time rule?
a. Less than 85%
b. More than 85% but less than 91%
c. More than 91% but less than 93%
d. More than 93% but less than 95%
Common cause variation _____.
a. is controllable by employees (labor) only
b. is also called assignable cause variation
c. can be easily detected by statistical process control methods
d. can be reduced if training is provided by management
A group of international experts published a set of principles of forecasting that
includes all of the following EXCEPT:
a. use quantitative rather than qualitative methods.
b. combine forecasts from approaches that are similar.
c. ask experts to justify their forecasts in writing.
d. use multiple measures of forecast accuracy.
A flash drive that fits only one way into an e-device is an example of an application of
the _____.
a. kaizen blitz
b. poka-yoke concept
c. Pareto analysis
d. Six Sigma concept
The Alpha Beta Corporation makes laser and inkjet printers for personal computers.
Each laser printer yields $40.00 in profits and each ink jet printer provides $20.00. Each
of the printers goes through two assembly areas. The following table provides
processing times per unit (in minutes) as well as total available processing times per
Sales commitments require at least 5 laser printers and 10 inkjet printers to be made per
day. The company is interested in determining how many of each printer to produce so
as to maximize its profit.
a. What is the objective function for this LP problem?
b. What are the constraints corresponding to Dept. A if x1 corresponds to laser printers?
c. What are the optimal solution points for this problem?
d. What is the optimal value of the objective function?
Assembly-Line Balancing ProblemTable 1 below
The Florida Appliance Company is installing an assembly line to produce vacuum
cleaners, and Patrick, as an operations manager, is responsible for balancing the line.
The work elements to be performed are listed, along with their items and immediate
Use the information in Table 1. Total idle time is _____ seconds using the
longest-task-time rule.
a. 10
b. 15
c. 30
d. 25
A p-chart _____.
a. is used to monitor the proportion of nonconforming items
b. counts the number of nonconformances per unit
c. uses continuous metrics
d. can have negative lower limits
Which of the following activities is NOT a part of a return facilitator's activities?
a. Being an Internet enabler
b. Returning a manufactured good or delivered service
c. Requesting money back for a customer
d. Invoking the service guarantee
Which of the following is NOT a component of holding cost?
a. Tax
b. Insurance
c. Material handling
d. Order processing
Table 2
The mean absolute deviation (MAD) for forecast 2 is:
a. less than or equal to 2.0.
b. more than 2.0 but less than or equal to 2.5.
c. more than 2.5 but less than or equal to 3.0.
d. more than 3.0 but less than or equal to 3.5.
A local legal aid office provides basic legal assistance to walk-in clients. The historical
arrival frequency is as shown below:
Clients Arriving Relative
Per Hour Frequency
1 20%
2 30%
3 40%
4 10%
Service times are characterized by a normal distribution with a mean of 10 minutes and
a standard deviation of 4 minutes. They are interested in using simulation to find the
total amount of service time for each hour of a six-hour working day. They generated
the following random numbers for hours 16 respectively: 63, 13, 67, 50, 71, and 25.
a. On a scale of 00-99, what random number range corresponds to 3 clients arriving per
b. What is the number of clients arriving in hour 4?
c. What is the total service time in minutes for hour 1?
All of the following are important concepts in forecasting EXCEPT:
a. determining the planning horizon length.
b. determining the time bucket size (i.e., year, quarter, month, week, day, etc.).
c. determining a relationship between a single dependent variable and one or more
independent variables.
d. identifying cyclical patterns.
An auto parts store (operates 350 days per year) in a major metropolitan area reviews its
inventory on a periodic basis using a computer system. It is experiencing some
problems with a tune-up kit. The kit is bought from PRC Tires, a U.S. manufacturer.
The annual demand for these kits is 10,500. The cost to carry a kit in the inventory for
one year is $4.90, and the cost to place a replenishment order is $17 per order.
Replenishment lead time is 4 days. The standard deviation of daily demand is 7 kits.
a. What should be the review period for these tune-up kits?
b. What is the optimal replenishment level without safety stock?
c. What is the optimal replenishment level with safety stock, assuming a 95 percent
service level?
Which is NOT a feature of the periodic review system?
a. The order quantity, Q, is always fixed.
b. The inventory position need not be monitored on a continuous basis.
c. The review period, T, is constant.
d. Placing an order is time-triggered.
A clothing distributor has four warehouses that serve four large cities. Each warehouse
has a monthly capacity of 5,000 blue jeans. They are considering using a transportation
LP approach to match demand and capacity. The following table provides data on their
shipping cost, capacity, and demand constraints on a per-month basis:
a. How many variables are there in this formulation?
b. How many constraints are involved in this problem?
c. What is the constraint corresponding to City F?
Which one of the following has the lowest goods content?
a. Automobile muffler replacement
b. Computer diagnosis and repair
c. Movie presentation
d. Fast-food restaurant
In the disaggregation framework, the direct inputs to material requirements planning
(MRP) include all of the following EXCEPT:
a. master production schedule (MPS).
b. transaction files.
c. bills of materials (BOM).
d. capacity requirements plan (CRP).
A print shop has four jobs that have to be processed through their only five-color press.
They usually use the first come, first served (FCFS) rule of scheduling jobs. However,
the customers are waiting in the lobby for these jobs so the shop wants to minimize the
average waiting time. They are going to use the shortest processing time rule to do so.
Processing times for each job are as follows (assume this is the arrival order): Job A, 30
minutes; Job B, 17 minutes; Job C, 12 minutes; and Job D, 39 minutes.
Using the shortest processing time (SPT) rule to sequence these jobs, the final sequence
is_____, if A is the first person to arrive and D is the last.
a. A, B, C, D
b. C, B, A, D
c. C, D, B, A
d. A, B, D, C
A Pareto diagram helps to understand the relationships between two variables and to
verify possible cause and effect hypotheses.
Project management objectives revolve around time and budget.
Safety stock inventory is an additional planned on-hand inventory that acts as a buffer
to reduce the risk of a stockout.
High scalability is the capability to serve additional customers at high incremental
variable costs.
Discuss the concept of optimization models with examples.
For linear programming to work for project crashing decisions, a dummy activity is
needed at the beginning of the project, with a duration of zero (0) time.
Accurate forecasts are more critical to a pull system.
Just-in-time (JIT) systems are based on the concept associated with pull systems rather
than push systems.
The design of a manufactured good focuses primarily on its physical characteristics.
In service applications, flowcharts generally highlight the points of contact with the
Indirectly, appointments reduce the cost of providing a service because the service
provider is idle less each workday.
A legal defense preparation is an example of a project.
The customer defection rate is expressed as 1/customer retention rate.
What are the seven key assumptions for the multiple-server waiting line model?
Proportional increases or decreases in perceived benefits as well as price or cost result
in no net change in value.
An automobile emission testing center has six (6) inspectors and tests 50 vehicles per
hour. Each inspector can inspect twelve (12) vehicles per hour. What is the center's
a. Less than 60 percent
b. More than 60% but less than or equal to 70%
c. More than 70% but less than or equal to 80%
d. More than 80% but less than or equal to 90%
Orders are passed upstream in a supply chain, while materials and finished goods are
sent downstream in a supply chain.
Table 1 Peterson Enterprises uses a fixed order quantity inventory control system. The
firm operates 50 weeks per year and has the following characteristics for an item:
Demand = 50,000 units/year
Ordering cost = $35/order
Inventory-carrying cost as a percent of item value = 25%
Item (Unit) value = $8 Lead time = 3 weeks
Standard deviation in weekly demand = 125 units
Using the information in Table 1, if Peterson wishes to provide a 97 percent cycle
service level, what is the reorder point?
a. Less than or equal to 2,800 units
b. Greater than 2,800 but less than or equal to 3,200 units
c. Greater than 3,200 but less than or equal to 3,600 units
d. Greater than 3,600 units
Explain the sociotechnical approach to job design and some ways to implement it.
Scalability is a phenomenon by which the same or an increased quality and quantity of
goods and/or services are created using fewer natural resources.

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