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Operations Management Quiz 2

70 Questions
Operation Management Quizzes & Trivia
Questions and Answers
  • 1. 
    • A. 

      A line process

    • B. 

      A batch process

    • C. 

      A project process

    • D. 

      A continuous process

  • 2. 
    A company makes necklaces with attached letters. Department A makes up the chains and letters. Department B assembles the necklaces when orders are received. Departments A and B are, respectively:
    • A. 

      Make-to-stock, make-to-stock

    • B. 

      Make-to-stock, make-to-order

    • C. 

      Make-to-order, make-to-stock

    • D. 

      Make-to-order, make-to-order

  • 3. 
    A company makes necklaces with attached letters. Department A makes up the chains and letters. Department B assembles the necklaces when orders are received. Department B would be primarily concerned with:
    • A. 

      Forecasting customer orders

    • B. 

      Planning capacity

    • C. 

      Use of overtime

    • D. 

      Delivery time

    • E. 

      A and B

  • 4. 
    An entrepreneur is planning to start a factory to produce specialized plastic containers. She has decided to choose either a line or batch process and has selected two possible sites, one in a small town and one in a big city. She has discovered the following facts: Small Town City Capital Not readily available Readily available Labor Unskilled available All types of labor Market  Small Large Based on the information just presented, which of the following should be chosen?
    • A. 

      Line in city

    • B. 

      Line in small town

    • C. 

      Batch in city

    • D. 

      Batch in small town

  • 5. 
    Identify the correct statement from the given choices.
    • A. 

      A batch process is characterized by jumbled flow while the line process is characterized by a regular sequential flow.

    • B. 

      The project form of operations is characterized by difficult planning and scheduling rules.

    • C. 

      Batch production is synonymous to mass production systems.

    • D. 

      All the above

    • E. 

      A & B

  • 6. 
    Which of the following statements regarding Dell Computer is false?
    • A. 

      Dell is a practitioner of the mass customization process

    • B. 

      Dell builds its computers overseas in order to gain a low-cost advantage.

    • C. 

      Dell keeps very little inventory of finished goods.

    • D. 

      Dell utilizes a global supply chain, but assembles its computers in the U.S.

    • E. 

      Dell's research focuses on manufacturing issues, not computer part design

  • 7. 
    A product-focused process is commonly used to produce
    • A. 

      High-volume, high-variety products

    • B. 

      Low-volume, high-variety products

    • C. 

      High-volume, low-variety products

    • D. 

      Low-variety products at either high- or low-volume

    • E. 

      High-volume products of either high- or low-variety

  • 8. 
    Harley Davidson
    • A. 

      Utilizes job shops to make each of its modules

    • B. 

      Uses product focused manufacturing

    • C. 

      Uses a large number of modules to build a small number of different bikes

    • D. 

      Uses work cells to feed its assembly line

    • E. 

      All of the above are true.

  • 9. 
    When done correctly, mass customization
    • A. 

      Increases pressure on supply chain performance

    • B. 

      Helps eliminate the guesswork that comes with sales forecasting

    • C. 

      Drives down inventories

    • D. 

      Increases pressure on scheduling

    • E. 

      . all of the above

  • 10. 
    In mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except
    • A. 

      Automation

    • B. 

      Standardization

    • C. 

      Tight quality control

    • D. 

      Removing some services

    • E. 

      Customization

  • 11. 
    Which of the following statements regarding ethical and environmentally friendly processes is true?
    • A. 

      Operations managers can be environmentally sensitive, but they must avoid following a low cost strategy.

    • B. 

      Processes can be environmentally friendly or socially responsible, but not both.

    • C. 

      Operations managers can be environmentally sensitive and still follow a low cost strategy.

    • D. 

      Using energy-efficient lighting saves so little that it should not be labeled environmentally friendly.

    • E. 

      The only business strategy consistent with ethical and environmentally sensitive management is the differentiation strategy.

  • 12. 
    1. FedEx chose Memphis, Tennessee, as its U.S. hub because
    • A. 

      The city is in the center of the U.S., geographically

    • B. 

      The airport has relatively few hours of bad weather closures

    • C. 

      It needed a means to reach cities to which it did not have direct flights

    • D. 

      The firm believed that a hub system was superior to traditional city-to-city flight scheduling

    • E. 

      All of the above are true.

  • 13. 
    Which of the following statements regarding FedEx is true?
    • A. 

      . Its hub in Memphis, Tennessee, was selected because of its low cost.

    • B. 

      Memphis, Tennessee, is the only hub in the company's global flight network.

    • C. 

      FedEx believes the hub system helps reduce mishandling and delays due to better controls.

    • D. 

      FedEx uses a hub system in the U.S., but a city-to-city network in other countries

    • E. 

      Memphis is FedEx's only hub airport in the United States.

  • 14. 
    Which of the following is usually not one of the top considerations in choosing a country for a facility location?
    • A. 

      Availability of labor and labor productivity

    • B. 

      Exchange rates

    • C. 

      Attitude of governmental units

    • D. 

      Zoning regulations

    • E. 

      Location of markets

  • 15. 
    Which of these factors would be considered when making a location decision at the region/community level?
    • A. 

      Government rules, attitudes, stability, incentives

    • B. 

      Cultural and economic issues

    • C. 

      Zoning restrictions

    • D. 

      Environmental impact issues

    • E. 

      Proximity to raw materials and customers

  • 16. 
    A firm is seeking a new factory location, and is considering several countries worldwide. In some of these countries, child labor is prevalent; in others, working conditions and worker safety are inferior to conditions in the U.S. An operations manager paying attention to __________will factor these issues into the location decision. 
    • A. 

      Ethical and social responsibility issues

    • B. 

      Critical success factors

    • C. 

      Factor rating systems

    • D. 

      Geographic information systems

    • E. 

      Regression models

  • 17. 
    Which of the following statements regarding "proximity" in the location decision is false?
    • A. 

      Service organizations find that proximity to market is the most critical primary location factor.

    • B. 

      Manufacturers want to be near customers when their product is bulky, heavy, or fragile.

    • C. 

      Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer.

    • D. 

      . Reduction in bulk is a good reason for a manufacturer to locate near the supplier

    • E. 

      Clustering among fast food chains occurs because they need to be near their labor supply.

  • 18. 
    • A. 

      Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances

    • B. 

      Few people will travel out-of state for a haircut.

    • C. 

      Patients will travel very long distances to have their hernia surgeries performed at Shouldice Hospita

    • D. 

      Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers

    • E. 

      Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source

  • 19. 
    A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs 0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If demand is expected to be 10 million units, which plant offers the lowest total cost?
    • A. 

      . Plant A, because it is cheaper than Plant B for all volumes under 10,000,000 units

    • B. 

      Plant B, because it is cheaper than Plant A for all volumes over 10,000,000 units

    • C. 

      Plant A, because it is cheaper than Plant B for all volumes

    • D. 

      Plant B, because it has the lower variable cost per unit

    • E. 

      Neither Plant A nor Plant B, because the crossover point is at 10 million units

  • 20. 
    Which of the following statements regarding Starbucks Coffee is false?
    • A. 

      The firm plans to open three new cafes per day around the world

    • B. 

      The firm uses GIS to evaluate most site decision

    • C. 

      The firm's cafes are exclusively in traditional settings: malls, tourist areas, and airports

    • D. 

      The firm places cafes into ever more innovative locations

    • E. 

      The firm put cafes in Japan, even though that country had no GIS data available

  • 21. 
    Which of the following is most likely to affect the location strategy of a manufacturing firm?
    • A. 

      Appearance/image of the area

    • B. 

      Utility costs

    • C. 

      Purchasing power of drawing area

    • D. 

      Competition in the area

    • E. 

      Parking availability

  • 22. 
    1.What two numbers are contained in the daily report to the CEO of Walt Disney Parks & Resorts regarding the six Orlando parks?
    • A. 

      Yesterday’s forecasted attendance and yesterday’s actual attendance

    • B. 

      Yesterday’s actual attendance and today’s forecasted attendance

    • C. 

      Yesterday’s forecasted attendance and today’s forecasted attendance

    • D. 

      Yesterday’s actual attendance and last year’s actual attendance

    • E. 

      Yesterday’s forecasted attendance and the year-to-date average daily forecast error

  • 23. 
    2. Forecasts
    • A. 

      Become more accurate with longer time horizons

    • B. 

      Are rarely perfect

    • C. 

      Are more accurate for individual items than for groups of items

    • D. 

      . all of the above

    • E. 

      None of the above

  • 24. 
    3. The three major types of forecasts used by business organizations are
    • A. 

      Strategic, tactical, and operational

    • B. 

      Economic, technological, and demand

    • C. 

      Exponential smoothing, Delphi, and regression

    • D. 

      Causal, time-series, and seasonal

    • E. 

      Departmental, organizational, and territorial

  • 25. 
    4. Which of the following is not a type of qualitative forecasting?
    • A. 

      Executive opinions

    • B. 

      Sales force composites

    • C. 

      Consumer surveys

    • D. 

      The Delphi method

    • E. 

      Moving average

  • 26. 
    5. Which of the following techniques uses variables such as price and promotional expenditures, which are related to product demand, to predict demand?
    • A. 

      Associative models

    • B. 

      Exponential smoothing

    • C. 

      Weighted moving average

    • D. 

      Time series

    • E. 

      All of the above

  • 27. 
    6. Which of the following statements about time series forecasting is true?
    • A. 

      It is based on the assumption that future demand will be the same as past demand.

    • B. 

      . It makes extensive use of the data collected in the qualitative approach.

    • C. 

      The analysis of past demand helps predict future demand.

    • D. 

      Because it accounts for trends, cycles, and seasonal patterns, it is more powerful than causal forecasting.

    • E. 

      All of the above are true.

  • 28. 
    Time series data may exhibit which of the following behaviors?
    • A. 

      Trend

    • B. 

      Random variations

    • C. 

      Seasonality

    • D. 

      Cycles

    • E. 

      They may exhibit all of the above

  • 29. 
    What is the approximate forecast for May using a four-month moving average?  
    Nov. Dec. Jan. Feb. Mar. April
    39 36 40 42 48 46
    • A. 

      38

    • B. 

      42

    • C. 

      43

    • D. 

      44

    • E. 

      47

  • 30. 
    . John’s House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month’s demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July, what should be the forecast for August?
    • A. 

      2400

    • B. 

      2511

    • C. 

      2067

    • D. 

      3767

    • E. 

      1622

  • 31. 
    A six-month moving average forecast is better than a three-month moving average forecast if demand
    • A. 

      Is rather stable

    • B. 

      Has been changing due to recent promotional efforts

    • C. 

      Follows a downward trend

    • D. 

      Follows a seasonal pattern that repeats itself twice a year

    • E. 

      Follows an upward trend

  • 32. 
    Increasing the number of periods in a moving average will accomplish greater smoothing, but at the expense of
    • A. 

      Manager understanding

    • B. 

      Accuracy

    • C. 

      Stability

    • D. 

      Responsiveness to changes

    • E. 

      All of the above are diminished when the number of periods increases.

  • 33. 
    Which of the following statements comparing the weighted moving average technique and exponential smoothing is true?
    • A. 

      Exponential smoothing is more easily used in combination with the Delphi method.

    • B. 

      More emphasis can be placed on recent values using the moving average

    • C. 

      Exponential smoothing is considerably more difficult to implement on a computer

    • D. 

      Exponential smoothing typically requires less record keeping of past data

    • E. 

      Exponential smoothing allows one to develop forecasts for multiple periods, whereas weighted moving averages does not.

  • 34. 
    Given an actual demand of 103, a previous forecast value of 99, and an alpha of .4, the exponential smoothing forecast for the next period would be
    • A. 

      94.6

    • B. 

      97.4

    • C. 

      100.6

    • D. 

      101.6

    • E. 

      103.0

  • 35. 
    Given an actual demand of 61, a previous forecast of 58, and an   of .3, what would the forecast for the next period be using simple exponential smoothing?
    • A. 

      45.5

    • B. 

      57.1

    • C. 

      58.9

    • D. 

      61.0

    • E. 

      65.5

  • 36. 
    Which of the following values of alpha would cause exponential smoothing to respond the most slowly to forecast errors?
    • A. 

      0.10

    • B. 

      0.20

    • C. 

      0.40

    • D. 

      0.80

    • E. 

      Cannot be determined

  • 37. 
    The primary purpose of the mean absolute deviation (MAD) in forecasting is to
    • A. 

      Estimate the trend line

    • B. 

      Eliminate forecast errors

    • C. 

      Measure forecast accuracy

    • D. 

      Seasonally adjust the forecast

    • E. 

      All of the above

  • 38. 
    Which of the following statements regarding Amazon.com is false?
    • A. 

      The company was opened by Jeff Bezos in 1995.

    • B. 

      B. The company was founded as, and still is, a "virtual retailer" with no inventory.

    • C. 

      The company is now a world-class leader in warehouse management and automation.

    • D. 

      The company uses both United Parcel Service and the U.S. Postal Service as shippers.

    • E. 

      Amazon obtains its competitive advantage through inventory management.

  • 39. 
    Which of the following is a function of inventory?
    • A. 

      To decouple or separate parts of the production process

    • B. 

      To decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers

    • C. 

      To take advantage of quantity discounts

    • D. 

      To hedge against inflation

    • E. 

      All of the above are functions of inventory.

  • 40. 
    Which of the following would not generally be a motive for a firm to hold inventories?
    • A. 

      To decouple or separate parts of the production process

    • B. 

      To provide a stock of goods that will provide a selection for customers

    • C. 

      To take advantage of quantity discounts

    • D. 

      To minimize holding costs

    • E. 

      All of the above are functions of inventory.

  • 41. 
    Which of the following is not one of the four main types of inventory?
    • A. 

      Raw material inventory

    • B. 

      Work-in-process inventory

    • C. 

      Maintenance/repair/operating supply inventory

    • D. 

      Safety stock inventory

    • E. 

      All of these are main types of inventory.

  • 42. 
    Which of the following statements about ABC analysis is false?
    • A. 

      ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.

    • B. 

      In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers.

    • C. 

      In ABC analysis, "C" Items have minimal records, periodic review, and simple controls.

    • D. 

      ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

    • E. 

      All of the above statements are true.

  • 43. 
    All of the following statements about ABC analysis are true except
    • A. 

      Inventory may be categorized by measures other than dollar volume

    • B. 

      It categorizes on-hand inventory into three groups based on annual dollar volume

    • C. 

      It is an application of the Pareto principle

    • D. 

      It states that all items require the same degree of control

    • E. 

      It states that there are the critical few and the trivial many inventory items

  • 44. 
    All of the following statements about ABC analysis are true except
    • A. 

      Inventory may be categorized by measures other than dollar volume

    • B. 

      It categorizes on-hand inventory into three groups based on annual dollar volume

    • C. 

      It is an application of the Pareto principle

    • D. 

      It states that all items require the same degree of control

    • E. 

      It states that there are the critical few and the trivial many inventory items

  • 45. 
    The two most basic inventory questions answered by the typical inventory model are
    • A. 

      Timing and cost of orders

    • B. 

      Quantity and cost of orders

    • C. 

      Timing and quantity of orders

    • D. 

      Order quantity and service level

    • E. 

      Ordering cost and carrying cost

  • 46. 
    Among the advantages of cycle counting is that it
    • A. 

      Makes the annual physical inventory more acceptable to management

    • B. 

      Does not require the detailed records necessary when annual physical inventory is used

    • C. 

      Does not require highly trained people

    • D. 

      Allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory

    • E. 

      Does not need to be performed for less expensive items

  • 47. 
    A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?
    • A. 

      16

    • B. 

      70

    • C. 

      110

    • D. 

      183

    • E. 

      600

  • 48. 
    In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will
    • A. 

      Increase by about 41%

    • B. 

      Increase by 100%

    • C. 

      Increase by 200%

    • D. 

      Increase, but more data is needed to say by how much

    • E. 

      Either increase or decrease

  • 49. 
    In thr basic EOQ model, if D=6,000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately
    • A. 

      24

    • B. 

      100

    • C. 

      141

    • D. 

      490

    • E. 

      600

  • 50. 
    A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is
    • A. 

      Three times as large

    • B. 

      One-third as large

    • C. 

      Nine times as large

    • D. 

      One-ninth as large

    • E. 

      Cannot be determined

  • 51. 
    13. Aproduct whose EOQ is 400 experiences a 50% increase in demand. The new EOQ is  
    • A. 

      Unchanged

    • B. 

      Increased by less than 50%

    • C. 

      Increased by 50%

    • D. 

      Increased by more than 50%

    • E. 

      Cannot be determined

  • 52. 
    For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model was 200 units and the total annual inventory (carrying and setup) cost was $600. The inventory carrying cost per unit per year for this item is
    • A. 

      $1.50

    • B. 

      $2.00

    • C. 

      $3.00

    • D. 

      $150.00

    • E. 

      Not enough data to determine

  • 53. 
    An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?
    • A. 

      One hundred is the reorder point, and 14 is the order quantity

    • B. 

      Fourteen is the reorder point, and 100 is the order quantity.

    • C. 

      The number 100 is a function of demand during lead time.

    • D. 

      Fourteen is the safety stock, and 100 is the reorder point.

    • E. 

      None of the above is true.

  • 54. 
    Which of the following statements regarding the production order quantity model is true?
    • A. 

      It applies only to items produced in the firm's own production departments

    • B. 

      It relaxes the assumption that all the order quantity is received at one time.

    • C. 

      It relaxes the assumption that the demand rate is constant.

    • D. 

      It minimizes the total production costs

    • E. 

      It minimizes inventory.

  • 55. 
    If demand is not uniform and constant, then stockout risks can be controlled by
    • A. 

      Increasing the EOQ

    • B. 

      Placing an extra order

    • C. 

      Raising the selling price to reduce demand

    • D. 

      Adding safety stock

    • E. 

      Reducing the reorder point

  • 56. 
    The fixed-period inventory model requires more safety stock than the fixed-quantity models because
    • A. 

      A stockout can occur during the review period as well as during the lead time

    • B. 

      This model is used for products that have large standard deviations of demand

    • C. 

      This model is used for products that require very high service levels

    • D. 

      Replenishment is not instantaneous

    • E. 

      Setup costs and holding costs are large

  • 57. 
    Which of the following statements regarding Wheeled Coach is false?
    • A. 

      Wheeled Coach has found competitive advantage through MRP

    • B. 

      Wheeled Coach builds ambulances in a repetitive process.

    • C. 

      Wheeled Coach’s MRP system allowed the company to meet tight schedules, but caused inventory to rise.

    • D. 

      Wheeled Coach’s MRP system maintains excellent record integrity.

    • E. 

      Low inventory and high quality are two positive outcomes of Wheeled Coach’s use of MRP.

  • 58. 
    Dependent demand and independent demand items differ in that
    • A. 

      For any product, all components are dependent- demand items

    • B. 

      The need for independent-demand items is forecast

    • C. 

      The need for dependent-demand items is calculated

    • D. 

      A and C

    • E. 

      All of the above are true.

  • 59. 
    A master production schedule specifies 
    • A. 

      The raw materials required to complete the project

    • B. 

      What component is to be made, and when

    • C. 

      What product is to be made, and when

    • D. 

      The labor hours required for production

    • E. 

      The financial resources required for production

  • 60. 
    4. A garden tractors in week 1; 50 small garden tractors and 100 riding mowers in week 2; 100 riding mowers and 200 garden utility carts in week 3; and 100 riding mowers in week 4. This document is most likely a(n)document calls for the production of 50 small  
    • A. 

      Net requirements document

    • B. 

      Resource requirements profile

    • C. 

      Aggregate plan

    • D. 

      Master production schedule

    • E. 

      Wagner-Whitin finite capacity document

  • 61. 
    The ______ is the input to material requirements planning which lists the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product.
    • A. 

      Bill of material

    • B. 

      Master production schedule

    • C. 

      Inventory records

    • D. 

      Assembly time chart

    • E. 

      Net requirements chart

  • 62. 
    The bill of material contains information necessary to
    • A. 

      Place an order to replenish the item

    • B. 

      Calculate quantities on hand and on order

    • C. 

      Convert net requirements into higher level gross requirements

    • D. 

      Convert gross requirements into net requirements

    • E. 

      Convert (explode) net requirements at one level into gross requirements at the next level

  • 63. 
    The minimum record accuracy required for successful MRP is approximately
    • A. 

      Lower than 90%

    • B. 

      90%

    • C. 

      95%

    • D. 

      97%

    • E. 

      99%

  • 64. 
    Given the following bill of material If the demand for product A is 50 units, what will be the gross requirement for component E?
    • A. 

      4

    • B. 

      100

    • C. 

      200

    • D. 

      250

    • E. 

      300

  • 65. 
    Given the following bill of material If the demand for product A is 50 units, what will be the gross requirement for component E?
    • A. 

      50

    • B. 

      100

    • C. 

      150

    • D. 

      200

    • E. 

      300

  • 66. 
    Refer to the previous bill of material. If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many units of part D will be needed?
    • A. 

      3

    • B. 

      40

    • C. 

      70

    • D. 

      90

    • E. 

      110

  • 67. 
    Each X requires 2 of component Y; each Y requires 4 of part Z. The lead time for assembly of X is 1 week. The lead time for the manufacture of Y is 1 week. The lead time for the procurement of Z is 6 weeks. The cumulative lead time for X is _____ weeks.
    • A. 

      6

    • B. 

      7

    • C. 

      8

    • D. 

      10

    • E. 

      CANNOT BE DETERMINED

  • 68. 
    Each R requires 4 of component S; each S requires 3 of part T. The lead time for assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for the procurement of T is 6 weeks. The cumulative lead time for R is ______ weeks.
    • A. 

      6

    • B. 

      9

    • C. 

      12

    • D. 

      18

    • E. 

      28

  • 69. 
    Which of the following best describes a gross material requirements plan?
    • A. 

      A schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started

    • B. 

      An intermediate range plan for the scheduling of families of products

    • C. 

      A chart illustrating whether capacity has been exceeded

    • D. 

      A table that corrects scheduled quantities for inventory on hand

    • E. 

      A schedule showing which products are to be manufactured and in what quantities

  • 70. 
    All of the following are advantages of enterprise resource planning (ERP) except it
    • A. 

      Creates commonality of databases

    • B. 

      Increases communications and collaboration worldwide

    • C. 

      Helps integrate multiple sites and business units

    • D. 

      Requires major changes in the company and its processes to implement

    • E. 

      Can provide a strategic advantage over competitors