Operations Management Quiz Questions And Answers

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Operationsmanage
O
Operationsmanage
Community Contributor
Quizzes Created: 3 | Total Attempts: 2,888
| Attempts: 976
SettingsSettings
Please wait...
  • 1/70 Questions

    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. 

    • Ethical and social responsibility issues
    • Critical success factors
    • Factor rating systems
    • Geographic information systems
    • Regression models
Please wait...
About This Quiz

This Operations Management Quiz assesses knowledge on process types, production strategies, and operational decisions. Key topics include batch processes, make-to-stock and make-to-order systems, and strategic site selection for manufacturing. Ideal for learners aiming to enhance their understanding of operational efficiencies.

Operations Management Quiz Questions And Answers - Quiz

Quiz Preview

  • 2. 

    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?

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

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

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

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

    • None of the above is true.

    Correct Answer
    A. Fourteen is the reorder point, and 100 is the order quantity.
    Explanation
    The inventory decision rule states that when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered. This means that 14 is the reorder point, as it is the level at which a new order needs to be placed. Additionally, 100 is the order quantity, as that is the number of gearboxes that will be ordered when the reorder point is reached. Therefore, the statement "Fourteen is the reorder point, and 100 is the order quantity" is true.

    Rate this question:

  • 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. Departments A and B are, respectively:

    • Make-to-stock, make-to-stock

    • Make-to-stock, make-to-order

    • Make-to-order, make-to-stock

    • Make-to-order, make-to-order

    Correct Answer
    A. Make-to-stock, make-to-order
    Explanation
    Department A is responsible for making the chains and letters, which indicates that they produce the necklaces in advance without any specific customer order. This aligns with the concept of make-to-stock, where products are made based on anticipated demand. On the other hand, Department B assembles the necklaces when orders are received, implying that they customize the necklaces based on individual customer requests. This corresponds to the make-to-order approach, where products are made specifically for each customer order. Therefore, the correct answer is make-to-stock, make-to-order.

    Rate this question:

  • 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?

    • Line in city

    • Line in small town

    • Batch in city

    • Batch in small town

    Correct Answer
    A. Line in city
    Explanation
    Based on the information provided, the entrepreneur should choose a line process in the city. This is because the capital is readily available in the city, which would be necessary for setting up a factory. Additionally, the city offers a larger market, which would provide more potential customers for the specialized plastic containers. The availability of all types of labor in the city would also be beneficial for the factory's operations.

    Rate this question:

  • 5. 

    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?

    • 45.5

    • 57.1

    • 58.9

    • 61.0

    • 65.5

    Correct Answer
    A. 58.9
    Explanation
    The forecast for the next period using simple exponential smoothing is calculated by adding the previous forecast (58) to the product of the smoothing factor (0.3) and the difference between the actual demand (61) and the previous forecast (58). Therefore, the forecast for the next period would be 58 + (0.3 * (61 - 58)) = 58.9.

    Rate this question:

  • 6. 

    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.

    • Bill of material

    • Master production schedule

    • Inventory records

    • Assembly time chart

    • Net requirements chart

    Correct Answer
    A. Bill of material
    Explanation
    The bill of material is the input to material requirements planning which lists the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product. It provides a comprehensive breakdown of all the components required for production, allowing for accurate planning and procurement of materials.

    Rate this question:

  • 7. 

    1. A large office which has a typing pool, a copying department and all the managers in a large suite of offices is an example of:

    • A line process

    • A batch process

    • A project process

    • A continuous process

    Correct Answer
    A. A batch process
    Explanation
    A large office which has a typing pool, a copying department, and all the managers in a large suite of offices is an example of a batch process. In a batch process, similar tasks or activities are grouped together and processed in batches. In this case, the typing pool and copying department can be considered as separate batches, where similar tasks are performed together. The managers in the large suite of offices can also be considered as a separate batch, as they are performing similar managerial tasks. This type of process allows for efficient use of resources and can result in increased productivity.

    Rate this question:

  • 8. 

    . 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?

    • 2400

    • 2511

    • 2067

    • 3767

    • 1622

    Correct Answer
    A. 2511
    Explanation
    The weighted moving average method assigns different weights to different time periods based on their relevance. In this case, the weight of 5 is assigned to the previous month's demand, 3 to demand two months ago, and 1 to demand three months ago. To calculate the forecast for August, we multiply the demand in each month by their respective weights and sum them up. (2200 * 5) + (3000 * 3) + (1000 * 1) = 11000 + 9000 + 1000 = 21000. Therefore, the forecast for August would be 21000 / (5 + 3 + 1) = 2511.

    Rate this question:

  • 9. 

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

    • Yesterday’s forecasted attendance and yesterday’s actual attendance

    • Yesterday’s actual attendance and today’s forecasted attendance

    • Yesterday’s forecasted attendance and today’s forecasted attendance

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

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

    Correct Answer
    A. Yesterday’s forecasted attendance and yesterday’s actual attendance
    Explanation
    The daily report to the CEO of Walt Disney Parks & Resorts contains two numbers: yesterday's forecasted attendance and yesterday's actual attendance. These numbers provide valuable information about the accuracy of the attendance forecasts and the actual number of visitors to the Orlando parks on a given day.

    Rate this question:

  • 10. 

    All of the following statements about ABC analysis are true except

    • Inventory may be categorized by measures other than dollar volume

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

    • It is an application of the Pareto principle

    • It states that all items require the same degree of control

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

    Correct Answer
    A. It states that all items require the same degree of control
  • 11. 

    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?

    • 16

    • 70

    • 110

    • 183

    • 600

    Correct Answer
    A. 110
    Explanation
    The economic order quantity (EOQ) is a formula used to determine the optimal order quantity for a product that minimizes the total cost of ordering and holding inventory. It is calculated as the square root of (2 x annual demand x order cost / holding cost). In this case, the annual demand is 10,000 units, the order cost is $150, and the holding cost is 25% of the cost of the computer, which is $1,000. Plugging these values into the formula, we get the approximate EOQ as 110 units.

    Rate this question:

  • 12. 

    The two most basic inventory questions answered by the typical inventory model are

    • Timing and cost of orders

    • Quantity and cost of orders

    • Timing and quantity of orders

    • Order quantity and service level

    • Ordering cost and carrying cost

    Correct Answer
    A. Timing and quantity of orders
    Explanation
    The correct answer is "timing and quantity of orders". In inventory management, the timing of orders refers to when to place an order to replenish inventory, while the quantity of orders refers to how much to order. These two factors are crucial in ensuring that inventory levels are maintained at an optimal level, preventing stockouts or excessive carrying costs. By determining the right timing and quantity of orders, businesses can effectively manage their inventory and meet customer demand efficiently.

    Rate this question:

  • 13. 

    When done correctly, mass customization

    • Increases pressure on supply chain performance

    • Helps eliminate the guesswork that comes with sales forecasting

    • Drives down inventories

    • Increases pressure on scheduling

    • . all of the above

    Correct Answer
    A. . all of the above
    Explanation
    Mass customization refers to the practice of producing goods or services that are tailored to meet the specific needs and preferences of individual customers. When done correctly, it increases pressure on supply chain performance because it requires efficient coordination and communication between various stakeholders. It also helps eliminate the guesswork that comes with sales forecasting as products are made based on actual customer orders. This, in turn, drives down inventories as there is less need for stockpiling finished goods. Additionally, mass customization increases pressure on scheduling as production processes need to be flexible and responsive to accommodate individual customer requests. Therefore, all of the given options are correct.

    Rate this question:

  • 14. 

    Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor?

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

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

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

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

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

    Correct Answer
    A. Few people will travel out-of state for a haircut.
    Explanation
    The best example of the proximity rule for service firms is that few people will travel out-of-state for a haircut. This demonstrates that proximity to the market is crucial for service firms as customers are unlikely to travel long distances for such services. This highlights the importance of being conveniently located to attract and serve customers effectively.

    Rate this question:

  • 15. 

    Which of the following is most likely to affect the location strategy of a manufacturing firm?

    • Appearance/image of the area

    • Utility costs

    • Purchasing power of drawing area

    • Competition in the area

    • Parking availability

    Correct Answer
    A. Utility costs
    Explanation
    Utility costs can significantly impact the location strategy of a manufacturing firm. High utility costs can increase the operational expenses of the firm, affecting its profitability. Therefore, a manufacturing firm is likely to consider utility costs when deciding on the location of its facilities. Lower utility costs in a particular area can make it more attractive for the firm as it can help reduce expenses and improve the overall competitiveness of the business.

    Rate this question:

  • 16. 

    Time series data may exhibit which of the following behaviors?

    • Trend

    • Random variations

    • Seasonality

    • Cycles

    • They may exhibit all of the above

    Correct Answer
    A. They may exhibit all of the above
    Explanation
    Time series data refers to a sequence of observations recorded at regular intervals over time. These observations can display various behaviors. Trend refers to a long-term increase or decrease in the data. Random variations are unpredictable fluctuations in the data. Seasonality refers to regular patterns that occur at fixed intervals, such as daily, weekly, or yearly. Cycles are repetitive patterns that occur over longer periods. Therefore, time series data can exhibit all of these behaviors, making the given answer correct.

    Rate this question:

  • 17. 

    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

    • 38

    • 42

    • 43

    • 44

    • 47

    Correct Answer
    A. 44
  • 18. 

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

    • The company was opened by Jeff Bezos in 1995.

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

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

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

    • Amazon obtains its competitive advantage through inventory management.

    Correct Answer
    A. B. The company was founded as, and still is, a "virtual retailer" with no inventory.
    Explanation
    The given statement is false because Amazon.com was founded as an online bookstore by Jeff Bezos in 1995, but it has since expanded to sell a wide range of products and is no longer a "virtual retailer" with no inventory. Amazon now operates as a world-class leader in warehouse management and automation, using both United Parcel Service and the U.S. Postal Service as shippers. Its competitive advantage is obtained through efficient inventory management.

    Rate this question:

  • 19. 

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

    • To decouple or separate parts of the production process

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

    • To take advantage of quantity discounts

    • To minimize holding costs

    • All of the above are functions of inventory.

    Correct Answer
    A. To minimize holding costs
    Explanation
    Holding inventory generally incurs costs such as storage, insurance, and obsolescence. Therefore, minimizing holding costs would not be a motive for a firm to hold inventories. The other options listed, such as decoupling parts of the production process, providing a selection for customers, and taking advantage of quantity discounts, are all valid reasons for a firm to hold inventories.

    Rate this question:

  • 20. 

    Which of the following statements regarding ethical and environmentally friendly processes is true?

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

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

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

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

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

    Correct Answer
    A. Operations managers can be environmentally sensitive and still follow a low cost strategy.
    Explanation
    This statement suggests that operations managers can prioritize environmental concerns while still implementing cost-saving measures. It implies that being environmentally friendly does not necessarily mean sacrificing a low cost strategy. This indicates that it is possible for businesses to adopt sustainable practices without compromising on their financial goals.

    Rate this question:

  • 21. 

    2. Forecasts

    • Become more accurate with longer time horizons

    • Are rarely perfect

    • Are more accurate for individual items than for groups of items

    • . all of the above

    • None of the above

    Correct Answer
    A. Are rarely perfect
    Explanation
    Forecasts are rarely perfect because they are based on assumptions and predictions about the future, which can be influenced by various factors such as changes in market conditions, unexpected events, and uncertainties. Even with longer time horizons, forecasts can still be subject to errors and inaccuracies due to the inherent complexity and unpredictability of the future. Therefore, it is unlikely for forecasts to be completely accurate, making the statement "are rarely perfect" the correct answer.

    Rate this question:

  • 22. 

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

    • 0.10

    • 0.20

    • 0.40

    • 0.80

    • Cannot be determined

    Correct Answer
    A. 0.10
    Explanation
    A smaller value of alpha (0.10) would cause exponential smoothing to respond the most slowly to forecast errors. This is because alpha determines the weight given to the most recent observation when calculating the forecast. A smaller alpha means less weight is given to the most recent observation, causing the forecast to change more slowly and respond more slowly to any errors in the forecast.

    Rate this question:

  • 23. 

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

    • Automation

    • Standardization

    • Tight quality control

    • Removing some services

    • Customization

    Correct Answer
    A. Customization
    Explanation
    In the mass service and service factory quadrants of the service process matrix, the operations manager could focus on automation, standardization, tight quality control, and removing some services to improve efficiency and reduce costs. However, customization is not a priority in these quadrants as the focus is on providing standardized and efficient services to a large number of customers.

    Rate this question:

  • 24. 

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

    • Availability of labor and labor productivity

    • Exchange rates

    • Attitude of governmental units

    • Zoning regulations

    • Location of markets

    Correct Answer
    A. Zoning regulations
    Explanation
    Zoning regulations are usually not one of the top considerations in choosing a country for a facility location. When selecting a country for facility location, businesses typically prioritize factors such as the availability of labor and labor productivity, exchange rates, the attitude of governmental units, and the location of markets. Zoning regulations, which determine how land can be used in a specific area, are important for local planning and development but are not usually the primary concern when deciding on a country for facility location.

    Rate this question:

  • 25. 

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

    • Executive opinions

    • Sales force composites

    • Consumer surveys

    • The Delphi method

    • Moving average

    Correct Answer
    A. Moving average
    Explanation
    Moving average is not a type of qualitative forecasting because it is a quantitative forecasting method. Qualitative forecasting methods rely on subjective opinions, judgments, and insights to make predictions, while quantitative methods use historical data and mathematical models to forecast future outcomes. The moving average, on the other hand, is a quantitative method that calculates the average of a set of data points over a specific period of time to identify trends and patterns. Therefore, it does not fall under the category of qualitative forecasting.

    Rate this question:

  • 26. 

    Which of the following is a function of inventory?

    • To decouple or separate parts of the production process

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

    • To take advantage of quantity discounts

    • To hedge against inflation

    • All of the above are functions of inventory.

    Correct Answer
    A. All of the above are functions of inventory.
    Explanation
    Inventory serves multiple functions in a business. Firstly, it helps to decouple or separate different parts of the production process, allowing for smoother operations. Secondly, it acts as a buffer to decouple the firm from fluctuations in demand, ensuring that there is always stock available for customers. Additionally, inventory can be used to take advantage of quantity discounts, allowing the business to save costs. Lastly, inventory can serve as a hedge against inflation, as holding inventory can help mitigate the impact of price increases. Therefore, all of the statements provided are valid functions of inventory.

    Rate this question:

  • 27. 

    If demand is not uniform and constant, then stockout risks can be controlled by

    • Increasing the EOQ

    • Placing an extra order

    • Raising the selling price to reduce demand

    • Adding safety stock

    • Reducing the reorder point

    Correct Answer
    A. Adding safety stock
    Explanation
    Adding safety stock is a way to control stockout risks when demand is not uniform and constant. Safety stock is additional inventory held to buffer against unexpected fluctuations in demand or lead time. By having extra stock on hand, a company can mitigate the risk of running out of inventory and being unable to fulfill customer orders. This is particularly important when demand is variable, as it allows for a buffer to absorb any spikes in demand or delays in replenishment.

    Rate this question:

  • 28. 

    Identify the correct statement from the given choices.

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

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

    • Batch production is synonymous to mass production systems.

    • All the above

    • A & B

    Correct Answer
    A. A & B
    Explanation
    The correct statement from the given choices is "A & B". This means that both statement A ("A batch process is characterized by jumbled flow while the line process is characterized by a regular sequential flow") and statement B ("The project form of operations is characterized by difficult planning and scheduling rules") are correct.

    Rate this question:

  • 29. 

    Which of the following statements regarding Starbucks Coffee is false?

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

    • The firm uses GIS to evaluate most site decision

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

    • The firm places cafes into ever more innovative locations

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

    Correct Answer
    A. The firm's cafes are exclusively in traditional settings: malls, tourist areas, and airports
    Explanation
    The given answer states that the firm's cafes are exclusively in traditional settings such as malls, tourist areas, and airports. However, this is false because the firm puts cafes in ever more innovative locations, indicating that they are not limited to traditional settings.

    Rate this question:

  • 30. 

    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

    • 94.6

    • 97.4

    • 100.6

    • 101.6

    • 103.0

    Correct Answer
    A. 100.6
    Explanation
    Exponential smoothing is a forecasting method that assigns more weight to recent data points. It is calculated by taking the previous forecast value and adjusting it based on the actual demand and the smoothing factor (alpha). In this case, the previous forecast value is 99, and the actual demand is 103. With an alpha of .4, the exponential smoothing forecast for the next period would be 0.4 * 99 + 0.6 * 103 = 39.6 + 61.8 = 101.4, which is closest to 100.6. Therefore, the correct answer is 100.6.

    Rate this question:

  • 31. 

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

    • Increase by about 41%

    • Increase by 100%

    • Increase by 200%

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

    • Either increase or decrease

    Correct Answer
    A. Increase by about 41%
    Explanation
    When the cost of placing an order doubles in the basic EOQ model, the EOQ (Economic Order Quantity) will increase by about 41%. This is because the EOQ is inversely proportional to the square root of the ordering cost. When the ordering cost doubles, the square root of the ordering cost also doubles, resulting in an increase in the EOQ. The exact increase is approximately 41%, which can be calculated using the formula for EOQ. Therefore, the correct answer is that the EOQ will increase by about 41%.

    Rate this question:

  • 32. 

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

    • Three times as large

    • One-third as large

    • Nine times as large

    • One-ninth as large

    • Cannot be determined

    Correct Answer
    A. One-third as large
    Explanation
    When the ordering cost decreases, the EOQ (Economic Order Quantity) increases. This is because with a lower ordering cost, it becomes more economical to order larger quantities of the product. In this case, the EOQ is initially 40. When the ordering cost decreases from $90 per order to $10, the EOQ becomes one-third as large. This means that the new EOQ is 40/3, which is approximately 13.33. Therefore, the answer is one-third as large.

    Rate this question:

  • 33. 

    A product-focused process is commonly used to produce

    • High-volume, high-variety products

    • Low-volume, high-variety products

    • High-volume, low-variety products

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

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

    Correct Answer
    A. High-volume, low-variety products
    Explanation
    A product-focused process is commonly used to produce high-volume, low-variety products. This means that the process is designed to efficiently produce a large quantity of a limited range of products. This type of process is often used in industries such as automotive manufacturing, where a small number of models are produced in large quantities. The focus is on achieving economies of scale and maximizing production efficiency.

    Rate this question:

  • 34. 

    Which of the following statements regarding FedEx is true?

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

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

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

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

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

    Correct Answer
    A. FedEx believes the hub system helps reduce mishandling and delays due to better controls.
    Explanation
    FedEx believes that their hub system helps reduce mishandling and delays due to better controls. This means that by centralizing operations at their hub in Memphis, Tennessee, they are able to have more oversight and control over the handling and movement of packages. This helps to minimize the chances of mishandling or delays in delivery.

    Rate this question:

  • 35. 

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

    • Unchanged

    • Increased by less than 50%

    • Increased by 50%

    • Increased by more than 50%

    • Cannot be determined

    Correct Answer
    A. Increased by less than 50%
    Explanation
    When demand for a product increases, the Economic Order Quantity (EOQ) also increases. However, the increase in EOQ is not directly proportional to the increase in demand. In this case, the EOQ is increased by less than 50% because the increase in demand is only 50%. The EOQ is calculated based on various factors such as holding costs, ordering costs, and demand rate, so a 50% increase in demand does not necessarily translate to a 50% increase in EOQ.

    Rate this question:

  • 36. 

    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

    • $1.50

    • $2.00

    • $3.00

    • $150.00

    • Not enough data to determine

    Correct Answer
    A. $3.00
    Explanation
    The total annual inventory cost is calculated by multiplying the order quantity by the carrying cost per unit. In this case, the cost-minimizing order quantity is 200 units and the total annual inventory cost is $600. Therefore, the carrying cost per unit per year can be found by dividing the total annual inventory cost by the order quantity: $600/200 = $3.00.

    Rate this question:

  • 37. 

    Which of the following statements regarding Dell Computer is false?

    • Dell is a practitioner of the mass customization process

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

    • Dell keeps very little inventory of finished goods.

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

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

    Correct Answer
    A. Dell builds its computers overseas in order to gain a low-cost advantage.
    Explanation
    Dell builds its computers overseas in order to gain a low-cost advantage. This statement is false because Dell actually assembles its computers in the U.S. rather than building them overseas. Dell utilizes a global supply chain, but the assembly of its computers takes place in the U.S. This allows Dell to have better control over the manufacturing process and ensure quality control.

    Rate this question:

  • 38. 

    The primary purpose of the mean absolute deviation (MAD) in forecasting is to

    • Estimate the trend line

    • Eliminate forecast errors

    • Measure forecast accuracy

    • Seasonally adjust the forecast

    • All of the above

    Correct Answer
    A. Measure forecast accuracy
    Explanation
    The mean absolute deviation (MAD) is a statistical measure used to assess the accuracy of a forecast. It calculates the average absolute difference between the actual values and the forecasted values. By measuring forecast accuracy, MAD helps in evaluating the effectiveness of forecasting models and identifying any biases or errors in the forecasts. Therefore, the primary purpose of MAD in forecasting is to measure forecast accuracy.

    Rate this question:

  • 39. 

    Among the advantages of cycle counting is that it

    • Makes the annual physical inventory more acceptable to management

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

    • Does not require highly trained people

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

    • Does not need to be performed for less expensive items

    Correct Answer
    A. Allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory
    Explanation
    Cycle counting allows for more rapid identification of errors and subsequent remedial action compared to annual physical inventory. This is because cycle counting involves counting a small portion of inventory on a regular basis, allowing for quicker detection of discrepancies and immediate corrective measures. In contrast, annual physical inventory involves counting the entire inventory once a year, which can result in delays in identifying errors and taking necessary actions.

    Rate this question:

  • 40. 

    All of the following statements about ABC analysis are true except

    • Inventory may be categorized by measures other than dollar volume

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

    • It is an application of the Pareto principle

    • It states that all items require the same degree of control

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

    Correct Answer
    A. It states that all items require the same degree of control
    Explanation
    ABC analysis categorizes inventory into three groups based on annual dollar volume, which means it does not categorize all items into the same degree of control. Therefore, the statement "it states that all items require the same degree of control" is not true.

    Rate this question:

  • 41. 

    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.

    • 6

    • 7

    • 8

    • 10

    • CANNOT BE DETERMINED

    Correct Answer
    A. 8
    Explanation
    The cumulative lead time for X can be determined by adding up the lead times for each component. X requires 2 of component Y, which has a lead time of 1 week. Y requires 4 of part Z, which has a lead time of 6 weeks. Therefore, the cumulative lead time for X is 1 week (for Y) + 6 weeks (for Z) = 7 weeks.

    Rate this question:

  • 42. 

    Which of the following best describes a gross material requirements plan?

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

    • An intermediate range plan for the scheduling of families of products

    • A chart illustrating whether capacity has been exceeded

    • A table that corrects scheduled quantities for inventory on hand

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

    Correct Answer
    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
    Explanation
    A gross material requirements plan is a schedule that shows the total demand for an item and specifies when it needs to be ordered from a supplier or when production needs to be started. This plan helps in ensuring that the necessary materials are available at the right time to meet the demand and avoid any delays in production or delivery.

    Rate this question:

  • 43. 

    All of the following are advantages of enterprise resource planning (ERP) except it

    • Creates commonality of databases

    • Increases communications and collaboration worldwide

    • Helps integrate multiple sites and business units

    • Requires major changes in the company and its processes to implement

    • Can provide a strategic advantage over competitors

    Correct Answer
    A. Requires major changes in the company and its processes to implement
    Explanation
    Enterprise resource planning (ERP) provides several advantages such as creating commonality of databases, increasing communications and collaboration worldwide, helping integrate multiple sites and business units, and providing a strategic advantage over competitors. However, the implementation of ERP requires major changes in the company and its processes. This means that implementing ERP may disrupt established workflows and require significant effort and resources to adapt to the new system.

    Rate this question:

  • 44. 

    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:

    • Forecasting customer orders

    • Planning capacity

    • Use of overtime

    • Delivery time

    • A and B

    Correct Answer
    A. Delivery time
    Explanation
    Department B would be primarily concerned with delivery time because they are responsible for assembling the necklaces when orders are received. Their main focus would be ensuring that the completed necklaces are delivered to customers within the agreed-upon timeframe. This involves coordinating with Department A to ensure that the chains and letters are ready for assembly in a timely manner, as well as managing any potential delays or issues that may arise during the assembly process.

    Rate this question:

  • 45. 

    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?

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

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

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

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

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

    Correct Answer
    A. Plant B, because it is cheaper than Plant A for all volumes over 10,000,000 units
    Explanation
    Plant B offers the lowest total cost for volumes over 10,000,000 units. This is because even though Plant B has a higher fixed cost compared to Plant A, its lower variable cost per unit compensates for the higher fixed cost at higher volumes. As the demand is expected to be 10 million units, which is exactly the crossover point, Plant B becomes the more cost-effective option.

    Rate this question:

  • 46. 

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

    • Strategic, tactical, and operational

    • Economic, technological, and demand

    • Exponential smoothing, Delphi, and regression

    • Causal, time-series, and seasonal

    • Departmental, organizational, and territorial

    Correct Answer
    A. Economic, technological, and demand
    Explanation
    The correct answer is economic, technological, and demand. Business organizations use economic forecasts to understand the overall economic conditions and trends that may impact their operations. Technological forecasts help organizations anticipate advancements in technology that may affect their products or services. Demand forecasts are used to predict customer demand for a product or service, helping organizations plan their production and inventory levels. These three types of forecasts are essential for organizations to make informed decisions and stay competitive in the market.

    Rate this question:

  • 47. 

    Which of the following is not one of the four main types of inventory?

    • Raw material inventory

    • Work-in-process inventory

    • Maintenance/repair/operating supply inventory

    • Safety stock inventory

    • All of these are main types of inventory.

    Correct Answer
    A. Safety stock inventory
    Explanation
    The given correct answer is "safety stock inventory." Safety stock inventory refers to the extra inventory that is held as a buffer to meet unexpected increases in demand or delays in supply. It is not considered one of the four main types of inventory, which include raw material inventory, work-in-process inventory, maintenance/repair/operating supply inventory, and finished goods inventory. Safety stock inventory is not a type of inventory that is actively used or consumed in the production process, but rather serves as a precautionary measure to ensure uninterrupted operations.

    Rate this question:

  • 48. 

    Which of the following statements about ABC analysis is false?

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

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

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

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

    • All of the above statements are true.

    Correct Answer
    A. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
    Explanation
    The correct answer is "ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings." This statement is false because ABC analysis categorizes items into different groups (A, B, and C) based on their importance and value. "A" items are the most important and tightly controlled, while "C" items have minimal records and simple controls. The analysis focuses on controlling the few most important items (A items) to achieve the majority of inventory savings, rather than controlling all items. Therefore, the statement contradicts the principles of ABC analysis.

    Rate this question:

  • 49. 

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

    • Manager understanding

    • Accuracy

    • Stability

    • Responsiveness to changes

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

    Correct Answer
    A. Responsiveness to changes
    Explanation
    Increasing the number of periods in a moving average will result in greater smoothing of the data. However, this also means that the moving average will be less responsive to changes in the data. As more periods are included in the calculation, the moving average becomes slower to reflect the impact of new data points, reducing its ability to quickly respond to changes in the underlying data. Therefore, the responsiveness to changes is diminished when the number of periods increases.

    Rate this question:

Quiz Review Timeline (Updated): Mar 21, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 27, 2012
    Quiz Created by
    Operationsmanage

Recent Quizzes

Strategic Consensus of Operations Room 101 Strategic Consensus of Operations Room 101
Operations Management - QP9 Operations Management - QP9
Operations Management Basic Questions! Quiz Operations Management Basic Questions! Quiz
Operations Management - QP7 Operations Management - QP7
Operations Management - QP6 Operations Management - QP6
Operations Management - QP2 Operations Management - QP2
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.