Operations Management Quiz Questions And Answers

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  • 1/56 Questions

    Total quality management is a philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction

    • True
    • False
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About This Quiz

Prepare yourself for this amazing Operations management quiz. Operations management refers to controlling and administering the process of production and redesigning business functions in the production of goods and services. The primary concern is planning, organizing, supervising manufacturing and services. This quiz has been designed to test your knowledge about the whole process. Let's play this quiz to find out See morethe answers. All the best to you for this test!

Operations Management Quiz Questions And Answers - Quiz

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  • 2. 

    Agility

    • The ability of an organization to respond quickly to demands or opportunities

    • Using resources in ways that do not harm ecological systems that support human existence

    Correct Answer
    A. The ability of an organization to respond quickly to demands or opportunities
    Explanation
    This answer correctly defines agility as the ability of an organization to respond quickly to demands or opportunities. It implies that an agile organization is able to adapt and adjust its strategies, processes, and resources efficiently in order to meet changing market conditions or take advantage of new opportunities. This definition aligns with the concept of agility in business, where organizations strive to be flexible, adaptable, and responsive to stay competitive in a dynamic environment.

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  • 3. 

    Variables generate data that are measured.mean control chart is a control chart used to monitor the central tendency of a process

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because variables generate data that are measured, and a mean control chart is indeed used to monitor the central tendency of a process. In statistical process control, variables are used to measure and monitor the quality of a process, such as measurements of length, weight, or time. A mean control chart specifically tracks the average or central tendency of these measurements over time, allowing for the detection of any shifts or trends in the process mean. Therefore, the given answer is true.

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  • 4. 

    Core competencies is the special attributes or abilities that give an organization a competitive edge.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Core competencies refer to the unique strengths or capabilities that set an organization apart from its competitors and contribute to its success in the market. These competencies can include specialized knowledge, skills, technologies, or resources that give the organization a competitive advantage. By leveraging their core competencies, organizations can differentiate themselves and create value for their customers, leading to a stronger market position and increased profitability. Therefore, the statement "core competencies are the special attributes or abilities that give an organization a competitive edge" is true.

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  • 5. 

    Strategy that focuses on quality in all phases of an organization

    • Quality based

    • Time based

    Correct Answer
    A. Quality based
    Explanation
    A quality-based strategy is an approach that prioritizes and emphasizes the importance of quality in all aspects and stages of an organization. This strategy aims to ensure that high-quality standards are maintained throughout the organization's operations, processes, products, and services. It involves implementing quality control measures, continuous improvement initiatives, and a strong focus on customer satisfaction. By adopting a quality-based strategy, an organization strives to deliver superior quality, meet customer expectations, and gain a competitive advantage in the market.

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  • 6. 

    Continuous improvement is a philosophy that seeks to make never ending improvements to the process of converting inputs into outputs

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Continuous improvement is a philosophy that emphasizes the ongoing effort to make constant enhancements to the process of transforming inputs into outputs. It involves constantly reviewing and refining processes, identifying areas for improvement, and implementing changes to achieve better results. This approach recognizes that there is always room for improvement and encourages organizations to continuously strive for better efficiency, quality, and effectiveness in their operations.

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  • 7. 

    Quality control is a process that evaluates output relative to a standard and takes corrective action when output doesnt meet standards

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Quality control is indeed a process that assesses the output or products against a set standard or criteria. It involves evaluating the quality of the output and taking corrective measures if it does not meet the established standards. Therefore, the statement "quality control is a process that evaluates output relative to a standard and takes corrective action when output doesn't meet standards" is correct.

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  • 8. 

    SPC (statistical process control) is statistical evaluation of the output of a process

    • True

    • False

    Correct Answer
    A. True
    Explanation
    SPC, or statistical process control, is indeed a statistical evaluation method used to monitor and control the output of a process. It involves collecting data, analyzing it statistically, and making decisions based on the results to ensure that the process is operating within acceptable limits. By using SPC, organizations can identify and address variations or abnormalities in their processes, leading to improved quality and efficiency. Therefore, the given answer "true" accurately describes the nature of SPC.

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  • 9. 

    Sampling distribution is a theoretical distribution of sample statistics

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because a sampling distribution is indeed a theoretical distribution of sample statistics. It represents the distribution of all possible sample statistics that could be obtained from repeated sampling of a population. This distribution helps in understanding the variability and characteristics of the sample statistics, such as the mean or standard deviation, and is crucial in making inferences about the population based on the sample data.

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  • 10. 

    Control limits is the dividing lines between random and nonrandom deviations from the mean of the distribution

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because control limits are used in statistical process control to determine whether a process is in a state of control or not. They are calculated based on the mean and standard deviation of the data and act as boundaries for random variation. Any data points that fall outside of these limits indicate nonrandom deviations from the mean and suggest that the process is out of control. Therefore, control limits help to identify when a process is experiencing significant variations that need to be investigated and corrected.

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  • 11. 

    The process is one or more actions that transform inputs into outputs.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This statement is true because a process is indeed a series of actions that take inputs and produce outputs. Processes are used in various fields and industries to achieve specific goals or outcomes. By following a set of defined actions, inputs are modified or combined in some way to generate desired outputs. This can be seen in manufacturing, software development, project management, and many other areas where a systematic approach is necessary to achieve desired results.

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  • 12. 

    Division of labor is the breaking up of a production process into small tasks, so that each worker performs a small portion of the overall job

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Division of labor refers to the practice of dividing a complex production process into smaller and simpler tasks, which are then assigned to different workers. Each worker focuses on performing a specific task or a small portion of the overall job. This approach increases efficiency and productivity as workers become specialized in their assigned tasks, leading to faster production and higher quality output. Therefore, the statement that division of labor involves breaking up a production process into small tasks is true.

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  • 13. 

    E business

    • The use of the internet to transact business

    • Consumer to business transactions

    Correct Answer
    A. The use of the internet to transact business
    Explanation
    The correct answer is "the use of the internet to transact business." This refers to the practice of conducting business activities, such as buying and selling products or services, using the internet as a platform. It involves various online transactions, including consumer to business interactions, where consumers make purchases from businesses through online channels. The internet has revolutionized the way businesses operate, providing a convenient and efficient platform for conducting transactions and reaching a wider customer base.

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  • 14. 

    Tactics

    • Plans for achieving organizational goals

    • The methods and actions taken to accomplish strategies

    Correct Answer
    A. The methods and actions taken to accomplish strategies
    Explanation
    Tactics refer to the specific methods and actions that are implemented in order to achieve the broader strategies of an organization. These tactics are the practical steps taken to execute the plans and achieve the desired goals. They are more focused and detailed than strategies, which are the overall plans or approaches to achieve organizational objectives. Therefore, the correct answer is "the methods and actions taken to accomplish strategies."

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  • 15. 

    Competitiveness is how effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Competitiveness refers to the ability of an organization to effectively fulfill the desires and requirements of customers in comparison to other entities that provide similar products or services. This statement is true as it accurately defines competitiveness by highlighting the importance of meeting customer needs and differentiating oneself from competitors in order to succeed in the market.

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  • 16. 

    Productivity is a measure of the effective use of resources, usually expressed as the ratio of output to input

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Productivity is indeed a measure of the effective use of resources, typically represented as the ratio of output to input. This means that productivity evaluates how efficiently resources are utilized to generate desired results. By measuring the relationship between output and input, productivity enables organizations to assess their efficiency and effectiveness in utilizing resources to achieve their goals. Therefore, the given answer, "true," accurately reflects the definition and concept of productivity.

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  • 17. 

    Assignable variation is in process output, a variation whose can be identified, a nonrandom variation

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The given answer is true. Assignable variation refers to a type of variation in process output that can be identified and traced back to a specific cause. It is a nonrandom variation, meaning it is caused by specific factors or conditions within the process. This type of variation can be controlled and reduced by identifying and eliminating the root cause. Therefore, the statement is correct.

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  • 18. 

    Central limit theorem is the distribution of sample averages tends to be normal regardless of the shape of the process distribution

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The central limit theorem states that regardless of the shape of the process distribution, the distribution of sample averages tends to be normal. This means that as the sample size increases, the distribution of the sample averages becomes more and more bell-shaped, resembling a normal distribution. This is a fundamental concept in statistics and is widely used in hypothesis testing and confidence interval estimation. Therefore, the given answer, "true," is correct.

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  • 19. 

    Dimensions of quality is performance aesthetics, special features, conformance, reliability, durability, perceived quality, and serviceability

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true. The dimensions of quality include performance aesthetics, special features, conformance, reliability, durability, perceived quality, and serviceability. These dimensions are used to assess the overall quality of a product or service. Each dimension represents a different aspect of quality that is important to customers and can influence their satisfaction and perception of the product or service.

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  • 20. 

    Failure costs

    • Costs of preventing defects from occurring

    • Costs caused by defective parts or products or by faulty services

    • Costs of activities designed to ensure quality or uncover defects

    Correct Answer
    A. Costs caused by defective parts or products or by faulty services
    Explanation
    The correct answer is "costs caused by defective parts or products or by faulty services." This refers to the expenses incurred due to the production of faulty items or the provision of subpar services. These costs include the expenses associated with reworking or scrapping defective products, customer returns or refunds, warranty claims, and potential damage to the company's reputation.

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  • 21. 

    Internal failures discovered during production

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Internal failures discovered during production are defects or issues that are identified within the production process itself. These failures can occur at any stage of production, from the initial manufacturing to the final assembly. Identifying and addressing these failures is crucial to ensure the quality and reliability of the final product. Therefore, it is true that internal failures can be discovered during production.

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  • 22. 

    Random variation is a natural variation in the output of a process, created by countless minor factors.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Random variation refers to the natural fluctuation in the output of a process, which is caused by numerous small factors. These factors can include environmental conditions, human error, or inherent variability in the system itself. Random variation is an inherent characteristic of many processes and can lead to differences in outcomes even when the process is controlled and consistent. Therefore, the statement that random variation is a natural variation in the output of a process, created by countless minor factors, is true.

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  • 23. 

    Type 1 error concluding a process is not in control when it actually is.type 2 error concluding a process is in control when it actually is not

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This statement is true because it accurately describes Type 1 and Type 2 errors in statistical process control. Type 1 error refers to the incorrect conclusion that a process is not in control when it actually is. On the other hand, Type 2 error refers to the incorrect conclusion that a process is in control when it actually is not. These errors can occur when analyzing data and making decisions about process control, and it is important to minimize both types of errors to ensure accurate assessments of process performance.

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  • 24. 

    Lean system is a system that uses minimal amounts of resources to produce a high volume of high quality goods with some variety

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because a lean system aims to eliminate waste and maximize efficiency by using minimal resources while producing a high volume of high-quality goods. This approach focuses on reducing non-value-added activities, streamlining processes, and continuously improving productivity. By doing so, a lean system can increase customer satisfaction, reduce costs, and improve overall performance.

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  • 25. 

    Environmental scanning

    • Characteristics of an organizations goods or services that cause it to be perceived as better than the competition

    • The considering of events and trends that present threats or opportunities for a company

    • Characteristics that customers perceive as minimum standards of accept ability to be considered as a potential for purchase

    Correct Answer
    A. The considering of events and trends that present threats or opportunities for a company
    Explanation
    The correct answer is "the considering of events and trends that present threats or opportunities for a company." Environmental scanning refers to the process of analyzing and monitoring the external environment to identify potential threats and opportunities that may impact a company. This involves keeping track of various factors such as economic, social, technological, and regulatory changes that could affect the organization's performance. By conducting environmental scanning, companies can stay proactive and make informed decisions to adapt and capitalize on emerging trends or mitigate potential risks.

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  • 26. 

    External failures discovered after delivery to the customer

    • True

    • False

    Correct Answer
    A. True
    Explanation
    External failures refer to defects or issues that are discovered by the customer after the product or service has been delivered. These failures can include malfunctions, defects, or any other problems that affect the customer's experience or satisfaction. The statement "true" suggests that external failures are indeed discovered after delivery to the customer, indicating that the organization is not able to identify and resolve these issues before the product reaches the customer. This highlights the importance of quality control measures and continuous improvement processes to minimize external failures and enhance customer satisfaction.

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  • 27. 

    Three basic functions of business organizations are finance, operations, and marketing.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because finance, operations, and marketing are indeed three fundamental functions of business organizations. Finance involves managing the financial resources of the organization, including budgeting, financial planning, and investment decisions. Operations focus on the production and delivery of goods and services, ensuring efficient processes and quality control. Marketing involves identifying and satisfying customer needs through product development, pricing, promotion, and distribution. These three functions are essential for the success and growth of any business organization.

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  • 28. 

    Return on quality is an approach that evaluates the financial return of investments in quality

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because return on quality is indeed an approach that assesses the financial returns of investments made in quality. This approach helps organizations determine the effectiveness and profitability of their quality initiatives by analyzing the financial impact they have on the company. By measuring the return on investment in quality, businesses can make informed decisions about allocating resources and improving their quality management systems.

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  • 29. 

    Quality of conformance is the degree to which goods or services conform to the intent of the designers

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because the quality of conformance refers to how closely goods or services adhere to the specifications and requirements set by the designers. It measures the extent to which the final product matches the intended design and meets the desired standards. A high level of quality of conformance indicates that the product or service has been produced or delivered according to the intended design, while a low level suggests deviations or non-compliance with the design.

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  • 30. 

    Outsourcing is buying goods or services instead of producing or providing them in house

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because outsourcing refers to the practice of obtaining goods or services from an external supplier instead of producing or providing them internally. This allows businesses to focus on their core competencies while benefiting from the expertise and cost-efficiency of external providers. By outsourcing, companies can save on resources, time, and potentially access specialized skills or technologies that may not be available internally.

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  • 31. 

    Prevention costs

    • Costs of preventing defects from occurring

    • Costs caused by defective parts or products or by faulty services

    • Costs of activities designed to ensure quality or uncover defects

    Correct Answer
    A. Costs of preventing defects from occurring
    Explanation
    The correct answer is "costs of preventing defects from occurring." This refers to the expenses incurred in implementing measures and processes to prevent defects in products or services. These costs include activities such as quality planning, training, process control, and quality assurance. By investing in prevention, organizations can minimize the occurrence of defects and improve overall product or service quality.

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  • 32. 

    Inspection is appraisal of goods or services

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Inspection refers to the evaluation or assessment of goods or services to determine their quality, condition, or compliance with certain standards or specifications. It involves a thorough examination to identify any defects, faults, or discrepancies. Therefore, the statement "inspection is appraisal of goods or services" is true, as appraisal involves assessing the value, quality, or worth of something, which aligns with the purpose of inspection.

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  • 33. 

    Time-based approaches to business organizations focus on reducing the time to accomplish certain necessary activities. time reductions can apply to:

    • Product/service design time

    • Processing time

    • Delivery time

    • Response time to complaints

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Time-based approaches to business organizations focus on reducing the time to accomplish certain necessary activities. This includes reducing product/service design time, processing time, delivery time, and response time to complaints. By reducing the time required for these activities, businesses can become more efficient, improve customer satisfaction, and gain a competitive advantage in the market. Therefore, the correct answer is "all of the above."

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  • 34. 

    The need to manage the supply chain:1. the need to improve operations2. increasing levels of outsourcing3. increasing transportation cost4. competitive pressures5. increasing globalization6. increasing importance of e business7. the complexity of supply chains8. the need to manage inventories

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement "the need to manage the supply chain" is true because there are several factors that contribute to this need. These factors include the need to improve operations, increasing levels of outsourcing, increasing transportation costs, competitive pressures, increasing globalization, increasing importance of e-business, the complexity of supply chains, and the need to manage inventories. All of these factors highlight the importance of effectively managing the supply chain to ensure efficient and cost-effective operations.

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  • 35. 

    Order winners

    • Characteristics of an organizations goods or services that cause it to be perceived as better than the competition

    • The considering of events and trends that present threats or opportunities for a company

    • Characteristics that customers perceive as minimum standards of accept ability to be considered as a potential for purchase

    Correct Answer
    A. Characteristics of an organizations goods or services that cause it to be perceived as better than the competition
    Explanation
    Order winners are the characteristics of an organization's goods or services that make them stand out and be perceived as superior to those of the competition. These characteristics give the organization a competitive advantage and can include factors such as quality, innovation, price, delivery speed, and customer service. By excelling in these areas, the organization is able to attract and retain customers, leading to increased market share and profitability.

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  • 36. 

    Lead time is the time between ordering a good or service and receiving it.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because lead time refers to the duration between placing an order for a product or service and actually receiving it. It is an important metric for businesses to consider in order to effectively manage their inventory and meet customer demands. By understanding the lead time, companies can plan their production, procurement, and delivery processes more efficiently.

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  • 37. 

    Deming prize established by the japanese and awarded annually to firms that distinguish themselves with quality management programs

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true. The Deming Prize is indeed established by the Japanese and is awarded annually to firms that excel in quality management programs. The prize is named after W. Edwards Deming, an American statistician, who played a significant role in Japan's post-war economic recovery by promoting quality management principles. The Deming Prize recognizes organizations that demonstrate exceptional performance in quality control, customer satisfaction, and overall business management.

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  • 38. 

    Value added is the difference between the cost of inputs and the value or price of outputs.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because value added is a measure of the additional value created by a company in the production process. It is calculated by subtracting the cost of inputs (such as raw materials and labor) from the value or price of outputs (the final products or services). This measure helps to assess the efficiency and profitability of a business, as a higher value added indicates that the company is generating more value from its inputs.

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  • 39. 

    Strategies

    • Plans for achieving organizational goals

    • The methods and actions taken to accomplish strategies

    Correct Answer
    A. Plans for achieving organizational goals
    Explanation
    The correct answer is "plans for achieving organizational goals" because strategies refer to the overall approach or framework that an organization adopts to achieve its goals. These plans outline the specific actions and methods that will be taken to accomplish those goals. Strategies provide a roadmap for the organization, guiding decision-making and resource allocation. They help align different departments and individuals towards a common objective and ensure that efforts are coordinated and focused. By developing and implementing effective strategies, organizations can increase their chances of success and achieve their desired outcomes.

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  • 40. 

    The fundamental purpose for the existence of any organization is described by its:

    • Policies

    • Procedures

    • Mission

    • Strategy

    Correct Answer
    A. Mission
    Explanation
    The mission of an organization describes its fundamental purpose for existence. It outlines the organization's core values, goals, and overall reason for being. A mission statement serves as a guiding principle that helps to define the organization's direction and informs decision-making processes. It provides clarity and focus, ensuring that all members of the organization are aligned and working towards a common objective. Policies and procedures, on the other hand, are tools used to implement and support the organization's mission, while strategy refers to the specific plans and actions taken to achieve the mission.

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  • 41. 

    A simple product supply chain: suppliers' suppliers = direct suppliers = producer = distributor = final customer

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because it states that the suppliers' suppliers are the direct suppliers, who are also the producers. These producers then distribute the products to the final customers. This implies a simple and straightforward supply chain where the products go directly from the suppliers to the customers, without any intermediaries involved.

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  • 42. 

    Sustainability

    • The ability of an organization to respond quickly to demands or opportunities

    • Using resources in ways that do not harm ecological systems that support human existence

    Correct Answer
    A. Using resources in ways that do not harm ecological systems that support human existence
    Explanation
    The term "sustainability" refers to the practice of using resources in a manner that does not cause harm to the ecological systems that are necessary for human existence. This means that organizations should take steps to ensure that their actions and operations do not deplete natural resources, contribute to pollution, or disrupt the delicate balance of ecosystems. By adopting sustainable practices, organizations can minimize their negative impact on the environment and help to preserve it for future generations.

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  • 43. 

    Production systems with standardized outputs typically:

    • Have relatively high volumes of output

    • Have relatively low unit costs

    • Have relatively high mechanization

    • Use relatively low skilled workers

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Production systems with standardized outputs typically have relatively high volumes of output, as standardization allows for efficient and streamlined processes. This leads to economies of scale and higher production volumes. Additionally, standardized outputs often result in relatively low unit costs, as the processes are optimized and repetitive, reducing the need for customization and increasing efficiency. Furthermore, standardized outputs tend to require high mechanization, as automation and machinery can consistently produce the standardized products. Lastly, standardized outputs can be produced by relatively low skilled workers, as the tasks are repetitive and require less specialized knowledge or training.

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  • 44. 

    Order qualifiers

    • Characteristics of an organizations goods or services that cause it to be perceived as better than the competition

    • The considering of events and trends that present threats or opportunities for a company

    • Characteristics that customers perceive as minimum standards of accept ability to be considered as a potential for purchase

    Correct Answer
    A. Characteristics that customers perceive as minimum standards of accept ability to be considered as a potential for purchase
    Explanation
    The answer suggests that order qualifiers are characteristics that customers perceive as minimum standards of acceptability in order to consider making a purchase. In other words, these are the basic requirements or criteria that a product or service must meet in order to be considered by customers as a potential option for purchase. These characteristics are essential for a company to compete in the market and meet the minimum expectations of customers.

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  • 45. 

    E commerce

    • Use of the internet to transact business

    • Consumer to business transactions

    Correct Answer
    A. Consumer to business transactions
    Explanation
    The correct answer is "consumer to business transactions" because e-commerce refers to the use of the internet to conduct business activities, including buying and selling products or services. In this context, consumer to business transactions specifically refer to situations where individual consumers purchase goods or services from businesses online. This type of transaction is a fundamental aspect of e-commerce, as it allows consumers to directly engage with businesses and make purchases conveniently through digital platforms.

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  • 46. 

    Mission statement

    • States the purpose of an organization

    • The reason for the existence of an organization

    • Provide detail and scope of the mission

    Correct Answer
    A. States the purpose of an organization
    Explanation
    A mission statement is a concise statement that outlines the purpose or reason for the existence of an organization. It serves as a guiding principle that defines the organization's goals, values, and overall direction. It helps to communicate the organization's core purpose to stakeholders, employees, and customers. A mission statement is typically brief and focuses on the fundamental reason for the organization's existence, providing clarity and direction for its activities and decision-making processes.

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  • 47. 

    Appraisal costs

    • Costs of preventing defects from occurring

    • Costs caused by defective parts or products or by faulty services

    • Costs of activities designed to ensure quality or uncover defects

    Correct Answer
    A. Costs of activities designed to ensure quality or uncover defects
    Explanation
    The correct answer refers to appraisal costs, which are the costs associated with activities designed to ensure quality or uncover defects. These activities may include inspections, testing, and quality audits. By investing in these activities, organizations can identify and address any defects or quality issues before they reach the customer, thereby reducing the overall costs caused by defective parts or products.

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  • 48. 

    QUALITY BASED STRATEGY that focuses on reduction of time needed to accomplish tasks

    • True

    • False

    Correct Answer
    A. False
    Explanation
    TIME BASED STRATEGY that focuses on reduction of time needed to accomplish tasks

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  • 49. 

    Warranty service, processing of complaints, and costs of litigation are examples of:

    • Internal failure costs

    • External failure costs

    • Appraisal costs

    • Prevention costs

    • Replacement costs

    Correct Answer
    A. External failure costs
    Explanation
    External failure costs refer to the expenses incurred by a company due to product or service failures that occur after they have reached the customer. Warranty service, processing of complaints, and costs of litigation are all examples of external failure costs. These costs arise when customers experience issues with the product or service, leading to warranty claims, customer complaints, and potential legal action. These costs can be significant and can damage a company's reputation and customer trust. Therefore, it is crucial for businesses to minimize external failure costs by focusing on prevention and quality control measures.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 05, 2009
    Quiz Created by
    Kilikika

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