EXAMINATION 1, Version E
Use a Scantron Form No. 886-E to record your choice of the best answer to each of the
following questions. You have the full period to answer the questions.
The following questions are worth three (3) points each.
1. An example of an operation that does not add value is ____________________________.
a) removing iron ore from the ground and shipping it to a steel mill
b) filling the underground gasoline tanks at a service station
c) making a wedding cake
d) moving components to a warehouse for storage until the factory needs them
e) moving luggage from a cab to the airport ticket counter
2. Which of the following is not primarily performed by the operation management function?
a) job design and work measurement
b) advertising strategy
c) location analysis
d) quality management
e) facility layout
3. Increasing the level of responsibility of a job by adding planning and coordination tasks is
___________.
a) job enlargement
b) job rotation
c) job involvement
d) job enrichment
e) job backward integration
4. Operational efficiency is:
a) driving the business strategy
b) ensuring the right tasks are performed
c) decreasing the firm’s input requirements
d) increasing the firm’s output
e) performing operations tasks well
5. What are the three primary types of technology?
a) product technology, process technology, and information technology
b) product technology, process technology, and environmental technology
c) product technology, process technology, and safety technology
d) information technology, environmental technology, and safety technology
e) environmental technology, information technology, and process technology
6. Studying the practices of companies considered “best in class” and comparing the performance of
our company against their performance is
a) competition
b) copying
c) frustration
d) benchmarking
e) notching
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7. Which product and service strategy is used to produce standard components that can be
combined to customer specifications?
a) assemble-to-deliver
b) make-to-stock
c) assemble-to-order
d) make-to-order
e) make-to-package
8. Which term refers to inaccurate or distorted demand information created in the supply chain?
a) Battle axe effect
b) Cobra effect
c) Bullwhip effect
d) Lasso effect
e) Whirlpool effect
9. Which activity appears to be most frequently outsourced by large companies?
a) Purchasing
b) Marketing
c) Finance
d) Accounting
e) Manufacturing
10. One common definition of quality is
, which focuses on measuring how well
the product or service meets targets and tolerances determined by its designers.
a) Fitness for use
b) Value for price paid
c) Technical perception
d) Judgmental evaluation
e) Conformance to specifications
11. Giving workers responsibility for seeking out quality problems and correcting them is
a) Continuous improvement
b) Passing the buck
c) Brainstorming
d) Employee empowerment
e) Employee involvement
12. Studying business practices of companies considered “best in class” is called
a) Pairwise comparison
b) Benchmarking
c) Competition
d) Dreamscaping
e) Discouraging
13. A process chart is a
a) graph that shows how the population was evaluated
b) graph of the population failures
c) graph that shows whether a sample of data falls within assignable causes
d) graph that show whether a sample falls within the common or normal range
e) table showing final inspection results
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14. What is the first step that should be taken if an observation falls below the lower control
limit on a control chart?
a) Recalibrate the machine
b) Perform a new process capability study
c) Try a larger standard deviation value
d) Search for assignable causes
e) Nothing—a low value is a “good” thing
15. What are the two types of control charts for attributes?
a) p and c
b) x-bar and p
c) x-bar and R
d) R and c
e ) p and R
16. The central belief of the JIT philosophy is
a) Quality must be emphasized
b) Use of Kanban
c) Elimination of waste
d) Minimize inventory
e) Save money
17. JIT is a
system.
a) Pull
b) Push
c) Lead time
d) Preventive maintenance
e) Closed
18. With JIT a company’s relationship with its suppliers includes
a) Competitive bidding
b) Being in partnership with them
c) Buying parts from the cheapest supplier
d) Short-term relationships
e) Having as many suppliers as possible
19. Operations management is the business function that plans, coordinates, and controls the
resources needed to produce a company’s products and services.
a) True
b) False
20. Firms that focus on quality as their primary competitive priority usually implement either product
design quality or process quality, but not both.
a) True
b) False
21. To remain competitive, companies must be innovative and bring out new products regularly.
a) True
b) False
22. The time between order placement and the receipt of goods is called lead time.
a) True
b) False
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23. ISO certification has become a requirement for conducting business in many industries.
a) True
b) False
24. A process that is in control has no variation.
a) True
b) False
The following problems are worth ten (10) points each.
1. The school’s cafeteria has three service lines (pizza, salads, and sandwiches). The pizza line
has one server and serves 90 pizzas per hour. The salad line has two servers and they handle
140 customers in 70 minutes. The sandwich line has three servers and they supply 360
sandwiches in 90 minutes. Which service line has the highest hourly productivity?
Pizza: P = O/I = 90/1 = 90 pizzas/hour
Salad: P = O/I = 140/(70/60)*2 = 140/2.33 = 60 salads/hour
Sandwich: P = O/I = 360/(90/60)*3 = 360/4.5 = 80 sandwiches/hour
Pizza line has the highest hourly productivity
2. Bazooka Company is thinking about introducing a new type of color printer. If they introduce it,
their factory will incur additional fixed costs of $37,000,000 per year. The variable costs will be $261
per printer.
a) If Bazooka sells the new printer for $819, how many must they sell to break even?
QBE = FC/SP-VC = $37,000,000/$819-$261 = $37,000,000/$558 = 66,308 Printers
b) If Bazooka sells 70,000 of the new printer at the $819 price, what will the contribution to profit
be? Profit = Revenue – Cost = 70,000*$819-[$37,000,000+(70,000*$261)] =
$57,330,000-[$37,000,000+$18,270,000] = $57,330,000-$55,270,000 = $2.060,000
3. Logo, Inc. can transport its own goods for a $140,000 annual cost and $25 per unit. A logistics
supplier offers a contract for a $100,000 annual cost at $30 per unit. What is the indifference point?
Qind = FCmake-FCbuy/VCbuy-VCmake = $140,000-$100,000/$30-$25 =
$40,000/$5 = 8,000 units
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