PRE-TEST I. Multiple Choice:
Direction: Write the letter of the best and correct answer.
1. At Hard Rock Café, tasks that reflect operations or operations management include:
a. designing efficient layouts.
b. providing meals.
c. receiving ingredients.
d. preparing effective employee schedules.
e. all of the above.
2. An operations task performed at Hard Rock Café is:
a. borrowing funds to build a new restaurant.
b. advertising changes in the restaurant menu.
c. calculating restaurant profit and loss.
d. preparing employee schedules.
e. all of the above.
3. Operations management is applicable:
a. mostly to the service sector.
b. to services exclusively.
c. mostly to the manufacturing sector.
d. to all firms, whether manufacturing or service.
e. to the manufacturing sector exclusively.
4. Which of the following is NOT one of the phases of project management?
a. planning
b. scheduling
c. controlling
d. budgeting
e. All of the above are project management phases.
5. Which of the following statements regarding Gantt charts is true?
a. Gantt charts give a timeline and precedence relationships for each activity of a project.
b. Gantt charts use the four standard spines of Methods, Materials, Manpower, and
Machinery.
c. Gantt charts are visual devices that show the duration of activities in a project.
d. Gantt charts are expensive.
e. All of the above are true.
6. When should product strategy focus on forecasting capacity requirements?
a. at the introduction stage of the product life cycle
b. at the growth stage of the product life cycle
c. at the maturity stage of the product life cycle
d. at the decline stage of the product life cycle
e. at the saturation stage of the product life cycle
7. The analysis tool that lists products in descending order of their individual dollar contribution
to the firm is:
a. decision tree analysis.
b. Pareto analysis.
c. breakeven analysis.
d. product-by-value analysis.
e. product life cycle analysis.
8. Companies with the highest levels of quality are how many times more productive than their
competitors with the lowest quality levels?
a. 2
b. 3
c. 4
d. 5
e. None of the above because quality has no impact on productivity (units/labor hr.).
9. Quality can improve profitability by reducing costs. Which of the following is not an aspect of
reduced costs by quality improvements?
a. flexible pricing
b. increased productivity
c. lower rework and scrap costs
d. lower warranty costs
e. All of the above are aspects of reduced costs by quality improvements.
10. "The employee cannot produce products that on average exceed the quality of what the
process is capable of producing" expresses a basic philosophy in the writings of:
a. Vilfredo Pareto.
b. Armand Feigenbaum.
c. Joseph M. Juran.
d. W. Edwards Deming.
e. Philip B. Crosby.
11. "Quality Is Free," meaning that the costs of poor quality have been understated, is the work of:
a. W. Edwards Deming.
b. Joseph M. Juran.
c. Philip B. Crosby.
d. Crosby, Stills, and Nash.
e. Armand Feigenbaum.
12. To become ISO 9000 certified, organizations must:
a. document quality procedures.
b. have an onsite assessment.
c. have an ongoing series of audits of their products or service.
d. all of the above
e. none of the above
13. A job shop is an example of a(n):
a. repetitive process.
b. continuous process.
c. line process.
d. intermittent process.
e. specialized process.
14. Industrial location analysis typically attempts to:
a. minimizes costs.
b. maximizes sales.
c. focus more on human resources.
d. avoids countries with strict environmental regulations.
e. ignores exchange rates and currency risks.
15. A location decision for an appliance manufacturer would tend to have what type of focus?
a. cost focus
b. focus on finding very highly skilled technicians
c. revenue focus
d. environmental focus
e. education focus
16. A location decision for a traditional department store (e.g., Ayala) would tend to have what
type of focus?
a. cost focus
b. labor focus
c. revenue focus
d. environmental focus
e. education focus
17. Location decisions are often being based on which of the following?
a. ports and rivers
b. rail hubs
c. interstate highways
d. airports
e. all of the above
18. Among the following choices, an operations manager might best evaluate political risk of a
country by looking at which type of country ranking?
a. based on competitiveness
b. based on cost of doing business
c. based on corruption
d. based on magnitude of government social programs
e. based on average duration between presidential/prime minister elections
19. When making a location decision at the country level, which of these would be considered?
a. corporate desires
b. land/construction costs
c. air, rail, highway, waterway systems
d. zoning restrictions
e. location of markets
20. Tangible costs include which of the following?
a. climatic conditions
b. availability of public transportation
c. taxes
d. quality and attitude of prospective employees
e. zoning regulations
II. TRUE OF FALSE
Direction: Write the word TRUE if the statement is correct and FALSE if otherwise.
1. Some of the operations-related activities of Hard Rock Café include designing meals and
analyzing them for ingredient cost and labor requirements. TRUE
2. Work breakdown structure is a useful tool in project management because it addresses the
timing of individual work elements. FALSE
3. Ethical issues that can arise in projects include gifts from contractors, pressure to mask delays
with false status reports, and pressure to compromise project quality to meet bonuses or
avoid penalties related to schedules. TRUE
4. Gantt charts give a timeline for each of a project's activities, but they do not adequately
illustrate the interrelationships between the activities and the resources. TRUE
5. Ill-defined projects are typified by software development and new technology. FALSE
6. Regal Marine's attempts to keep in touch with customers and respond to the marketplace are
made impossible because consumer tastes change and maritime engineering improves. FALSE
7. Relatively few new product ideas, perhaps only 1 in 250, become successfully marketed
products. TRUE
8. An improvement in quality must necessarily increase costs. TRUE
9. Improved quality can increase profitability via allowing flexible pricing. TRUE
10. The definition of quality adopted by The American Society for Quality is a customer-oriented
(i.e., user based) definition. FALSE
11. Conforming to standards is the focus of the product-based definition of quality. FALSE
12. Internal failure costs are associated with scrap, rework, and downtime. TRUE
13. Philip Crosby is credited with both of these quality catch-phrases: "quality is free" and "zero
defects." "Making it right the first time" is the focus of the user-based definition of quality. TRUE
14. A firm's process strategy is its approach to transforming resources into goods and services.
TRUE
15. Intermittent processes are organized around processes. TRUE
16. In process-focused facilities, utilization of facilities is low. TRUE
17. The typical full-service restaurant uses a product-focused process. FALSE
18. The assembly line is a classic example of a repetitive process. TRUE
19. The tool that calculates which process has the lowest cost at any specified production volume
is a crossover chart. TRUE
20. The term focused processes refer to the quest for increased efficiency, whether in goods or
services, that results from specialization. TRUE
21. Professional services typically require low levels of labor intensity. FALSE
22. Lists have been developed that rank countries on issues such as "competitiveness" and
"corruption." FALSE
23. The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit. TRUE
24. For a location decision, labor productivity may be important in isolation, but low wage rates
are a more important criterion. FALSE
25. Unfavorable exchange rates can offset other savings in a location decision. TRUE
26. An example of an intangible cost, as it relates to location decisions, is the quality of education.
TRUE
27. In location decisions, intangible costs are easier to measure than tangible costs. FALSE
28. Location decisions are based on many things, including costs, revenues, incentives, attitudes,
and intangibles, but not on ethical considerations. FLASE
29. The graphic approach to locational cost-volume analysis displays the range of volume over
which each location is preferable. TRUE
30. The factor-rating method can consider both tangible and intangible costs. TRUE
31. The center-of-gravity method finds the location of a centralized facility, such as a distribution
center that will maximize the organization's revenue. FALSE
32. The transportation model calculates an optimal shipping system between a central facility and
several outlying customers. FALSE
33. Service firms choose locations based, in part, on the revenue potential of a site. FALSE
34. Service firms choose locations based, in part, on the revenue potential of a site. FALSE
35. The location decisions of goods-producing firms will generally pay more attention to parking,
access, and traffic counts than will service location decisions. FALSE
MODULE 1 Introduction to Operations Management
Production is the creation of goods and services. How can you distinguish goods from services? In
your everyday living, do you think you can set aside yourself in utilizing these two production
activities? For what reasons that a consumers and manufacturers can meet their objectives for a
mutual benefit.
Personally, goods are something that we need that we can touch, feel or seen. It is a
physical matter that we need everyday like food, clothing, etc. Services are something that we also
need but we rely it unto someone’s skills or talent. It is more of an activity that someone have that is
needed in that particular event like, repair and maintenance service, legal service, medical and
many more. I think we cannot set aside the two production activities because it is vital to us as a
person. We cannot live without having goods and services on our side because it supports us a
being and the system too. I think the reasons that a consumer and manufacturer can meet their
objectives for a mutual benefit because they need each other. The consumer need the manufacturer
to produce goods and services and the manufacturer needs the consumer to buy their goods and
avail their services. I think the bond between consumer and manufacturer keeps not just the
economy alive but ourselves as well.
Let’s Try This
Try to answer the questions below.
1. Why should one study operations management?
When you think how fascinating the market world is, you should first know the operation that
occur in every business. I think operation management is very important because we are engaged
mostly in businesses, every organization and firm mostly used operations. When you want to know
how products are made it can be found in operation. And I think the reason why we should study in
operation management it is because we engaged it in our everyday life. From waking up, making
breakfast, cleaning the house, going to work, etc. we are operating ourselves into something that’s
why in broader perspective it is enough to study operations management.
2. Because J’s Restobar is themed restaurants, operations managers focus their layout design
efforts on attractiveness while paying little attention to efficiency. Do you agree? Why or why
not?
Efficiency means achieving maximum productivity with minimum wasted effort or expense.
In this case, I think it should still be balanced. The primary course of the business is restaurant and
the themed is just a strategy to get more customer. They should also focused on their recipe or
services because I think what a customer love is a good service and a delicious meal. J’s restobar
should put the those in one package because if you have a nice themed setting plus a nice and warm
service and delicious food, I’m sure it will be a blast and people will loved to come back at it again.
3. An example of a "hidden" production function is the transfer of funds between accounts at a
bank. Is it TRUE or FALSE?
I think it is TRUE. Because it involves operations between transferring funds into the
account to the bank or vice-versa. There will no transference of funds without production function
because it is obviously the activity that involves.
Let’s Think About This
You might be curious why this type of questions has been asked? Is it relevant for
the topic? Despite the ambiguity of the queries, can you figure it out an
establishment in your local community that goods and services been catered every
day? If this is so, how will you measure its efficiency and effectiveness as an output of their
operations?
I lived in the municipality of San Francisco and the common or known establishment here is
the JDR business group. It consists of transportation services because they own the St. Francis
busses operating in Southern Leyte, they also have pharmacy, gasoline stations, water refilling,
hardware, etc. all pf those business involves operations and we rely it also in our lives. Well, when
we talk about efficiency and effectivity I’ll rate it as 7/10. As a person residing here most of its
business are not customer-friendly. You spent more of the time waiting in their hardware,
unfriendly pharmacist, gasoline station without a roof, and even unfair treatment of the passengers
in their busses. But as what life do, we need their goods and services and most importantly they
also need us. I hope that maybe someday they will engage more in customer’s want. This is not
being a picky or unpleasant person because of this complaint because this is not a complain but I
think it is much better if we give fair treatment and enjoy the things we deserve, because we all are.
Let’s See How Far You Understand the Lesson (Post-Test)
1. All organizations, including service firms such as banks and hospitals, have a production
function. Is it TRUE or FALSE?
TRUE
2. Operations management is the set of activities that creates value in the form of goods and
services by transforming inputs into outputs. Is it TRUE or FALSE?
TRUE
3. ________ is the set of activities that creates value in the form of goods and services by
transforming inputs into outputs.
Operations Management
4. Identify three or more operations-related tasks carried out by J’s Restobar business.
Providing custom meals; designing, testing, and costing meals; acquiring, receiving, and
storing supplies; recruiting and training employees; preparing employee schedules; designing
efficient restaurant layouts.
5. Define operations management. Will your definition accommodate both manufacturing and
service operations?
Operations management is the practice of effectively managing a company's resources and
techniques for producing goods and services for sale. This management style focuses on how a
corporation uses its inputs (such as human resources, raw materials, and information systems) to
produce its outputs (the product or service that the company sells). Overseeing plans, tactics, and
processes for managing the materials, technologies, people, and products that keep a corporation
functioning is also part of operations.
6. What are the three basic functions of a firm? Support your answer.
The three basic functions of business organizations are operations, marketing, and
finance.
7. What are the five reasons productivity is difficult to improve in the service sector? Justify your
answer.





Service industries need team development.
Service industries are labor-intensive.
Measuring and monitoring service quality are difficult.
Most service establishments are of small size.
Using machine technology and other labor saving devices is difficult.
LESSON 2. PROJECT MANAGEMENT
Do you have any idea about Project Management or how important project management in opening
a certain access to a particular project? Will you agree that projects are a common part of our
everyday life if yes, then how can you compare projects done without any planning, scheduling and
controlling over a project that have management team to develop a supply chain from the port to its
project site?
Well, project management is new to me. I think this my first encounter of this word. Project
management is the application of processes, methods, skills, knowledge and experience to achieve
specific project objectives according to the project acceptance criteria within agreed parameters. I
think by the definition itself it is very important especially in project or the things you want to
achieved. Yes, I agree that projects are common part of our everyday life. I think project is vain or
seems meaningless if there is no planning, scheduling and controlling the course. It is not project
afterall without those activities. Because project is something that is contemplated, devised, or planned.
Without one of those fundamentals there will be no achievement of goal and it is a chaos throughout the
process.
Let’s Try This
Try to answer the questions below.
1. A project organization works best for an organization when the project resides in only one of
its functional areas. Is it TRUE or FALSE?
-FALSE
2. One responsibility of a project manager is to make sure that the project meets its quality goals.
Is it TRUE or FALSE?
-TRUE
3. Project managers have their own code of ethics, established by the Project Management
Institute. Is it TRUE or FALSE?
-TRUE
4. A project organization:
a. is effective for companies with multiple large projects.
b. is appropriate only in construction firms.
c. Often fails when the project cuts across organizational lines.
d. is most helpful for ongoing projects with no termination date.
e. is most helpful when the work contains simple and unrelated tasks.
5. A code of ethics especially for project managers:
a. Has been established by the Project Management Institute.
b. Has been formulated by the Federal government.
c. Has been formulated by the World Trade Organization.
d. is inappropriate, since everyone should use the same guidance on ethical issues.
e. Does not exist at this time.
6. What is a project organization?
The way a team coordinates, communicates, and manages a project throughout its life cycle
is referred to as project organization. Each team member is motivated to engage, and different
talents and skills are valued.
7. Projects such as road building and plane building are:
a. ill-defined
b. well-defined
c. agile
d. not defined
e. none of the above
8. The shortest of all paths through the network is the critical path. Is it TRUE or FALSE?
-FALSE
9. The ________ is the computed longest time path(s) through a network.
CRITICAL PATH
10. Every network has at least one critical path. Is it TRUE or FALSE?
-FALSE
Let’s Think About This
As you go over those questions asked, do you think your answer was right? If so, would you
believe that managers find projects just a part of their job? As part of their job, why the observance
of the code of ethics is relevance among managers? What limitations that a manager should have?
How will you distinguish quality or sub-standard quality projects of a manager?
As I assessed myself I think my answers are right. I believe that projects are not just parts of
manager’s job but it is their job. It so very confusing to say that they didn’t find projects as their job
because as a manger you are the one who will manage your team in fulfilling a project. I think it is not
just in managers, the code of ethics is important to every professional. Without following the code
ethics means you are not ready to take your role. A professional should uphold moral values and
virtues. I think in managers they should set examples to his team and show a right balanced of
discipline and motivation. In this way the team will grow healthy and it is very important in the
workplace. Quality projects are that exceed expectations, save time and energy and the goods are in
well-met specifications. Sun-standard quality projects are those objects or goods that do not meet or
surpass established standards and samples.
I. MULTIPLE CHOICE
Direction: Choose the letter of the best and correct answer.
1. The phases of project management are:
a. planning, scheduling, and controlling.
b. planning, programming, and budgeting.
c. planning, organizing, staffing, leading, and controlling.
d. different for manufacturing projects than for service projects.
e. GANTT, CPM, and PERT.
2. Which of the following statements regarding critical paths is true?
a. The shortest of all paths through the network is the critical path.
b. Some activities on the critical path may have slack.
c. Every network has only one critical path.
d. On a specific project, there can be multiple critical paths, all with exactly the same
duration.
e. The duration of the critical path is the average duration of all paths in the project
network.
3. Which of the following statements regarding CPM is true?
a. The critical path is the shortest of all paths through the network.
b. The critical path is that set of activities that has positive slack.
c. Some networks have no critical path.
d. All activities on the critical path have their LS equal to the maximum EF of all
immediate predecessors.
e. All activities on the critical path have their ES equal to their LF.
4. Which of the following statements regarding CPM networks is true?
a. There can be multiple critical paths on the same project, all with different durations.
b. The early finish of an activity is the latest early start of all preceding activities.
c. The late start of an activity is its late finish plus its duration.
d. If a specific project has multiple critical paths, all of them will have the same
duration.
e. None of the above are true.
5. Which of the following statements concerning CPM activities is false?
a. The early finish of an activity is the early start of that activity plus its duration.
b. The late finish is the earliest of the late start times of all successor activities.
c. The late start of an activity is its late finish less its duration.
d. The late finish of an activity is the earliest late start of all preceding activities.
e. The early start of an activity is the latest early finish of all preceding activities.
6. The project organization works best when which of the following conditions are satisfied?
a. Work tasks can be defined with a specific goal and deadline.
b. The job is typical and familiar to the existing organization.
c. The work contains interrelated tasks requiring specialized skills.
d. The project is temporary but unimportant to long-term organizational success.
e. The project cuts across organizational lines.
a) a, b, c, d, e
b) None of the above conditions need to be satisfied.
c) a, c, e
d) a, b, c, e
e) a, c, d, e
7. Ethical issues that may arise in projects large and small include:
a. gifts from contractors.
b. exaggerated expense reports.
c. compromised quality standards to meet bonuses or avoid penalties related to
schedules.
d. pressure to mask delays with false status reports.
e. all of the above.
8. A project organization that becomes permanent is often referred to as a:
a. fixed project organization.
b. matrix organization.
c. normal organization.
d. standard organization.
e. permanent project organization.
9. The control of projects involves close monitoring of which of the following?
a. resources
b. costs
c. quality
d. budgets
e. all of the above
10. The waterfall approach is used most often for:
a. well-defined projects
b. projects whose changes tend to be minor
c. projects with step-by-step progress
d. controlling projects
e. all of the above
11. The main difference between PERT and CPM is that:
a. PERT is more accurate than CPM.
b. PERT assumes that activity durations are known.
c. PERT ignores activity costs.
d. CPM assumes activity durations can vary.
e. PERT employs three time estimates for each activity.
12. A simple CPM network has five activities, A, B, C, D, and E. A is an immediate predecessor
of C and of D. B is also an immediate predecessor of C and of D. C and D are both immediate
predecessors of E. Which of the following statements is true?
a. There are two paths in this network.
b. There are four paths in this network.
c. There are five paths in this network.
d. There are 25 paths in this network.
e. There are six paths in this network
II. IDENTIFICATION
Direction: Identify and write the correct answer.
1. A project organization is an organization formed to ensure that programs (projects)
receive the proper management and attention
2. The Project Management Institute has established a code of ethics especially for project
managers.
3. Identify the responsibilities of project managers.
The responsibilities of project managers are:
 Plan and develop the project idea
 Create and lead your team
 Monitor the project progress and set deadlines
 Solve issues that arise
 Manage money
 Ensure stakeholder satisfaction
 Project manager skills
4. What is a project organization?
A project organization is an organization formed to ensure that programs (projects)
receive the proper management and attention.
5. The Critical Path Method is a project management technique using only one-time factor
per activity that enables managers to schedule, monitor, and control large and complex
projects.
6. ____________________________________________________________________________________________________ .
7. The network analysis method that allows activity times to vary is Program Evaluation
and Review Technique.
8. Identify, in order, the six steps basic to both PERT and CPM.
1. Define the project and prepare the WBS.
2. Develop the relationships among the activities.
3. Draw the network connecting all of the activities.
4. Assign the time and/or cost estimates to each activity.
5. Compute the critical path–the longest time path through the network.
6. Use the network to help plan, schedule, monitor, and control the project.
9. What is the basic difference between PERT and CPM?
PERT is a project management technique, whereby planning, scheduling, organising,
coordinating and controlling uncertain activities are done. CPM is a statistical technique of project
management in which planning, scheduling, organising, coordination and control of well-defined
activities take place.
10. Identify each of the purposes of project scheduling.
 Is to organize and complete your projects in a timely, quality and financially
responsible manner.
 To keep projects on track
 set realistic time frames
 assign resources appropriately
 manage quality to decrease product errors
11. Describe the differences between a Gantt chart and a PERT/CPM network.

PERT/CPM NETWORK
GANTT CHART
The project manager and team define all
Tasks appear in a linear fashion on a bar
activities and tasks necessary to complete a chart.
project, estimate the time to complete each
task, and develop a preliminary time
frame.

In a network diagram, each task is in a
separate box that shows its dependencies
in relation to other tasks.
The layout makes it easy to see the expected
duration of each task and the entire project.

A PERT chart doesn’t have an x- or a y-axis,
but each box shows the start and
completion times for its task.
Gantt charts are also useful for
coordinating resources and scheduling
team members.

When you look at a Gantt chart, the x-axis
shows the timeline, and the y-axis displays
the tasks.
12. Slack time is the amount of time an individual activity in a network can be delayed
without delaying the entire project.
13. What are the three phases of a project? Describe each in a sentence or two.
The three phases are planning, scheduling, and controlling. Goal-setting, project
definition, and team organization are all part of the planning process. Scheduling connects
people, money, and supplies to specific activities while also connecting activities to one
another. Controlling is the process of keeping track of a company's resources, costs, quality,
and budgets. It also revises or alters plans and reallocates resources to meet deadlines and
budget constraints.
III. TRUE OR FALSE
Direction: Write TRUE if the statement is correct and FALSE if otherwise.
1. PERT, but not CPM, has the ability to consider the precedence relationships in a project.
FALSE
2. The fundamental difference between PERT and CPM is that PERT uses the beta
distribution for crashing projects while CPM uses cost estimates. FALSE
3. One phase of a large project is scheduling. TRUE
4. Slack is the amount of time an activity can be delayed without delaying the entire project.
TRUE
5. The critical path can be determined by use of either the "forward pass" or the "backward
pass”. FALSE
Lesson 3. FORECASTING
Forecasts are a critical part of the operations manager’s function. Why operations manager
demands forecasting as his drive for the firm? What is the variety of qualitative and
quantitative forecasting techniques? How will you measure the effectiveness of forecasting
method used? Do you think this is true to all conditions? However, forecasting can often be
a very challenging, but rewarding, part of managing.
The primary goal of forecasting is to make accurate predictions. Every day, operations
managers make decisions with uncertain outcomes. No one can predict future sales,
breakages, new equipment requirements, or investment returns since no one can see the
future. Qualitative forecasting is based on information that can't be measured. It's especially
important when a company's just starting out, since there's a lack of past (historical) data.
Quantitative forecasting relies on historical data that can be measured and manipulated.
Averaging over the test sets yields the forecast accuracy. Because the "origin" on which the
forecast is based moves forward in time, this technique is frequently referred to as
"assessment on a rolling forecasting origin."
Let’s Try This
Try to answer the questions below.
TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if otherwise.
1. Forecasts may be influenced by a product's position in its life cycle. TRUE
2. Demand forecasts serve as inputs to financial, marketing, and personnel planning. TRUE
3. Forecasts of individual products tend to be more accurate than forecasts of product
families. FALSE
4. Most forecasting techniques assume that there is some underlying stability in the system.
TRUE
5. The sales force composite forecasting method relies on salespersons' estimates of
expected sales. TRUE
6. A time-series model uses a series of past data points to make the forecast. TRUE
7. A naïve forecast for September sales of a product would be equal to the forecast for August.
FALSE
8. Cycles and random variations are both components of time series. TRUE
9. A naïve forecast for September sales of a product would be equal to the sales in August.
TRUE
One advantage of exponential smoothing is the limited amount of record keeping involved.
TRUE
10. The larger the number of periods in the simple moving average forecasting method, the
greater the method's responsiveness to changes in demand. FALSE
11. Mean squared error and exponential smoothing are two measures of the overall error of
a forecasting model. FALSE
12. In trend projection, the trend component is the slope of the regression equation. TRUE
13. In trend projection, a negative regression slope is mathematically impossible. FALSE
14. Seasonal indices adjust raw data for patterns that repeat at regular time intervals. TRUE
15. A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y
per period. TRUE
16. Demand for individual products can be driven by product life cycles. TRUE
Let’s Think About This
I’m sure you are not certain of your answers whether true or false and finds difficulty as well.
However, would you believe that historical data is the only data needed in forecasting? Or, it doesn’t
matter either data is available or not? How much budget will you spare for this purpose? Is your
product or service a new offering or for expansion? On what particular product or service you want
to study forecasting? How important is your forecast? “You can hardly ever make things worse”,
Armstrong says. “You can only improve things. You can always reduce risk.”
Business forecasting by its very nature uses historical data to forecast future performance
of the company. Historical data includes your company's financial statements, client invoices and
any information you believe has relative predictive value to the future success of your company. If
I have given a chance to forecast a product it would be the sale of my resto. Since I was a child, I
dreamed to have a nice restaurant with a successful condition. Businesses benefit from forecasting
because it allows them to make informed business decisions and establish data-driven strategies.
Financial and operational decisions are based on current market conditions as well as forecasts for
the future.
Let’s See How Far You Understand the Lesson (Post-Test)
I. Multiple Choice: Write the letter of the best and correct answer
1. As compared to long-range forecasts, short-range forecasts:
a. is less accurate.
b. deal with less comprehensive issues supporting management decisions.
c. employs similar methodologies.
d. all of the above
e. none of the above
2. One use of short-range forecasts is to determine:
a. planning for new products.
b. capital expenditures.
c. research and development plans.
d. facility location.
e. job assignments.
3. Forecasts are usually classified by time horizon into which three categories?
a. short-range, medium-range, and long-range
b. finance/accounting, marketing, and operations
c. strategic, tactical, and operational
d. exponential smoothing, regression, and time series
e. departmental, organizational, and industrial
4. A forecast with a time horizon of about 3 months to 3 years is typically called a:
a. along-range forecast.
b. medium-range forecast.
c. short-range forecast.
d. weather forecast.
e. strategic forecast.
5. Forecasts used for new product planning, capital expenditures, facility location or
expansion, and R&D typically utilize a:
a. short-range time horizon.
b. medium-range time horizon.
c. long-range time horizon.
d. naive method, because there is no data history.
e. trend extrapolation
6. The three major types of forecasts used by organizations in planning future operations
are:
a. strategic, tactical, and operational.
b. economic, technological, and demand.
c. exponential smoothing, Delphi, and regression.
d. causal, time-series, and seasonal.
e. departmental, organizational, and territorial.
7. Which of the following most requires long-range forecasting (as opposed to short-range
or medium-range forecasting) for its planning purposes?
a. job scheduling
b. production levels
c. cash budgeting
d. capital expenditures
e. purchasing
8. Short-range forecasts tends to ________ longer-range forecasts.
a. be less accurate than
b. be more accurate than
c. has about the same level of accuracy as
d. employs the same methodologies as
e. deal with more comprehensive issues than
9. What forecasting systems combine the intelligence of multiple supply chain partners?
a. FORE
b. MULTISUP
c. CPFR
d. SUPPLY
e. MSCP
10. Which of the following is NOT a step in the forecasting process?
a. Determine the use of the forecast.
b. Eliminate any assumptions.
c. Determine the time horizon of the forecast.
d. Select the forecasting model.
e. Validate and implement the results.
11. The two general approaches to forecasting are:
a. qualitative and quantitative.
b. mathematical and statistical.
c. judgmental and qualitative.
d. historical and associative.
e. judgmental and associative.
12. Which of the following uses three types of participants: decision makers, staff personnel,
and respondents?
a. jury of executive opinion
b. sales force composite
c. Delphi method
d. associative models
e. time series
13. The forecasting technique that pools the opinions of a group of experts or managers is
known as:
a. the expert judgment model.
b. multiple regression.
c. jury of executive opinion.
d. market survey.
e. management coefficients.
14. Which of the following is not a type of qualitative forecasting?
a. jury of executive opinion
b. sales force composite
c. market survey
d. Delphi method
e. moving average
15. Which of the following techniques uses variables such as price and promotional
expenditures, which are related to product demand, to predict demand?
a. associative models
b. exponential smoothing
c. weighted moving average
d. moving average
e. trend projection
16. Which of the following statements about time-series forecasting is true?
a. It is always based on the assumption that future demand will be the same as past
demand.
b. It makes extensive use of the data collected in the qualitative approach.
c. It is based on the assumption that the analysis of past demand helps predict future
demand.
d. Because it accounts for trends, cycles, and seasonal patterns, it is always more
powerful than associative forecasting.
e. All of the above are true.
17. Time-series data may exhibit which of the following behaviors?
a. trend
b. random variations
c. seasonality
d. cycles
e. They may exhibit all of the above.
18. Gradual upward or downward movement of data over time is called:
a. seasonality.
b. a cycle.
c. a trend.
d. exponential variation.
e. random variation.
19. Which of the following is not present in a time series?
a. seasonality
b. operational variations
c. trend
d. cycles
e. random variations
20. The fundamental difference between cycles and seasonality is the:
a. duration of the repeating patterns.
b. magnitude of the variation.
c. ability to attribute the pattern to a cause.
d. all of the above
e. none of the above
21. In time series, which of the following cannot be predicted?
a. large increases in demand
b. cycles
c. seasonal fluctuations
d. random variations
e. large decreases in demand
22. Which time-series model below assumes that demand in the next period will be equal to
the most recent period's demand?
a. naïve approach
b. moving average approach
c. weighted moving average approach
d. exponential smoothing approach
e. trend projection
23. A six-month moving average forecast is generally better than a three-month moving
average forecast if demand:
a. is rather stable.
b. has been changing due to recent promotional efforts.
c. follows a downward trend.
d. exceeds one million units per year.
e. follows an upward trend.
24. Which time-series model uses BOTH past forecasts and past demand data to generate a
new forecast?
a. naïve
b. moving average
c. weighted moving average
d. exponential smoothing
e. trend projection
25. Which of the following is NOT a characteristic of exponential smoothing?
a. smoothes random variations in the data
b. uses an easily altered weighting scheme
c. weights each historical value equally
d. has minimal data storage requirements
e. uses the previous period's forecast
II. Identification
1. Technological forecasts are concerned with rates of technological progress, which can
result in the birth of exciting new products, requiring new plants and equipment.
2. What are the three realities of forecasting that companies face?
First, forecasts are seldom perfect. Second, most forecasting techniques assume that there
is some underlying stability in the system. Finally, both product family and aggregated
forecasts are more accurate than individual product forecasts. (Seven steps in the forecasting
system, moderate)
3. Economic forecasts address the business cycle by predicting inflation rates, money
supplies, housing starts, and other planning indicators.
4. A skeptical manager asks what short-range forecasts can be used for. Give her three
possible uses/purposes.
Any three of: planning purchasing, job scheduling, work force levels, job assignments,
production levels.
5. A skeptical manager asks what long-range forecasts can be used for. Give her three
possible uses/purposes.
Any three of: planning new products, capital expenditures, facility location or expansion,
research and development
6. Quantitative forecasts employ one or more mathematical models that rely on historical
data and/or associative variables to forecast demand.
7. Sales force composite is a forecasting technique based upon salespersons' estimates of
expected sales.
8. Time-series forecasts use a series of past data points to make a forecast.
9. What are the differences between quantitative and qualitative forecasting methods?
Quantitative methods use mathematical models to analyze historical data. Qualitative
methods incorporate such factors as the decision maker's intuition, emotions, personal experiences,
and value systems in determining the forecast.
10. Identify four quantitative forecasting methods.
 straight-line
 moving average
 simple linear regression
 multiple linear regression.
11. What is a time-series forecasting model?
Time series forecasting occurs when you make scientific predictions based on
historical time stamped data. It involves building models through historical analysis and
using them to make observations and drive future strategic decision-making.
12. What is the difference between an associative model and a time-series model?
A time series model uses only historical values of the quantity of interest to predict
future values of that quantity. The associative model, on the other hand, attempts to
identify underlying causes or factors that control the variation of the quantity of
interest, predict future values of these factors, and use these predictions in a model to
predict future values of the specific quantity of interest.
13. A moving average forecast uses an average of the most recent periods of data to forecast
the next period.
14. The smoothing constant is a weighting factor used in exponential smoothing.
15. Trend Projection is a time-series forecasting method that fits a trend line to a series of
historical data points and then projects the line into the future for forecasts.
16. Simple moving average forecasts only work well if we can assume that market demands
will stay fairly steady over time.
17. If a barbershop operator noted that Tuesday's business was typically twice as heavy as
Wednesday's, and that Friday's business was typically the busiest of the week, business at
the barbershop is subject to seasonality.
18. Identify the four components of a time series. Which one of these is rarely forecast? Why
is this so?
Trend, seasonality, cycles, and random variation.
19. Compare seasonal effects and cyclical effects.
A cycle is longer (typically several years) than a season (typically days, weeks, months, or
quarters). A cycle has variable duration, while a season has fixed duration and regular repetition.
20. Give an example, other than a restaurant or other food-service firm, of an organization
that experiences an hourly seasonal pattern. (That is, each hour of the day has a pattern that
tends to repeat day after day.) Explain.
Movie theaters. The cycle of a theater is repetitive. They showcase different movie
every hour in every day. There are no other activities involved it is just each hour in a day
they will showcase movies to the customers.
MODULE 2
Designing Operations
Lesson 4. Design of Goods and Services
Have you not asked yourself on what are the basis for an organization’s existence with
regards to the offering of goods and services in the society? Would you agree that products
have its own life cycle? If that’s the case, considering products are almost dying in the market,
how the organizations prevent or preserve its existence? In other words, effective product
strategy links product decisions with investment, market share, and product life cycle, and
defines the breadth of the product line. In short, what is your idea pertaining to the objective
of the product decision that can attend competitive advantage in the marketplace?
I think the basis for an organization’s existence with regards to the offering of goods
and services in the society is that no man is an island. It is clearly and obviously that we need
others in our lives. Why there are goods and services because we don’t have it and we need
it. Yes, I agree that products and goods have its own life cycle. I believe everything has a
beginning and an end. In my perspective, services or goods that are dying needed to be
suffice technological needs or modern trends. I think in this way, organizations that are dying
will boom again because of the advantageous way of coping using the trend system. To
create an effective marketing plan and strategy, businesses must go through a series of steps.
They must first perform a S.W.O.T analysis. Strengths, weaknesses, opportunities, and
threats are abbreviated as S.W.O.T. They must do a SWOT analysis to determine their
competitive edge in the marketplace. The next step is for businesses to pick which strategic
marketing option they will employ to promote their product or service. A strategic
alternative is a game plan that a firm picks to achieve the most growth and revenues with
the least amount of risk.
1. Product strategy may focus on developing a competitive advantage via differentiation, low
cost, rapid response, or a combination of these. Is it TRUE or FALSE? TRUE
2. In which stage of the product life cycle should product strategy focus on process
modifications as the product is being "fine-tuned" for the market?
a. introduction
b. growth
c. maturity
d. decline
e. incubation
3. ________ is used to rank a company's products to determine which products represent the
best use of the firm's resources, or, perhaps, to determine which products are to be
eliminated.
a. Value analysis
b. Value engineering
c. Financial analysis
d. Product-by-value analysis
e. Product cost justification
4. Operations managers must be able to anticipate changes in which of the following?
a. product mix
b. product opportunities
c. the products themselves
d. product volume
e. all of the above
5. Which of the following would likely cause a change in market opportunities based upon
levels of income and wealth?
a. economic change
b. sociological and demographic change
c. technological change
d. political change
e. legal change
Let’s Think About This
You might as well encounter difficulties in answering the questions above, are you? If so, how
can effective strategies helps the operations manager in building a product development
system that yields competitive advantage for the firm? Do you think that if this strategy is
carried out effectively can contribute its maximum to the organization? In what stages of
product life cycle this strategy be more effective? What analysis is appropriate in ensuring
maximum product value?
The effectiveness of the organization's strategic and tactical operations decisions
determines how successfully it can achieve its objectives. They also allow the company to
gain distinct competitive advantages that help it attract and retain customers. Knowing
your target audience and client segments, as well as how to keep them happy, is key to
making effective and efficient operational decisions. All of the resources required to
generate a company's goods and services are planned, organized, coordinated, and
controlled by operations management. The stage I think that life cycle will be more
effective is growth. If the product is successful, it then moves to the growth stage. This is
characterized by growing demand, an increase in production, and expansion in its
availability. Value chain analysis is a means of evaluating each of the activities in a
company's value chain to understand where opportunities for improvement lie. Conducting
a value chain analysis prompts you to consider how each step adds or subtracts value from
your final product or service.
1. The objective of the product decision is to develop and implement a product strategy that
meets the demands of the marketplace with a competitive advantage. Is it TRUE or FALSE?
TRUE
2. The four phases of the product life cycle are incubation, introduction, growth, and decline.
Is it TRUE or FALSE? FALSE
3. In the maturity stage of the product life cycle, operations managers will be particularly
concerned with adding capacity or enhancing existing capacity to accommodate the increase
in product demand. Is it TRUE or FALSE? FALSE
4. The three major elements of the product decision are:
a. selection, definition, and design.
b. goods, services, and hybrids.
c. strategy, tactics, and operations.
d. cost, differentiation, and speed of response.
e. legislative, judicial, and executive.
5. A product's life cycle is divided into four stages, which are:
a. introduction, growth, saturation, and maturity.
b. introduction, growth, stability, and decline.
c. introduction, maturity, saturation, and decline.
d. introduction, growth, maturity, and decline.
6. At which stage of the product life cycle is product strategy likely to focus on improved cost
control?
a. introduction
b. growth
c. maturity
d. saturation
e. inflation
7. In the growth phase of the product life cycle, the product design has begun to stabilize.
8. What is the objective of the product decision?
The objective of product decisions is to develop a product strategy that helps the company
meet the demand of the market while achieving a competitive advantage.
9. What is a product-by-value analysis, and what type of decisions does it help managers
make?
Product-by-value analysis is the process of listing all products of a firm in descending order
of the actual dollars they bring individually and on yearly basis. This helps the firm’s product
strategist develop product strategies and product decisions. This analysis also helps in adopting to
professional market standards.
10. "With respect to the product decision, managers must be able to accept risk and tolerate
failure." Comment on why this is a necessary hazard in making new product decisions, given
all the powerful tools and carefully built systems that support that decision.
Managers must be able to accept risks and tolerate failures because the carefully built
systems are made to make predictions to support a product decision. These predictions may not take
into account the unexpected circumstances that could be encountered. Human errors may also cause
issues that the managers need to encounter professionally.
11. Is it possible for a product's life cycle stage to affect its product strategy? In particular,
describe how one product in growth and another in maturity might have different product
strategies.
Yes, as products progress through their life cycles, strategies change. Successful
product strategies necessitate establishing the most efficient approach for every product
based on its life cycle stage. A company defines goods or product groups, as well as their life
cycle stage.
Growth Phase - Additional capacity or enhancements to current capacity may be required to
meet increased product demand.
Improved cost control, option reduction, and product line paring down may be effective or
necessary for profitability and market share during the maturity phase.
12. Which of the following represents an opportunity for generating a new product?
a. understanding the customer
b. demographic change, such as decreasing family size
c. changes in professional standards
d. economic change, such as rising household incomes
e. All of the above are such opportunities.
13. Identify factors that influence new product opportunities.
The factors involved in new product development are Knowledge Management, Market
Orientation, New Product Development Process, New Product Development Speed, New Product
Development Strategies, New Product Development Teams, Technology and Top Management
Support.
14. Provide some examples of recent product changes, i.e. new products that are replacing
older ones.
I think typewriters are often used these days. It was replaced by modern technologies
like computer or laptops. Typewriters’ purpose is to print paper but today’s technologies
make it easier, effective and efficient to utilize.
Lesson 5. Managing Quality
How will you define quality in your own perception? Do you think people will run after its
quality of such product or service? When you avail such product or service what is your
determinant factor to consider? Do you think satisfaction will matter in utilizing such
product or service? In short, quality is a term that means different things to different people.
For me, quality describes how good something is in comparison to similar items. To
put it another way, its level of quality. It refers to a distinguishing quality or attribute that a
person possesses when used to describe them. I think when in this situation where products
are rising and all prices are hiking, I think most people prefer quantity over quality. My
determinant when I purchased a product is that it is strong, no defect can be seen, made of
tough materials, when it comes to service, it is good, unquestionable and excellent. 'Quality
is the ongoing process of creating and maintaining relationships by assessing, anticipating,
and meeting expressed and implied needs,' says one definition.
Let’s Try This
Answer the following questions.
1. A successful quality strategy features which of the following elements?
a. an organizational culture that fosters quality
b. an understanding of the principles of quality
c. engaging employees in the necessary activities to implement quality
d. A and C
e. A, B, and C
2. "Quality lies in the eyes of the beholder" is:
a. an unrealistic definition of quality.
b. a user-based definition of quality.
c. a manufacturing-based definition of quality.
d. a product-based definition of quality.
e. the definition of quality proposed by the American Society for Quality.
3. "Making it right the first time" is:
a. an unrealistic definition of quality.
b. a user-based definition of quality.
c. a manufacturing-based definition of quality.
d. a product-based definition of quality.
e. the definition of quality proposed by the American Society for Quality
4. Stakeholders who are affected by the production and marketing of poor-quality products
include:
a. stockholders, employees, and customers.
b. suppliers and creditors, but not distributors.
c. only stockholders, creditors, and owners.
d. suppliers and distributors, but not customers.
e. only stockholders and organizational executives and managers.
5. Regarding the quality of design, production, and distribution of products, an ethical
requirement for management is to:
a. determines whether any of the organization's stakeholders are being wronged by
poor quality products.
b. gain ISO 9000 certification for the organization.
c. obtains a product safety certificate from the Consumer Product Safety Commission.
d. has the organization's legal staff write disclaimers in the product instruction
booklets.
e. compares the cost of product liability to the external failure cost.
6. Not only customers, but stockholders, suppliers, and others, are among the stakeholders
whose values must be protected in making ethical decisions concerning the quality of
products.
7. Quality is mostly the business of the quality control staff, not ordinary employees. Is it
TRUE or FALSE? FALSE
8. TQM is important because each of the ten decisions made by operations managers deals
with some aspect of identifying and meeting customer expectations. Is it TRUE or FALSE?
TRUE
9. Continuous improvement is based on the philosophy that any aspect of an operation can
be improved. Is it TRUE or FALSE? TRUE
10. Kaizen is a Japanese term meaning:
a. a foolproof mechanism.
b. just-in-time (JIT).
c. a fishbone diagram.
d. setting standards.
e. continuous improvement.
11. A cause-and-effect diagram helps identify the sources of a problem. Is it TRUE or FALSE?
TRUE
Let’s Think About This
We define quality as “the totality of features and characteristics of a product or service that
bears on its ability to satisfy stated or implied needs.” Based, on this definition how the
operations manager expects the effectiveness and efficiency of its process? What
interventions that the operations manager will do to answer its quality? If you find difficulty
in answering those questions, then these lesson addresses seven TQM concepts: continuous
improvement, Six Sigma, employee empowerment, benchmarking, just-in-time, Taguchi
concepts, and knowledge of TQM tools.
I think operation manager should really focus on what is efficient and effective things to
produced. I think when we don’t know how the products and services are qualified in the way we
should want it the satisfaction of the customers is at risk. Even the world is facing tremendous waves
of financial crisis, it should be the quality that matters. a manager is always a strong source of
inspiration for other employees. You need to practice total quality management yourself before
expecting others to believe in the same. Customer feedbacks should be carefully monitored and taken
into consideration while formulating company’s major strategies. Provide frequent reports to staff
members highlighting scope of improvement.
Let’s See How Far You Understand the Lesson (Post-Test)
1. Three broad categories of definitions of quality are:
a. product quality, service quality, and organizational quality.
b. user based, manufacturing based, and product based.
c. internal, external, and prevention.
d. low-cost, response, and differentiation.
e. Pareto, Shewhart, and Deming.
2. According to the manufacturing-based definition of quality:
a. quality is the degree of excellence at an acceptable price and the control of
variability at an acceptable cost.
b. quality depends on how well the product fits patterns of consumer preferences.
c. even though quality cannot be defined, you know what it is.
d. quality is the degree to which a specific product conforms to standards.
e. quality lies in the eyes of the beholder.
3. Which of the following is NOT one of the major categories of costs associated with quality?
a. prevention costs
b. appraisal costs
c. internal failure costs
d. external failure costs
e. None of the above; they are all major categories of costs associated with quality.
4. All of the following costs are likely to decrease as a result of better quality EXCEPT:
a. customer dissatisfaction costs.
b. inspection costs.
c. scrap costs.
d. warranty and service costs.
e. maintenance costs.
5. Which of the four major categories of quality costs is particularly hard to quantify?
a. prevention costs
b. appraisal costs
c. internal failure costs
d. external failure costs
e. None is hard to quantify.
6. Which of the following statements is NOT true?
a. Self-promotion is not a substitute for quality products.
b. Inferior products harm a firm's profitability and a nation's balance of payments.
c. Product liability transfers from the manufacturer to the retailer once the retailer
accepts delivery of the product.
d. Quality–be it good or bad–will show up in perceptions about a firm's new products,
employment practices, and supplier relations.
e. Legislation such as the Consumer Product Safety Act sets and enforces product
standards by banning products that do not reach those standards.
7. Identify the four costs of quality. Which one is hardest to evaluate? Explain.
8. Quality has at least three categories of definitions; identify them. Provide a brief
explanation of each.
9. The phrase Six Sigma has two meanings. One is statistical, referring to an extremely high
process, product, or service capability; the other is a comprehensive system for achieving
and sustaining business success. Is it TRUE or FALSE? TRUE
10. Kaizen is similar to TQM in that both are focused on continuous improvement. Is it TRUE
or FALSE? TRUE
11. Quality circles empower employees to improve productivity by finding solutions to
work-related problems in their work area. Is it TRUE or FALSE? TRUE
12. Benchmarking requires the comparison of your firm to other organizations; it is not
appropriate to benchmark by comparing one of your divisions to another of your divisions.
Is it TRUE or FALSE? FALSE
13. Line employees need the knowledge of TQM tools. Is it TRUE or FALSE? TRUE
14. One of the ways that just-in-time (or JIT) influences quality is that by reducing inventory,
bad quality is exposed. Is it TRUE or FALSE? TRUE
15. The quality loss function indicates that costs related to poor quality are low as long as
the product is within acceptable specification limits. Is it TRUE or FALSE? FALSE
16. Total quality management emphasizes:
a. the responsibility of the quality control staff to identify and solve all quality-related
problems.
b. a commitment to quality that goes beyond internal company issues to suppliers and
customers.
c. a system where strong managers are the only decision makers.
d. a process where mostly statisticians get involved.
e. ISO 14000 certification.
17. A successful TQM program incorporates all EXCEPT which of the following?
a. continuous improvement
b. employee involvement
c. benchmarking
d. centralized decision-making authority
e. JIT
18. Which of the following statements regarding "Six Sigma" is TRUE?
a. The term has two distinct meanings–one is statistical; the other is a comprehensive
quality system.
b. Six Sigma means that about 94 percent of a firm's output is free of defects.
c. The Six Sigma program was developed by Toyota in the 1970s.
d. The Six Sigma program is for manufacturing firms and is not applicable to services.
e. Six Sigma certification is granted by the International Standards Organization (ISO).
19. Members of quality circles are:
a. paid according to their contribution to quality.
b. external consultants designed to provide training in the use of quality tools.
c. always machine operators.
d. all trained to be facilitators.
e. None of the above; all of the statements are false.
20. Techniques for building employee empowerment include:
a. building communication networks that include employees.
b. developing open, supportive supervisors.
c. moving responsibility from both managers and staff to production employees.
d. building high-morale organizations.
e. All of the above are techniques for employee empowerment.
21. Building high-morale organizations and building communication networks that include
employees are both elements of:
a. ISO 9000 certification.
b. Six Sigma certification.
c. employee empowerment.
d. Taguchi methods
e. the tools of TQM.
22. The process of identifying other organizations that are best at some facet of your
operations and then modeling your organization after them is known as:
a. continuous improvement.
b. employee empowerment.
c. benchmarking.
d. copycatting.
e. patent infringement.
23. Costs of dissatisfaction, repair costs, and decreased future demand are elements of cost
in the:
a. quality loss function.
b. Pareto chart.
c. ISO 9000 quality cost calculator.
d. process chart.
e. Ishikawa diagram.
24. A manager tells her production employees, "It's no longer good enough that your work
falls anywhere within the specification limits. I need your work to be as close to the target
value as possible." Her thinking is reflective of:
a. internal benchmarking.
b. Six Sigma.
c. ISO 9000.
d. Taguchi concepts.
e. process control charts.
25. Kaizen is the Japanese word for the ongoing process of unending improvement.
26. Enlarging employee jobs so that the added responsibility and authority is moved to the
lowest level possible in the organization is called Employee Empowerment.
27. Benchmarking selects a demonstrated standard of performance that represents the
very best performance for a process or an activity.
28. A group of employees that meet on a regular basis with a facilitator to solve work-related
problems in their work area is a (n) Quality Circle.
29. Identify the five steps of DMAIC.
30. Explain how just-in-time processes relate to the quality of an organization's outputs.
31. Identify the seven major concepts of TQM.
32. Pareto charts are a graphical way of identifying the few critical items from the many less
important ones. Is it TRUE or FALSE? TRUE
33. Pareto charts are used to:
a. identify inspection points in a process.
b. outline production schedules.
c. organize errors, problems, or defects.
d. show material flow.
e. show the range of values of a measurement and the frequency with which each
value occurs.
34. The "four Ms" of cause-and-effect diagrams are:
a. material, machinery/equipment, manpower, and methods.
b. material, methods, men, and mental attitude.
c. named after four quality experts.
d. material, management, manpower, and motivation.
e. mentality, motivation, management, and manpower.
35. Among the tools of TQM, the tool ordinarily used to aid in understanding the sequence of
events through which a product travels is a:
a. Pareto chart.
b. flowchart.
c. check sheet.
d. Taguchi map.
e. poka-yoke.
36. The process improvement technique that sorts the vital few from the trivial many is:
a. Taguchi analysis.
b. Pareto analysis.
c. benchmarking.
d. Deming analysis.
e. Yamaguchi analysis.
37. A production manager at a pottery factory has noticed that about 70 percent of defects
result from impurities in raw materials, 15 percent result from human error, 10 percent from
machine malfunctions, and 5 percent from a variety of other causes. This manager is most
likely using:
a. a Pareto chart.
b. a scatter diagram.
c. a quality loss function.
d. a cause-and-effect diagram.
e. a flowchart.
i. Answer:
38. A customer service manager at a retail clothing store has collected numerous customer
complaints from the forms they fill out on merchandise returns. To analyze trends or
patterns in these returns, she has organized these complaints into a small number of sources
or factors.
This is most closely related to the ________ tool of TQM.
a. quality loss function
b. cause-and-effect diagram
c. scatter diagram
d. histogram
e. process control chart
39. A fishbone chart is also known as a:
a. cause-and-effect diagram.
b. poka-yoke diagram.
c. Kaizen diagram.
d. Kanban diagram.
e. Taguchi diagram.
40. If a sample of parts is measured and the mean of the measurements is outside the control
limits, the process is:
a. in control, but not capable of producing within the established control limits.
b. out of control and the process should be investigated for assignable variation.
c. within the established control limits with only natural causes of variation.
d. monitored closely to see if the next sample mean will also fall outside the control
limits.
e. none of the above.
41. A quality circle holds a brainstorming session and attempts to identify the factors
responsible for flaws in a product. Which tool do you suggest they use to organize their
findings?
a, Ishikawa diagram
b. Pareto chart
c. flowchart
d. control charts
e. activity chart
42. Which of the following is FALSE regarding control charts?
a. Values above the upper control limits imply that the product's quality is exceeding
expectations.
b. Control charts are built so that new data can be quickly compared to past
performance data.
c. Control charts graphically present data.
d. Control charts plot data over time.
e. None of the above is false.
43. Cause and effect diagrams use a schematic technique to discover possible locations of
quality problems.
44. Control charts are graphical presentations of data over time that show upper and lower
control limits for processes we want to control.
45. Explain how a Pareto chart can identify the most important causes of errors in a process.
Lesson 6. Process, Location, Layout Strategy
Let’s Try This
Try to answer the questions below.
1. Three of the four types of processes are:
a. goods, services, and hybrids.
b. manual, automated, and service.
c. process focus, repetitive focus, and product focus.
d. modular, continuous, and technological.
e. input, transformation, and output.
2. Which of the following industries is most likely to have low equipment utilization?
a. auto manufacturing
b. commercial baking
c. television manufacturing
d. steel manufacturing
e. restaurants
3. One of the similarities between process focus and mass-customization is:
a. the volume of outputs.
b. the use of modules.
c. many departments and many routings.
d. the variety of outputs.
e. All of the above are similarities.
4. Goods made to order are typical of ________ and ________ approaches while goods made to
forecast are typical of ________ and ________ approaches.
a. process, mass customization; repetitive, product
b. product, mass customization; repetitive, process
c. product, process; repetitive, mass customization
d. repetitive, product; mass customization, process
e. repetitive, process; mass customization, product
5. Which of the following phrases best describes product focus?
a. low volume, high variety
b. Finished goods are usually made to order.
c. Processes are designed to perform a wide variety of activities.
d. high fixed costs, low variable costs
e. high inventory
6. A quasi-custom product:
a. gets its apparent customization from the combinations available from a small
number of modules.
b. is often the output of repetitive focus facilities.
c. is a valid description of a fast food sandwich.
d. only applies in services.
e. All but D are true.
7. The crossover point is that production quantity where:
a. variable costs of one process equal the variable costs of another process.
b. fixed costs of a process are equal to its variable costs.
c. total costs equal total revenues for a process.
d. total costs for one process equal total costs for another process.
e. the process no longer loses money.
8. Product focused processes:
a. allow more customization, but are not very efficient.
b. are desirable because resource needs increase slowly with the complexity of a
process.
c. are processes that are specialized for relatively few products or customer groups.
d. apply only to service firms, not to manufacturers.
e. are profitable because customers demand flexibility, not specialization.
9. When selecting new equipment and technology, decision makers look for flexibility—the
ability to respond with little penalty in time, cost, or customer value. Is it TRUE or FALSE?
TRUE
Let’s Think About This
You might as well need more background about the topic because it’s confusing. Or, you’re
not definite with your answers why process strategy is so important? In other words, why
they need to select a production process with the necessary quality, flexibility, and cost
structure of the product and its volume requirements? Besides, why managers use the
techniques of lean production and employee participation in the development of efficient
equipment and processes?
The product process matrix combines the product lifetime, which includes all parts
of the product development process—from concept through growth or decline—with the
process lifecycle, which is the evolution toward a more cost-effective and productive
standardized structure. Lean manufacturing is a set of techniques for reducing material and
labor waste while maintaining or growing production levels. This leads to an increase in total
production. Finally, lean manufacturing is about removing waste and delivering the greatest
possible product to the client as rapidly as possible with the fewest possible impediments.
Let’s See How Far You Understand the Lesson (Post-Test)
1. The process strategy that is organized around processes to facilitate low-volume,
highvariety processes is called a (n) Process Focus.
2. Repetitive Process is a process strategy based on a product-oriented production process
that uses modules.
3. Mass customization focus is a rapid, low-cost production process that caters to
constantly changing unique customer desires.
4. Focused processes represent an organization's attempt to gain increased efficiency
through specialization, which can include, for example, concentrating on certain classes of
customers.
5. Flexibility involves the ability to respond with little penalty in time, cost, or customer
value.
6. The strategy for improving service productivity that customizes at delivery, rather than at
production, is postponement.
7. Process Redesign is the fundamental rethinking of business processes to bring about
dramatic improvements in performance.
8. Successful process redesign focuses on departmental areas where small, continuous
improvements can be made. Is it TRUE or FALSE? FALSE
9. Which of the following is not one of the strategies for improving service productivity?
a. self-service
b. automation
c. scheduling
d. separation
e. mass customization
10. A product-focused process is commonly used to produce:
a. high-volume, high-variety products.
b. low-volume, high-variety products.
c. high-volume, low-variety products.
d. low-variety products at either high- or low-volume.
e. high-volume products of either high- or low-variety.
11. Which one of the following products is most likely made in a job shop environment?
a. rolls of newsprint
b. custom furniture
c. television sets
d. cigarettes
e. canned vegetables
12. Which of the following products is likely to be assembled on a repetitive process line?
a. automobiles
b. custom personal computers
c. custom cakes
d. steel
e. beer
13. An assembly line is an example of a:
a. product-focused process.
b. process-focused process.
c. repetitive process.
d. line process.
e. specialized process.
14. High fixed costs and low variable costs are typical of which approach?
a. product
b. process
c. mass customization
d. repetitive
e. A and C
15. Align Technology uses a ________ approach to produce clear plastic removable aligners.
a. mass customization
b. product focus
c. process focus
d. repetitive focus
e. crossover
16. Which of the following is FALSE regarding repetitive processes?
a. They use modules.
b. They allow easy switching from one product to the other.
c. They are the classic assembly lines.
d. They have more structure and less flexibility than a job shop layout.
e. They include the assembly of basically all automobiles.
17. Which of the following phrases best describes process focus?
a. low volume, high variety
b. Finished goods are usually made to a forecast and stored.
c. Operators are less broadly skilled.
d. high fixed costs, low variable costs
e. low inventory
18. Which of the following characteristics best describes repetitive focus?
a. It uses sophisticated scheduling to accommodate custom orders.
b. Its output is a standardized product produced from modules.
c. Operators are broadly skilled.
d. It is widely used for the manufacture of steel.
e. low volume, high variety
19. How are modules useful in manufacturing processes?
20. Identify the four basic process strategies, and describe them in a complete sentence or
two each.
21. Which of the following is true regarding the concept of flexibility?
a. It is the ability to respond with little penalty in time, cost, or customer value.
b. It may be accomplished with digitally controlled equipment.
c. It may involve modular or movable equipment.
d. All of the above are true.
e. None of the above is true.
6.2 Location Strategy
Location may determine up to 50% of operating expense. If this is so, on what specific
operating expense that this applied for? Justify your answer. Talking of revenue, why is
location also considered as a determinant factor? How will you distinguish tangible cost and
intangible cost? Are you familiar with the terms purchasing power of a drawing area,
Competition, Advertising and promotion, Physical qualities of the product? Can you identify
each item?
It can be transportation expenses or delivery, it can be the repairs and maintenance
and more. The location factors consider capital availability, (investment capital, venture
capital, exchange rates), subsidies and incentives, regulations, taxation, and available
technology. All of these should be consider especially when taking up a business. A tangible
cost is a cost that can be measured and linked to a specific source or object. A material item
utilized in production or to conduct commercial operations can be directly linked to tangible
costs. The money paid to a new employee to replace an old one is a concrete expense. The
information that the departing employee brings with them is an intangible cost. Purchasing
power is the value of a currency expressed in terms of the number of goods or services that
one unit of money can buy. Purchasing power refers to how much you can buy with your
money. As prices rise, your money can buy less. As prices drop, your money can buy more.
Let’s Try This
Try to answer the questions below.
1. Industrial location analysis typically attempts to:
a. minimize costs.
b. maximize sales.
c. focus more on human resources.
d. avoid countries with strict environmental regulations.
e. ignore exchange rates and currency risks.
2. A location decision for an appliance manufacturer would tend to have what type of focus?
a. cost focus
b. focus on finding very highly skilled technicians
c. revenue focus
d. environmental focus
e. education focus
3. A location decision for a traditional department store (e.g., Ayala) would tend to have what
type of focus?
a. cost focus
b. labor focus
c. revenue focus
d. environmental focus
e. education focus
4. Location decisions are often being based on which of the following?
a. ports and rivers
b. rail hubs
c. interstate highways
d. airports
e. all of the above
5. Lists have been developed that rank countries on issues such as "competitiveness" and
"corruption." Is it TRUE or FALSE? TRUE
6. The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit.
Is it TRUE or FALSE? TRUE
7. For a location decision, labor productivity may be important in isolation, but low wage
rates are a more important criterion. Is it TRUE or FALSE? FALSE
8. Unfavorable exchange rates can offset other savings in a location decision. Is it TRUE or
FALSE? TRUE
9. An example of an intangible cost, as it relates to location decisions, is the quality of
education. Is it TRUE or FALSE? TRUE
10. In location decisions, intangible costs are easier to measure than tangible costs. Is it TRUE
or FALSE? FALSE
11. Location decisions are based on many things, including costs, revenues, incentives,
attitudes, and intangibles, but not on ethical considerations. Is it TRUE or FALSE? FALSE
12. The graphic approach to locational cost-volume analysis displays the range of volume
over which each location is preferable. Is it TRUE or FALSE? TRUE
13. The factor-rating method can consider both tangible and intangible costs. Is it TRUE or
FALSE? TRUE
14. The center-of-gravity method finds the location of a centralized facility, such as a
distribution center that will maximize the organization's revenue. Is it TRUE or FALSE?
FALSE
15. The transportation model calculates an optimal shipping system between a central
facility and several outlying customers. Is it TRUE or FALSE? FALSE
16. Service firms choose locations based, in part, on the revenue potential of a site. Is it TRUE
or FALSE? TRUE
17. The location decisions of goods-producing firms will generally pay more attention to
parking, access, and traffic counts than will service location decisions. Is it TRUE or FALSE?
FALSE
18. Location decisions of goods-producing companies often assume that costs are relatively
constant for a given area; therefore, the revenue function is critical. Is it TRUE or FALSE?
FALSE
19. One reason for a firm locating near its competitors is the presence of a major resource it
needs. Is it TRUE or FALSE? TRUE
20. Among the following choices, an operations manager might best evaluate political risk of
a country by looking at which type of country ranking?
a. based on competitiveness
b. based on cost of doing business
c. based on corruption
d. based on magnitude of government social programs
e. based on average duration between presidential/prime minister elections
21. When making a location decision at the country level, which of these would be
considered?
a. corporate desires
b. land/construction costs
c. air, rail, highway, waterway systems
d. zoning restrictions
e. location of markets
22. Tangible costs include which of the following?
a. climatic conditions
b. availability of public transportation
c. taxes
d. quality and attitude of prospective employees
e. zoning regulations
23. Intangible costs include which of the following?
a. quality of prospective employees
b. quality of education
c. availability of public transportation
d. all of the above
e. none of the above
Let’s Think About This
How will you assess in answering those questions, is it difficult or too easy for you? Is the
operations manager concerned more on the selection of its location or not so important? Is
this can really affect or detrimental during the process? Why the classification of costs been
included in deciding for such strategy? Try to reflect upon reading the notes below.
Operations management is chiefly concerned with planning, organizing and supervising in
the contexts of production, manufacturing or the provision of services. As such, it is delivery-focused,
ensuring that an organization successfully turns inputs to outputs in an efficient manner. I think
locations are very important to them because without concerning of the location many factors will
be affected and operations will be impossible. Classification of costs based on behavior helps in costvolume-profit analysis. Classification based on traceability is important for accurate costing of jobs
and units produced. Classification for the purpose of decision-making is important to help
management identify costs which are relevant for a decision.
Let’s See How Far You Understand the Lesson (Post-Test)
1. ________ and currency risks are to key country success factors as land costs and ________ are
to key region success factors.
a. Cultural issues; zoning restrictions
b. Exchange rates; environmental impact
c. Labor cost; proximity to customers
d. Land costs; air and rail systems
e. All of the above are accurate relationships.
2. Which of the following workers is the most productive?
a. P500 wages, 10 parts produced
b. P100 wages, 1 part produced
c. P300 wages, 5 parts produced
d. P1, 000 wages, 21 parts produced
e. P5, 000 wages, 100 parts produced
3. An employee produces 15 parts during a shift in which he made P90. What is the labor
content of the product?
a. P90
b. P5
c. P6
d. P0.167
e. P1, 350
4. The reason fast food restaurants often are found in close proximity to each other is:
a. they enjoy competition.
b. location clustering near high traffic flows.
c. low cost.
d. availability of skilled labor.
e. all of the above.
5. Currency risk is based on what assumption?
a. Firms that do not continuously innovate will lose market share.
b. Values of foreign currencies continually rise and fall in most countries.
c. Changing product lines by reacting to every current trend may alienate the
customer base.
d. The value of one dollar today is greater than the value of one dollar to be received
one year from now.
e. The U.S. stock market fluctuates daily.
6. Governmental attitudes toward issues such as private property, intellectual property,
zoning, pollution, and employment stability may change over time. What is the term
associated with this phenomenon?
a. bureaucratic risk
b. political risk
c. legislative risk
d. judicial risk
e. democratic risk
7. Globalization of the location decision is the result of all EXCEPT which of the following?
a. market economics
b. higher quality of labor overseas
c. ease of capital flow between countries
d. high differences in labor costs
e. more rapid, reliable travel and shipping
8. In location planning, environmental regulations, cost and availability of utilities, and taxes
are:
a. global factors.
b. country factors.
c. regional/community factors.
d. site-related factors.
e. none of the above.
9. Which of the following is usually NOT one of the top considerations in choosing a country
for a facility location?
a. availability of labor and labor productivity
b. exchange rates
c. attitude of governmental units
d. zoning regulations
e. location of markets
10. Which of these factors would be considered when making a location decision at the
region/community level?
a. government rules, attitudes, stability, incentives
b. cultural and economic issues
c. zoning restrictions
d. environmental impact issues
e. proximity to raw materials and customers
11. When making a location decision at the region/community level, which of these would
be considered?
a. government rules, attitudes, stability, incentives
b. cultural and economic issues
c. cost and availability of utilities
d. zoning restrictions
e. air, rail, highway, waterway systems
12. Which of these factors would be considered when making a location decision at the site
level?
a. government rules, attitudes, stability, incentives
b. cultural and economic issues
c. zoning regulations
d. cost and availability of utilities
e. proximity to raw materials and customers
13. Which of the following statements regarding "proximity" in the location decision is
FALSE?
a. Service organizations find that proximity to market is the most critical primary
location factor.
b. Manufacturers want to be near customers when their product is bulky, heavy, or
fragile.
c. Perishability of raw materials is a good reason for manufacturers to locate near the
supplier, not the customer.
d. Reduction in bulk is a good reason for a manufacturer to locate near the supplier.
e. Clustering among fast food chains occurs because they need to be near their labor
supply.
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?
a. Soft drinks are bottled in many local plants, where carbonated water is added to
proprietary syrups that may have been shipped long distances.
b. Few people will travel out of state for a routine haircut.
c. Patients will travel very long distances to have their hernia surgeries performed at
Shouldice Hospital.
d. Furniture makers choose to locate near the source of good hardwoods, even though
it means locating near other furniture manufacturers.
e. Metal refiners (smelters) locate near mines to accomplish significant weight
reduction near the metal's source.
15. Tangible costs are readily identifiable and can be measured with precision.
16. Political risk, cultural issues, and exchange rates are among those key success factors
that affect which country will be selected for a location decision.
17. Labor cost per unit is also referred to as labor content.
18. Clustering occurs when competing companies locate near each other because of a critical
mass of information, talent, venture capital, or natural resources.
19. Why is "quality of life" an element of intangible costs associated with location decisions?
Provide an example as part of your discussion.
20. What is it called when competing companies locate next to each other? Why do they do
this?
21. Which of the following statements regarding the center-of-gravity method is FALSE?
a. It is designed to minimize the maximum possible travel distance to any of the
locations.
b. The optimal x- and y-coordinates are calculated separately.
c. The optimal solution is unconstrained, so it could suggest a location in the middle
of a body of water.
d. The weights used are the quantity of goods moved to or from each location.
e. The origin of the coordinate system and the scale used are arbitrary, just as long as
the relative distances are correctly represented.
22. Community attitudes, zoning restrictions, and quality of labor force are likely to be
considered in which of the following location decision methods?
a. transportation method
b. locational cost-volume analysis
c. center-of-gravity method
d. simulation
e. factor-rating method
23. Which of the following methods best considers intangible costs related to a location
decision?
a. crossover methods
b. locational cost-volume analysis
c. factor-rating method
d. the transportation method
e. center-of-gravity method
24. Which of the following is an approach to location analysis that includes both qualitative
and quantitative considerations?
a. locational cost-volume analysis
b. factor-rating method
c. transportation model
d. center-of-gravity method
e. make-or-buy analysis
25. On the crossover chart where the costs of two or more location alternatives have been
plotted, the quantity at which two cost curves cross is the quantity where:
a. fixed costs are equal for two alternative locations.
b. variable costs are equal for two alternative locations.
c. total costs are equal for all alternative locations.
d. fixed costs equal variable costs for one location.
e. total costs are equal for two alternative locations.
26. The center-of-gravity method is used primarily to determine what type of locations?
a. service locations
b. manufacturing locations
c. distribution center locations
d. supplier locations
e. call center locations
27. A regional bookstore chain wants to build a distribution center that is centrally located
for its eight retail outlets. It will most likely employ which of the following tools of analysis?
a. assembly line balancing
b. load-distance analysis
c. center-of-gravity method
d. linear programming
e. locational cost-volume analysis
28. Production and transportation costs are always considered in which of the following
location decision methods?
a. traffic counts
b. transportation model
c. purchasing power
d. proximity of markets
e. clustering
29. The transportation model, when applied to location analysis:
a. minimizes total fixed costs.
b. minimizes total production and transportation costs.
c. minimizes total transportation costs.
d. maximizes revenues.
e. minimizes the movement of goods.
30. Location analysis techniques typically employed by service organizations include:
a. the factor rating method.
b. the center-of-gravity method.
c. purchasing power analysis of area.
d. traffic counts.
e. all of the above.
31. Which of the following is most likely to affect the location decision of a service firm rather
than a manufacturing firm?
a. energy and utility costs
b. attitude toward unions
c. parking and access
d. cost of shipping finished goods
e. labor costs
32. Which of the following is a location analysis technique typically employed by a service
organization?
a. purchasing power analysis
b. linear programming
c. queuing theory
d. transportation method
e. locational cost-volume analysis
33. A jewelry store is more likely than a jewelry manufacturer to consider ________ in making
a location decision.
a. transportation costs
b. cost of raw materials
c. appearance/image of the location
d. quality of life
e. taxes
34. Which of the following is a location analysis technique typically employed by a
manufacturing organization?
a. transportation method
b. queuing theory
c. correlation analysis and traffic counts
d. simulation
e. demographic analysis
35. Which of the following assumptions is NOT associated with strategies for goodsproducing location decisions?
a. Most major costs can be identified explicitly for each site.
b. Focus on identifiable costs.
c. High customer-contact issues are critical.
d. Intangible costs can be evaluated.
e. Location is a major determinant of cost.
36. Which of the following is most likely to affect the location strategy of a manufacturing
firm?
a. appearance/image of the area
b. utility costs
c. purchasing power of drawing area
d. competition in the area
e. parking availability
37. Industrial firms choose locations that minimize cost, but service firms look for locations
with good demographics and traffic count because these variables are indicators of good
revenue of business.
MODULE 3
Managing Operations
LESSON 7. SUPPLY CHAIN MANAGEMENT
Supply chain management is the coordination of all supply chain activities involved in
enhancing customer value. If you consider yourself as a business owner, how will you
enhance customer satisfaction? Do you think you can satisfy the needs of your customers
while maintaining competitive advantage over other businesses? Why do you think is it
important to organize supply chain activities? Provide a certain situation that best describes
your answers.
By achieving customer satisfaction, I think it should start by knowing what should be done
and what should not. Like improving customer service, improving products, targeting the everchanging trend or making the customer happy. If you want to excel in your business you should focus
on the customer and the customer only. Knowing and understanding customer needs is at the centre
of every successful business, whether it sells directly to individuals or other businesses. Once you
have this knowledge, you can use it to persuade potential and existing customers that buying from
you is in their best interests. Supply chain management works to design and implement the most
efficient and cost-effective supply chain process possible. Companies understand that when a single
link in the supply chain breaks, it costs valuable time and money. Streamlining supply chain activities
also results in faster production. This allows businesses to better compete and in turn, creates value
for customers.
Let’s Try This
Try to answer the questions below.
1. What do you think are the most common activities of supply chain management?
It includes supply planning, product planning, demand planning, sales and operations
planning, and supply management.
2. If you were a manager, what would you do if an angry and dissatisfied customer
confronted you?
Stay composed and calm. I think when I’m in that situation I will confront him/her
calmly and ask what is the problem. I will hear his/her problems and give him/her the best
solutions that we can give. I think in every conflicted situation; you just have to stay still.
Customers are very important and we should appreciate them as long as it is not under the
belt.
Let’s Think About This
When you think of the activities most businesses engaged in a supply chain management,
you have to take note that these businesses make sure that all of these activities are vital and
rely with each other in order to provide a seamless path from plan to completion as
affordably as possible. You also need take into consideration the level of satisfaction and
value of your customers and your company while performing those activities. Competition
today is not between companies; it is between supply chains. So, how will you possibly
manage a supply chain?
Supply Chain Management (SCM) involves the flow of goods and services in an
efficient manner. It encompasses all the steps involved in procuring raw materials through to
the finished goods, in a way that is streamlined and provides value to the customer. I think I
can manage a supply chain in the way:





FIND DEPENDABLE SUPPLIERS
INVEST IN EMPLOYEE DEVELOPMENT
CONTINUOUS IMPROVEMENT
LEVERAGE NEW TECHNOLOGIES
IMPROVE RETURNS MANAGEMENT
Let’s See How Far You Understand the Lesson (Post-Test)
I. TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if
otherwise.
1. Even though a firm may have a low-cost strategy, supply-chain strategy can select
suppliers primarily on response or differentiation. FALSE
2. The supply chain for a brewery would include raw ingredients such as hops and barley but
not the manufactured goods such as bottles and cans. FALSE
3. When using the low-cost strategy for supply chain management, a firm should use buffer
stocks to ensure speedy supply. FALSE
4. Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
TRUE
5. A firm that employs a response strategy should minimize inventory throughout the supply
chain. FALSE
6. Supply chain decisions are not generally strategic in nature, because purchasing is not a
large expense for most firms. FALSE
7. Because service firms do not acquire goods and services externally, their supply chain
management issues are insignificant. FALSE
8. With the "many suppliers" sourcing strategy, the order usually goes to the supplier that
offers the highest quality. FALSE
9. Vertical integration, whether forward or backward, requires the firm to become more
specialized. FALSE
10. A fast-food retailer that acquired a spice manufacturer would be practicing backward
integration. TRUE
II. Multiple Choice: Choose the letter of the best and correct answer.
1. Which of the following characteristics is NOT common to all four of Darden Restaurants'
supply channels?
a. supplier qualification
b. product tracking
c. independent audits
d. refrigeration
e. just-in-time delivery
2. Which of the following would NOT typically be considered as part of a manufacturing
firm's supply chain?
a. suppliers
b. distributors
c. wholesalers
d. retailers
e. landscaping contractors
3. In most manufacturing industries, which of the following would likely represent the
largest cost to the firm?
a. transportation
b. purchasing
c. insurance
d. financing
e. advertising
4. Which one of the following is NOT one of the six sourcing strategies?
a. negotiation with many suppliers
b. vertical integration
c. keiretsu
d. short-term relationships with few suppliers
e. virtual companies
5. A disadvantage of the "few suppliers" sourcing strategy is:
a. the risk of not being ready for technological change.
b. the lack of cost savings for customers and suppliers.
c. possible violations of the Sherman Antitrust Act.
d. the high cost of changing partners.
e. the suppliers are less likely to understand the broad objectives of the procuring
firm and the end customer.
6. Which sourcing strategy is particularly common when the products being sourced are
commodities?
a. few suppliers
b. many suppliers
c. keiretsu
d. vertical integration
e. virtual companies
7. Which of the following is NOT an advantage of the "few suppliers" sourcing strategy?
a. suppliers have a learning curve that yields lower transaction and production costs
b. suppliers are more likely to understand the broad objectives of the end customer
c. less vulnerable trade secrets
d. creation of value by allowing suppliers to have economies of scale
e. suppliers' willingness to provide technological expertise
8. Which of the following is NOT a condition that favors the success of vertical integration?
a. availability of capital
b. availability of managerial talent
c. sufficiently high demand
d. small market share
e. All of the above favor the success of vertical integration.
9. Which of the following best describes vertical integration?
a. sell products to a supplier or a distributor
b. develop the ability to produce products that complement the original product
c. produce goods or services previously purchased
d. develop the ability to produce the specified good more efficiently than before
e. build long-term partnerships with a few suppliers
10. E-procurement:
a. works best in long-term contract situations but is not suited for auctions.
b. is purchasing facilitated through the Internet.
c. has many benefits but requires a lot of paperwork.
d. is illegal in all states except Nevada and New Jersey.
e. All of the above are true of e-procurement.
11. What are the three classic types of negotiation strategies?
a. supplier evaluation, supplier development, and supplier selection
b. Theory X, Theory Y, and Theory Z
c. many suppliers, few suppliers, and keiretsu
d. cost-based price model, market-based price model, and competitive bidding
e. traditional auctions, reverse auctions, and online exchanges
12. What are the four stages of supplier selection?
a. supplier evaluation, supplier development, negotiations, and contracting
b. supplier evaluation, negotiations, supplier acquisition, and supplier development
c. introduction, growth, maturity, and decline
d. supplier evaluation, supplier development, negotiations, and centralized
purchasing
e. negotiations, contracting, centralized purchasing, and E-procurement
13. Which of the following would NOT be subject to negotiation between a buyer and
supplier?
a. price
b. credit and delivery terms
c. quality standards
d. cooperative advertising agreements
e. All of the above could be negotiated.
14. Which of the following is NOT a typical benefit of centralized purchasing?
a. leverage purchase volume for better pricing
b. develop specialized staff expertise
c. reduce the duplication of tasks
d. reduce lead times
e. promote standardization
15. In what type of auction does a buyer initiate the process by submitting a description of
the desired product or service?
a. traditional
b. buyer
c. Dutch
d. French
e. Mexican
LESSON 8. INVENTORY MANAGEMENT
Let’s Try This
Try to answer the questions below.
I. TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if
otherwise.
1. According to the global company profile, Amazon.com's advantage in inventory
management comes from its almost fanatical use of economic order quantity and safety stock
calculations. FALSE
2. A major challenge in inventory management is to maintain a balance between inventory
investment and customer service. TRUE
3. Which item to order and with which supplier the order should be placed are the two
fundamental issues in inventory management. FALSE
4. One function of inventory is to take advantage of quantity discounts. TRUE
5. Work-in-process inventory is devoted to maintenance, repair, and operating materials.
FALSE
Let’s See How Far You Understand the Lesson (Post-Test)
I. TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if
otherwise.
1. ABC analysis classifies inventoried items into three groups, usually based on annual units
or quantities used. FALSE
2. In ABC analysis, "A" items are the most tightly controlled. TRUE
3. ABC analysis is based on the presumption that carefully controlling all items is necessary
to produce important inventory savings. FALSE
4. Cycle counting is an inventory control technique exclusively used for cyclical items. FALSE
5. One advantage of cycle counting is that it maintains accurate inventory records. TRUE
6. In cycle counting, the frequency of item counting and stock verification usually varies from
item to item depending upon the item's classification. TRUE
7. Retail inventory that is unaccounted for between receipt and time of sale is known as
shrinkage. TRUE
8. The demand for automobiles would be considered as independent demand. TRUE
9. Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
FALSE
10. If setup costs are reduced by substantial reductions in setup time, the production order
quantity is also reduced. TRUE
11. The EOQ model is best suited for items whose demand is dependent on other products.
FALSE
12. In the simple EOQ model, if annual demand were to increase, the EOQ would increase
proportionately. FALSE
13. At the economic order quantity, holding costs are equal to product costs. FALSE
14. In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.
FALSE
15. In the production order quantity model, inventory does not arrive in a single moment but
flows in at a steady rate, resulting in a larger production/order quantity than in an otherwise
identical EOQ problem. TRUE
II. Multiple Choice: Choose the letter of the best and correct answer.
1. Which of the following is a function of inventory?
a. to decouple various parts of the production process
b. to provide a selection of goods for anticipated customer demand and to separate
the firm from fluctuations in that demand
c. to take advantage of quantity discounts
d. to hedge against inflation
e. All of the above are functions of inventory.
2. Which of the following would NOT generally be a motive for a firm to hold inventories?
a. to decouple various parts of the production process
b. to provide a selection of goods for anticipated customer demand and to separate
the firm from fluctuations in that demand
c. to take advantage of quantity discounts
d. to minimize holding costs
e. to hedge against inflation
3. Which of the following is NOT one of the four main types of inventories?
a. raw material inventory
b. work-in-process inventory
c. maintenance/repair/operating supply inventory
d. safety stock inventory
e. finished-goods inventory
4. Which of the following statements about ABC analysis is FALSE?
a. ABC analysis is based on the presumption that controlling the few most important
items produces the vast majority of inventory savings.
b. In ABC analysis, "A" items should have tighter physical inventory control than "B"
or "C" items have.
c. In ABC analysis, forecasting methods for "C" items may be less sophisticated than
for "A" items.
d. ABC analysis is based on the presumption that all items must be tightly controlled
to produce important cost savings.
e. Criteria other than annual dollar volume, such as high holding cost or delivery
problems, can determine item classification in ABC analysis.
5. Most inventory models attempt to minimize:
a. the likelihood of a stockout.
b. the number of items ordered.
c. total inventory-based costs.
d. the number of orders placed.
e. the safety stock.
6. Which of the following statements about the basic EOQ model is FALSE?
a. If the setup cost were to decrease, the EOQ would fall.
b. If annual demand were to double, the number of orders per year would increase.
c. If the ordering cost were to increase, the EOQ would rise.
d. If annual demand were to double, the EOQ would also double.
e. All of the above statements are true.
7. All EXCEPT which of the following statements about ABC analysis are true?
a. In ABC analysis, inventory may be categorized by measures other than dollar
volume.
b. ABC analysis categorizes on-hand inventory into three groups based on annual
dollar volume.
c. ABC analysis is an application of the Pareto principle.
d. ABC analysis suggests that all items require the same high degree of control.
e. ABC analysis suggests that there are the critical few and the trivial many inventory
items.
8. ABC analysis is based upon the principle that:
a. all items in inventory must be monitored very closely.
b. there are usually a few critical items, and many items that are less critical.
c. an item is critical if its usage is high.
d. more time should be spent on class "C" items because there are many more of them.
e. as with grade distributions in many MBA courses, there should be more mediumlevel "B" items than either "A" or "C" items.
9. ABC analysis divides on-hand inventory into three classes, generally based upon which of
the following?
a. item quality
b. unit price
c. the number of units on hand
d. annual demand
e. annual dollar volume
10. Which of the following is an element of inventory holding costs?
a. housing costs
b. material handling costs
c. investment costs
d. pilferage, scrap, and obsolescence
e. All of the above are elements of inventory holding costs
LESSON 9. SHORT-TERM SCHEDULING
Let’s Try This
Try to answer the questions below.
1. In your own idea, why is it important to create short-term scheduling in dealing with
various business activities?
Short-term scheduling involves selecting one of the processes from the ready queue and
scheduling them for execution. The task of short-term scheduling is to select specific resources and
exact times for all activities of the orders to be scheduled Having a schedule guides you in
determining what your priorities are so that you can spend the right time on the right
tasks. It also reminds you of any forthcoming deadlines. Knowing this, you can block out
sufficient time to meet them.
2. What are the most common issues that will be encountered in making short-term
scheduling? Explain each issue.
Shortage of Employees- If you’re actually understaffed, you need to hire more
people. Sometimes that’s a hard thing to convince yourself of – especially if your business
is small. But realistically, the amount of hassle and headaches you’ll avoid by creating an
employee buffer is worth the extra payroll any day of the week.
Overscheduling- While most types of employees are covered by federal and state
regulations – which typically require eight hours between shifts some are not. And
sometimes shifts are “scrunched” together accidentally. For this reason, it’s a better idea to
try to give employees at least 12 hours between shifts. If that’s not possible, arrange things
so they can get two days off together. This extended period away from work will allow
them to decrease their sleep deficit, forget work for a while, and punch back in ready and
refreshed.
Disorganization- The solution to this issue is finding a full-featured time clock software that
gives you the flexibility and resources you need to create an organized schedule that works
for everyone. In addition to traditional scheduling duties, a good time clock app will help
you send digital schedules and text updates to employees, and help managers quickly find
shift replacements.
Lack of Availability- Workers want to work around their lives. Some prefer day shifts,
others night shifts. Some want to work weekends, others refuse to. As a result, it can be a
challenge to accommodate everybody. The solution to this problem is to hire a wellbalanced crew. Have a few early birds, a few night owls and a couple of part-timers (maybe
high school or college students) who can only work weekends. That way, you keep
everyone happy – including your customers.
Let’s See How Far You Understand the Lesson (Post-Test)
I. Multiple Choice: Choose the letter of the best and correct answer.
1. Which of the following statements regarding scheduling at Alaska Airlines is FALSE?
a. Flying into Alaska complicates scheduling.
b. Schedule changes at one airport have a ripple effect that may have impacts in many
others.
c. Alaska Airlines' high-tech computer and communications system is located in
Seattle.
d. Alaska Airlines' rapid rescheduling uses mathematical scheduling models.
e. Alaska Airlines' rapid rescheduling promotes air safety and limits traveler
inconvenience, but has not resulted in money savings for Alaska Airlines.
2. Which of the following is NOT a key direct benefit from effective internal or external
scheduling?
a. lower cost
b. greater use of assets
c. more dependable delivery
d. higher quality
e. added flexibility
3. What is the objective of scheduling?
a. maximize quality
b. minimize cost
c. minimize response time
d. prioritize and allocate demand to available facilities
e. minimize lead time
4. The correct sequence from longest to smallest duration scheduling is:
a. capacity planning, aggregate planning, master schedule, short-term scheduling.
b. aggregate planning, capacity planning, master schedule, short-term scheduling.
c. master schedule, capacity planning, aggregate planning, short-term scheduling.
d. master schedule, aggregate planning, capacity planning, short-term scheduling.
e. capacity planning, master schedule, aggregate planning, short-term scheduling.
5. Forward scheduling is the scheduling of:
a. the end items or finished products.
b. jobs as soon as the requirements are known.
c. the start items or component parts.
d. the final operation first beginning with the due date.
e. jobs according to their profit contributions.
6. Short-term schedules are prepared:
a. directly from the aggregate plans.
b. directly from the capacity plans.
c. from inventory records for items that have been used up.
d. from master schedules, which are derived from aggregate plans.
e. from the purchasing plans.
7. Which of the following is not an effectiveness criterion for scheduling?
a. minimizing customer waiting time
b. minimizing completion time
c. minimizing WIP inventory
d. maximizing utilization
e. maximizing flow time
8. Which of the following considers process capacity when scheduling?
a. cap loading
b. constrained loading
c. capacitated loading
d. backward loading
e. finite loading
9. Forward scheduling:
a. begins with a delivery date, then offsets each operation one at a time, in reverse
order.
b. has the same meaning as "finite loading."
c. is often used in service environments such as catering a banquet or scheduling
surgery.
d. starts the schedule as soon as the job requirements are known.
e. produces a schedule only if it meets the due date.
10. The short-term scheduling activity called "loading":
a. assigns dates to specific jobs or operations steps.
b. specifies the order in which jobs should be done at each center.
c. assigns jobs to work centers
d. assigns workers to jobs.
e. assigns workers to machines.
11. Which of the following is NOT required to be known in order to schedule process-focused
facilities?
a. the sequence of work
b. which workers are assigned to each work center
c. the time required for each item
d. the capacity of each work center
e. the availability of each work center
12. A work center is interested in limiting work-in-process by not allowing production to
start again until the current batch is finished. The best solution most likely involves:
a. MRP.
b. ConWIP cards.
c. Gantt charts.
d. Johnson's rule.
e. the assignment method.
13. The assignment method is:
a. a method to highlight overloads in a given work center.
b. a computerized method of determining appropriate tasks for an operation.
c. a form of linear programming for optimally assigning tasks or jobs to resources.
d. the same thing as the Gantt schedule chart.
e. a method for achieving a balance between forward and backward scheduling.
14. What is a scheduling technique used to achieve an optimum, one-to-one matching of tasks
and resources?
a. the assignment method
b. Johnson's rule
c. the CDS algorithm
d. the appointment method
e. the reservation method
15. Which of the following is an aid used to monitor jobs in progress?
a. a Gantt load chart
b. the assignment method
c. a Gantt schedule chart
d. Johnson's rule
e. a Gantt progress chart
II. TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if
otherwise.
1. Alaska Airlines uses mathematical short-term scheduling techniques and a high-tech nerve
center to manage the rapid rescheduling necessary to cope with weather delays and similar
disruptions. TRUE
2. Short-term scheduling is important to efficiency and to cost reduction, but its impact is not
of strategic importance. FALSE
3. The benefits of effective scheduling include lower cost, faster throughput, and dependable
delivery. TRUE
4. With forward scheduling, jobs are scheduled as late as possible within the time allowed by
the customer due dates. FALSE
5. One criterion for developing effective schedules is minimizing completion time. TRUE
6. Process-focused facilities and repetitive facilities generate forward-looking schedules, but
process-focused facilities do this with JIT and kanban while repetitive facilities generally use
MRP. FALSE
7. The constant work-in-process (ConWIP) card aids input-output control by limiting the
amount of work in a work center. TRUE
8. A Gantt load chart shows the loading and idle time of several departments, machines, or
facilities. TRUE
9. Gantt charts are useful for scheduling jobs, but not for loading them. FALSE
10. The assignment method provides an optimum, one-to-one assignment of jobs to
resources. TRUE
LESSON 10. LEAN OPERATIONS
Let’s Try This
Try to answer the questions below.
1. What is the role of customer satisfaction in business?
Customer happiness is critical since it indicates that your target market like what
you're doing. Customer happiness is linked to higher customer retention, higher lifetime
value, and a stronger company reputation, according to research. customer satisfaction does
have a positive effect on an organisation’s profitability. Without customer satisfaction you
cannot asses where the business should cope up.
2. How are you going to satisfy customer?
Focus on their happiness. As you engage in business, customers are treasure that
should be keep. Received feedback as a form of an opportunity to develop. Form a good
relationship between them and attain happiness.
3. What is the relationship of customer satisfaction in lean operations?
Increased customer satisfaction: By eliminating inefficiencies, LEAN manufacturing creates
faster production, packaging, and shipping times. Customers will receive their orders more quickly
and with fewer errors, which will improve their level of satisfaction and increase retention. Lean is a
top-line rather than a bottom-line strategy; as the organization improves its sales, engineering,
development, production, and delivery processes so that customers get what they want, where they
want it, how they want it, when they want it and at the cost that they want, revenues and market
share improve.
Let’s See How Far You Understand the Lesson (Post-Test)
I. TRUE OR FALSE: Write the word TRUE if the statement is correct and FALSE if
otherwise.
1. Product storage is an example of waste in the sense that no value is added. TRUE
2. In a JIT system, product inspection adds value by identifying defective items. FALSE
3. Customer demand will always remain an unknown, so it is not considered a source of
variability. TRUE
4. Variability in manufacturing can occur because engineering drawings or specifications are
incomplete or inaccurate. TRUE
5. A push system means providing the next station with exactly what is needed when it is
needed. FALSE
6. Waste is anything that does not add value from the consumer's perspective. TRUE
7. Increasing inventory exposes variability in production processes. FALSE
8. The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and
sustain/self-discipline—are important to lean production because they act as a means to
reduce waste. TRUE
9. When implemented as a comprehensive operations strategy, JIT, TPS, and lean systems
sustain competitive advantage and result in increased overall returns. TRUE
10. JIT brings about competitive advantage by faster response to the customer regardless of
cost. FALSE
11. One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots
directly to the using department as needed. TRUE
12. Many suppliers feel that having a variety of customers is better than being tied to longterm contracts with one customer. TRUE
13. JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a
way of transferring holding cost from the JIT firm to the suppliers. TRUE
14. A common JIT layout tactic is to minimize distance. TRUE
15. Cross-training is a common JIT layout tactic to improve flexibility. TRUE
16. JIT systems carry inventory just in case something goes wrong. FALSE
17. Hidden problems are generally uncovered during the process of reducing inventory.
TRUE
18. A scheduler may find that freezing the portion of the schedule closest to the due dates
allows the production system to function and the schedule to be met. TRUE
19. The first step in reducing setup times is the separation of setup into preparation activities
and actual setup, so that as much work as possible can be done while the machine or process
is operating. TRUE
20. Level scheduling means producing at a constant rate, regardless of customer demands.
FALSE
II. Multiple Choice: Choose the letter of the best and correct answer.
1. What does TPS stand for?
a. Total Production Streamlining
b. Toyota Production System
c. Taguchi's Production S's
d. Total Process Simplification
e. Transparent Processing System
2. Which of the following is generally found in most Lean environments?
a. a push or pull system, depending upon the rate of demand
b. a push system for high margin items and a pull system for low margin items
c. a push system for purchased parts and a pull system for manufactured parts
d. push systems
e. pull systems
3. Which of the following is NOT a source of variability?
a. Employees, machines, and suppliers produce units late.
b. Customer demand is unknown.
c. Employees, machines, and suppliers produce units that conform to standards.
d. Engineering drawings are inaccurate.
e. Drawings or specifications are incomplete.
4. Which of the following is specifically characterized by a focus on continuous
improvement, respect for people, and standard work practices?
a. Just-in-time (JIT)
b. Toyota Production System (TPS)
c. Lean operations
d. Material requirements planning (MRP)
e. kanban
5. Which of the following is specifically characterized by continuous and forced problem
solving via a focus on throughput and reduced inventory?
a. Just-in-time (JIT)
b. Toyota Production System (TPS)
c. Lean operations
d. Material requirements planning (MRP)
e. Kanban
6. Which of the following statements regarding a pull system is TRUE?
a. Large lots are pulled from upstream stations.
b. Work is pulled to the downstream stations before it is actually needed.
c. Manufacturing cycle time is increased.
d. Problems become more obvious.
e. None of the above is true of a pull system.
7. Manufacturing cycle time is best defined as the:
a. length of the work shift, expressed in minutes per day.
b. time it takes a unit to move from one workstation to the next.
c. time between the start of one unit and the start of the next unit.
d. sum of all the task times to make one unit of a product.
e. time from raw materials receipt to finished product exit.
8. Which of the following is specifically characterized by the elimination of waste through a
focus on exactly what the customer wants?
a. Just-in-time (JIT)
b. Toyota Production System (TPS)
c. Lean operations
d. Material requirements planning (MRP)
e. Kanban
9. Which of the following is NOT one of the Seven Wastes?
a. overproduction
b. transportation
c. assignment
d. defective product
e. motion
10. The 5Ss:
a. have the "flavor" of a housekeeping list.
b. are a checklist for lean operations.
c. have become a list of seven items in American practice.
d. can be used to assist with necessary changes in organizational culture.
e. All of these are true.
11. The list of 5Ss, although it looks like a housekeeping directive, supports lean production
by:
a. identifying non-value items and removing them, in the "sort/segregate" category.
b. reducing inventory, in the "standardize" category.
c. increasing variability through standardized procedures, in the "standardize" category.
d. eliminating wasted motion through ergonomic studies, in the "support" category.
e. building good safety practices, in the "shine/sweep" category.
12. Concerning relationships with suppliers, which of the following combinations is critical
to the
success of JIT?
a. close relationships with trust
b. close relationships with skepticism
c. distant relationships with trust
d. distant relationships with skepticism
e. none of the above
13. Which one of the following is not a benefit of JIT implementation?
a. cost reduction
b. variability increase
c. rapid throughput
d. quality improvement
e. rework reduction
14. If the goals of JIT partnerships are met, which of the following is a result?
a. For incoming goods, receiving activity and inspection are outsourced.
b. In-transit inventory falls as suppliers are located closer to facilities.
c. Suppliers maintain a variety of customers to reduce risk.
d. In-plant inventory replaces in-transit inventory.
e. All of the above are consequences of meeting the JIT partnership goals.
15. Which one of the following is a characteristic of a JIT partnership?
a. third-party logistics never used
b. maximal product specifications imposed on supplier
c. active pursuit of vertical integration
d. removal of incoming inspection
e. frequent deliveries in large lot quantities
16. Characteristics of just-in-time partnerships do NOT include:
a. removal of in-transit inventory.
b. large lot sizes to save on setup costs and to gain quantity discounts.
c. long-term contracts.
d. produce with zero defects.
e. focus on core competencies.
17. Which of the following is not a goal of JIT partnerships?
a. removal of unnecessary activities
b. removal of in-plant inventory
c. removal of in-transit inventory
d. inspect all incoming shipments to ensure zero defects
e. All of the above are goals of JIT partnerships.
18. Which of the following is NOT a goal of JIT partnerships?
a. removal of unnecessary activities
b. removal of in-plant inventory
c. removal of in-transit inventory
d. obtain improved quality and reliability
e. All of the above are goals of JIT partnerships.
19. Which one of the following is a concern expressed by suppliers in JIT partnerships?
a. having too many customers
b. delivery to the point of use
c. having limited ability to respond to changes in product and quality
d. large lot sizes
e. customers' infrequent engineering changes
20. How can a reduction of in-transit inventory be encouraged?
a. supplier location near plants
b. high setup costs
c. low carrying costs
d. use of trains, not trucks
e. low-cost, global suppliers
21. In JIT partnerships, suppliers have several concerns. Which of the following is NOT such
a concern?
a. desire for diversification
b. poor customer scheduling
c. small lot sizes
d. producing high enough quality levels
e. customers' infrequent engineering changes
22. Which of the following is NOT a concern of suppliers as they prepare to enter into JIT
partnerships?
a. Suppliers feel that they would be less at risk if they contracted with more than one
customer.
b. Suppliers are concerned that customers will present frequent engineering changes
with inadequate lead time to deal with them.
c. Suppliers feel that their processes are suited for larger lot sizes than the customer
wants.
d. Suppliers are concerned that frequent delivery of small quantities is economically
prohibitive.
e. All of the above represent JIT supplier concerns.
23. Just-in-time systems make demands on layouts, including the need for:
a. distance reduction.
b. increased flexibility.
c. reduced space and inventory.
d. cross-trained, flexible employees.
e. all of the above
24. Which one of the following is NOT a layout tactic in a JIT environment?
a. work cells for families of products
b. fixed equipment
c. minimizing distance
d. little space for inventory
e. poka-yoke devices
25. Who is credited with coining the phrase, "Inventory is evil"?
a. Poka Yoke
b. Pat "Keiretsu" Morita
c. Kanban Polka
d. Shigeo Shingo
e. Taiichi Ohno
26. Which one of the following statements is TRUE regarding JIT inventory?
a. It exists just in case something goes wrong.
b. It is the minimum inventory necessary to keep a perfect system running.
c. It hides variability.
d. It is minimized with large lot production.
e. It increases if setup costs decrease.
27. What does the Japanese word "kanban" mean?
a. low inventory
b. employee empowerment
c. card
d. continuous improvement
e. lot size of one
28. Kanban is associated with all EXCEPT which of the following?
a. small lot sizes
b. signals, such as cards, lights, or flags
c. moving inventory only as needed
d. increased material handling
e. reductions in inventory
29. Which one of the following statements is TRUE about the kanban system?
a. The quantities in the containers are usually large to reduce setup costs.
b. It is associated with a push system.
c. It is useful to smooth operations when numerous quality problems occur.
d. The supplier workstation signals the customer workstation as soon as a batch is
completed.
e. The customer workstation signals to the supplier workstation when production is
needed.
30. Which one of the following scenarios represents the use of a kanban to reduce
inventories?
a. A supervisor tells the operators to stay busy and start producing parts for next month.
b. A "supplier" work center signals the downstream workstation that a batch has been
completed.
c. A supervisor signals to several work centers that the production rate should be
changed.
d. A "customer" work center signals to the "supplier" workstation that more parts are
needed.
e. An operator asks the next station's operator to help him fix his machine