Chapter 08 - Managing Service and Manufacturing Operations
Chapter 08
Managing Service and Manufacturing Operations
True / False Questions
1. The transformation process occurs only in companies that manufacture tangible goods.
True False
2. Production refers to all the activities involved in producing products, while operations
refers to the physical process of transforming resources into goods and services.
True False
3. Outputs include labor, materials, energy, and money.
True False
4. The transformation process is at the heart of operations management.
True False
5. Operations management refers to those processes used in making both tangible and
intangible products.
True False
6. The number of steps in the transformation process is always the same, no matter what the
product or service.
True False
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Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
7. If an employee is involved with transforming resources into goods and services, then he is
in
A. marketing.
B. financing.
C. human resources.
D. operations management.
E. budgeting.
8. If an employee is associated with producing goods, services, and ideas that satisfy the
needs of customers, then she works most closely with
A. financing.
B. budgeting.
C. production.
D. human resources.
E. operations.
9. The transformation process is
A. the development and administration of activities that transform resources into goods,
services, and ideas.
B. the conversion of human, financial, and physical resources into goods, services, and ideas.
C. labor, materials, energy, and money.
D. goods and services.
E. the development, promotion, pricing, and distribution of products.
10. The transformation process occurs in
A. service companies.
B. all organizations, regardless of product.
C. manufacturing companies.
D. idea consultants.
E. government agencies.
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Chapter 08 - Managing Service and Manufacturing Operations
11. Operations management includes responsibility for
A. customer service.
B. inputs and outputs.
C. product development.
D. pricing.
E. promotion.
12. Viewed from the perspective of operations, the money used to purchase a carpenter's tools
and the electricity used to run his power saw are
A. processes.
B. outputs.
C. inventory.
D. inputs.
E. maintenance costs.
13. From an operations perspective, food sold at a restaurant and services provided by a
plumbing company are
A. processes.
B. inputs.
C. outputs.
D. inventory.
E. costs.
14. To ensure quality and efficiency, operations managers take ________ at various points in
the transformation process and compare them to established standards.
A. breaks
B. samples
C. calculations
D. marketing research
E. feedback
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Chapter 08 - Managing Service and Manufacturing Operations
15. Operations management has the primary responsibility for
A. determining customer wants and needs.
B. conducting research on goods/service feasibility.
C. creating products that satisfy customers.
D. developing an appropriate distribution system.
E. deciding what promotional activities will be best.
16. Transformation processes occur
A. only in manufacturing organizations.
B. only in marketing departments.
C. in all organizations.
D. only in service providers.
E. only in industrial plants.
Essay Questions
17. Describe the transformation process, from inputs to outputs, for a product or service of
your choosing.
18. What is operations management?
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Chapter 08 - Managing Service and Manufacturing Operations
True / False Questions
19. For most organizations, the ultimate goal of the transformation process is to produce
outputs that are worth more than the combined costs of inputs.
True False
20. Different kinds of transformation processes take place in organizations that provide
services.
True False
21. In a nonprofit organization like Habitat for Humanity, inputs such as money, materials,
information, and volunteer time and labor are used to transform raw materials into homes for
needy families.
True False
22. Manufacturers and service providers differ in the nature and consumption of their output.
True False
23. Service providers are generally less labor-intensive because of the high degree of
customization.
True False
24. Variations in demand, service requirements, and the intangibility of the product make
measuring productivity more difficult for manufacturers.
True False
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Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
25. Which of the following is not a point of difference between service providers and
manufacturers?
A. Services are more labor-intensive
B. Manufacturing has more uniform outputs
C. Services do not undergo a transformation process
D. It is straightforward to measure manufacturing productivity
E. Services have less control over the variability of their inputs
26. To receive a haircut, you generally have to go to a barbershop or salon. To which of the
following characteristics does this pertain?
A. Uniformity of inputs
B. Uniformity of outputs
C. Labor required
D. Measurement of productivity
E. Nature and consumption of output
27. Why do the products of service providers tend to be more customized than those of
manufacturers?
A. Differing customers have differing needs
B. Because all customers are the same
C. Technological innovations have reduced variability
D. There is more capital required in service provision
E. It is easy to measure productivity
28. Money, employees, time, and equipment represent an airline's ________ to the
transformation process.
A. outputs
B. inputs
C. products
D. services
E. intangibles
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Chapter 08 - Managing Service and Manufacturing Operations
29. For most organizations, the ultimate objective is for produced outputs to be
A. easy to develop.
B. tangible, hard goods.
C. inexpensive.
D. worth more than the costs of input.
E. equal to the costs of input.
30. The fact that a hairdresser gives each customer a different haircut relates to which of the
following points of difference between service providers and manufacturers?
A. Nature and consumption of output.
B. Uniformity of inputs.
C. Labor required.
D. Measurement of productivity.
E. Uniformity of output.
31. The nature of the service provider's product requires
A. less employee input.
B. a higher degree of customer contact.
C. a lesser degree of customer contact.
D. more expensive inputs.
E. more standardization.
32. Actual performance of the service provider's product typically occurs
A. several days after purchase.
B. outside the service provider's facility.
C. at the point of consumption.
D. in the buyer's home.
E. before the point of consumption.
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Chapter 08 - Managing Service and Manufacturing Operations
33. Manufacturers' products are typically
A. more labor intensive than service providers'.
B. less uniform than service providers'.
C. more difficult to inventory than service providers'.
D. more standardized than service providers'.
E. cheaper than service providers'.
34. Compared to service providers, manufacturers generally
A. are more labor intensive.
B. are more capital intensive.
C. customize their outputs.
D. have difficulty measuring productivity.
E. produce intangible outputs.
Essay Questions
35. Why do services tend to be more labor-intensive than manufacturing?
36. How do operations for manufacturers and service providers differ?
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Chapter 08 - Managing Service and Manufacturing Operations
True / False Questions
37. A company that uses a fixed-position layout is often called a project organization because
it is involved in large, complex projects.
True False
38. It is not necessary for a product to satisfy a need or a want.
True False
39. Consumer needs and wants often dictate a production process.
True False
40. Modular design allows products to be repaired quickly, but the components are often
expensive.
True False
41. Taxes are an important consideration when deciding where to locate a production facility.
True False
42. Intermittent organizations typically use the fixed-position layout.
True False
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Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
43. If ABC Computer Company is determining demand for its future products and how much
consumers are willing to pay, the company will likely rely on
A. the economy.
B. marketing research.
C. the competition.
D. the past.
E. intuition.
44. The term standardization means
A. ensuring that every product has the same quality.
B. that similar products, manufactured by different companies, all operate in the same
manner.
C. making identical, interchangeable components or products.
D. making the exact product the customer wants.
E. all of the above.
45. A primary reason for using standardization is to
A. reduce production costs.
B. increase consumer options.
C. reduce product quality.
D. increase variations.
E. foster creativity.
46. Building a computer so that components can be installed in different configurations to
meet customers' needs is a result of
A. flexible manufacturing.
B. modular design.
C. customization.
D. specialization.
E. varied engineering.
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Chapter 08 - Managing Service and Manufacturing Operations
47. Facility location decisions are complex because
A. all customers want plants nearby.
B. transportation costs are prohibitively high.
C. delivery speed is of prime concern.
D. proximity to market is crucial.
E. they involve the evaluation of a number of important factors and the costs are high.
48. A company that manufactures large products, such as houses or bridges, may require that
all resources be brought to a central location during production. This type of facility layout is
called
A. fixed-position.
B. product.
C. line.
D. central control.
E. assembly line.
49. A company performing large, complex tasks such as construction or exploration is called
a(n)
A. continuous manufacturing organization.
B. intermittent organization.
C. project organization.
D. construction company.
E. oil company.
50. A metal fabrication plant with a cutting department, a drilling department, and a polishing
department would likely use which of the following layouts?
A. Fixed position
B. Horizontal position
C. Process
D. Geographical
E. Customer based
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Chapter 08 - Managing Service and Manufacturing Operations
51. A hospital having an x-ray, obstetrics, emergency room, and other units probably would
best be classified as a(n)
A. intermittent organization.
B. project organization.
C. continuous manufacturing organization.
D. fixed organization.
E. HMO.
52. An organization that creates many products with similar characteristics, such as
automobiles, television sets, or vacuum cleaners, would most likely be which of the following
types of organizations?
A. Continuous manufacturing
B. Intermittent manufacturing
C. Project manufacturing
D. Assembly line
E. Fixed-position
Essay Questions
53. What is sustainability and how does it impact manufacturing?
54. How have computers and robots influenced the operations of business?
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Chapter 08 - Managing Service and Manufacturing Operations
True / False Questions
55. A just-in-time inventory management system saves money and requires less storage space
by using smaller amounts of materials that arrive just when they are needed.
True False
56. Operations managers have little concern for supply-chain management activities.
True False
57. Managing finished products and packaging them are activities most closely associated
with marketing.
True False
58. Purchasing is the buying of all materials needed by the organization.
True False
59. The majority of companies purchase all materials needed to make their finished products.
True False
60. A planning system that schedules the precise quantity of materials needed for production
is called a just-in-time system.
True False
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Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
61. Which of the following activities is not included in supply chain management?
A. Getting products to customers
B. Obtaining and managing raw materials
C. Managing finished products
D. Packaging finished products
E. Researching and developing products
62. All activities involved in obtaining and managing raw materials and component parts,
managing finished products, packaging them, and getting them to customers are part of
A. resource management.
B. supply chain management.
C. engineering.
D. finance.
E. strategic planning.
63. Within organizations, purchasing is also referred to as
A. consumption.
B. disposition.
C. acquisitions.
D. procurement.
E. budgeting.
64. The buying of all materials needed by the organization is called
A. consumer behavior.
B. capital expenditures.
C. purchasing.
D. buyer behavior.
E. acquisitions.
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Chapter 08 - Managing Service and Manufacturing Operations
65. The process of determining how many supplies and goods are needed, keeping track of
quantities on hand, each item's location, and who is responsible for it is called
A. the economic order quantity model.
B. just-in-time inventory management.
C. material-requirements planning.
D. inventory control.
E. procurement.
66. The term used to refer to the raw materials, components, completed or partially completed
products, and pieces of equipment a firm uses is
A. inventory.
B. order quantities.
C. production.
D. tangibles.
E. intangibles.
67. Materials that have been purchased to be used in making other products are included in
A. finished inventory.
B. partial inventory.
C. raw materials inventory.
D. supplier inventory.
E. components parts inventory.
68. A model that identifies the optimum number of items to minimize the costs of managing
them is called
A. just-in-time management.
B. flexible scheduling.
C. material requirements planning.
D. the economic order quantity model.
E. logistics.
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Chapter 08 - Managing Service and Manufacturing Operations
69. Minimizing inventory by providing an almost continuous flow of items from suppliers to
the production facility is referred to as
A. just-in-time management.
B. economic ordering.
C. material requirements planning.
D. logistics.
E. operations management.
70. A planning system that schedules the precise quantity of materials needed for production
is called
A. just-in-time management.
B. material-requirements planning.
C. economic order quantities.
D. flexible scheduling.
E. cycle time management.
Essay Questions
71. What is the economic order quantity model?
72. What considerations must managers make after materials have been procured and their
use has been determined?
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Chapter 08 - Managing Service and Manufacturing Operations
True / False Questions
73. The ISO 9000 is a series of international quality management standards for organizations.
True False
74. Quality is a critical element of operations management.
True False
75. The degree to which a good or service meets the demands and requirements of customers
is called customer satisfaction.
True False
76. Determining quality can be difficult.
True False
77. Service businesses cannot incorporate quality standards.
True False
78. Inspection reveals whether a product meets quality standards.
True False
Multiple Choice Questions
79. When managing quality in manufacturing, when is sampling likely to be used?
A. When inspection tests are destructive
B. When every product absolutely must be tested
C. Sampling is always used in manufacturing
D. Sampling is never used in manufacturing
E. Sampling is generally used in conjunction with inspection tests
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Chapter 08 - Managing Service and Manufacturing Operations
80. It is especially difficult to measure quality characteristics when
A. a firm uses ISO 9000.
B. a firm has a total quality management program.
C. the product is a good.
D. the product is a service.
E. a firm uses statistical process control.
81. Quality
A. is a concern only for manufacturing companies.
B. is a concern only for service providers.
C. refers to the price charged for a product.
D. is a critical element of operations management.
E. depends on employees' perceptions.
82. The degree to which a good or service meets the demands and requirements of customers
is called
A. efficiency.
B. productivity.
C. quality.
D. effectiveness.
E. customer satisfaction.
83. The processes an organization uses to maintain its established quality standards are called
A. quality control.
B. implementation.
C. inspections.
D. operations management.
E. total quality management.
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Chapter 08 - Managing Service and Manufacturing Operations
84. The system in which management collects and analyzes information about the production
process to pinpoint quality problems in the production system is called
A. total quality management.
B. statistical process control.
C. quality control.
D. operations control.
E. production control.
85. The first step in quality control for any organization is
A. inspection.
B. establishing standards.
C. sampling.
D. implementation.
E. correction.
86. ________ is a philosophy that uniform commitment to quality in all areas of an
organization will promote a culture that meets customers' perceptions of quality.
A. The marketing concept
B. Total quality manufacturing
C. ISO 9000
D. Statistical process control
E. Total quality management
87. Determining how many items are to be inspected is called
A. efficiency.
B. sampling.
C. appraisal.
D. effectiveness.
E. specifications.
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Chapter 08 - Managing Service and Manufacturing Operations
88. It is desirable to test only a sample of the product in all of the following circumstances
except when
A. inspection procedures are expensive.
B. elaborate testing equipment is required.
C. testing takes a significant number of hours to complete.
D. the product is destroyed by sampling.
E. sampling is the cheapest option and does not destroy the product
Essay Questions
89. What is total quality management?
90. What is quality control?
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Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
Solve the Dilemma: Planning For Pizza
91. What does McKing Corporation wish to do?
A. To release a new line of sandwiches
B. To start selling its food products in grocery stores
C. To diversify into selling pizzas
D. To start selling insurance
E. McKing wants to keep selling the same products it always has
92. What is the problem with McKing's plan to start selling 16" pizzas at its drive throughs?
A. There is no market for 16" fast food pizzas
B. McKing's target market does not eat very much pizza
C. The pizzas are too expensive for the average consumer
D. The pizzas are too large to be passed through existing drive-through windows
E. There is no problem with McKing's plan to expand into pizza
Essay Questions
93. What mistake did McKing make in approaching the introduction of pizza?
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Chapter 08 - Managing Service and Manufacturing Operations
94. How could this product introduction have been coordinated to avoid the problems that
were encountered?
95. If you were an executive at McKing, how would you proceed with the introduction of
pizza into the restaurants?
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Chapter 08 - Managing Service and Manufacturing Operations
Chapter 08 Managing Service and Management Operations Answer Key
True / False Questions
1. (p. 239) The transformation process occurs only in companies that manufacture tangible
goods.
FALSE
The transformation process occurs in the production of both goods and services.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
2. (p. 239) Production refers to all the activities involved in producing products, while operations
refers to the physical process of transforming resources into goods and services.
FALSE
Production refers to the activities and processes used in making tangible products, while
operations are the activities and processes used in making both tangible and intangible
products.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
3. (p. 239) Outputs include labor, materials, energy, and money.
FALSE
Outputs refer to the goods, services, and ideas that result from the conversion of inputs.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-23
Chapter 08 - Managing Service and Manufacturing Operations
4. (p. 239) The transformation process is at the heart of operations management.
TRUE
At the heart of operations management is the transformation process through which inputs
(resources such as labor, money, materials, and energy) are converted into outputs (goods,
services, and ideas).
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
5. (p. 239) Operations management refers to those processes used in making both tangible and
intangible products.
TRUE
At the heart of operations management is the transformation process through which inputs
(resources such as labor, money, materials, and energy) are converted into outputs (goods,
services, and ideas).
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
6. (p. 239-240) The number of steps in the transformation process is always the same, no matter
what the product or service.
FALSE
The number of steps in the transformation process can vary greatly from one to many steps.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-24
Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
7. (p. 238) If an employee is involved with transforming resources into goods and services, then
he is in
A. marketing.
B. financing.
C. human resources.
D. operations management.
E. budgeting.
Operations management (OM) is the development and administration of the activities
involved in transforming resources into goods and services.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8. (p. 238) If an employee is associated with producing goods, services, and ideas that satisfy the
needs of customers, then she works most closely with
A. financing.
B. budgeting.
C. production.
D. human resources.
E. operations.
Employees involved in operations management develop and administer activities involved in
transforming resources into goods and services that are designed to meet the desires of
customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-25
Chapter 08 - Managing Service and Manufacturing Operations
9. (p. 239) The transformation process is
A. the development and administration of activities that transform resources into goods,
services, and ideas.
B. the conversion of human, financial, and physical resources into goods, services, and ideas.
C. labor, materials, energy, and money.
D. goods and services.
E. the development, promotion, pricing, and distribution of products.
At the heart of operations management is the transformation process through which inputs
(resources such as human, financial, and physical resources) are converted into outputs
(goods, services, and ideas).
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
10. (p. 239) The transformation process occurs in
A. service companies.
B. all organizations, regardless of product.
C. manufacturing companies.
D. idea consultants.
E. government agencies.
At the heart of operations management is the transformation process through which inputs
(resources such as labor, money, materials, and energy) are converted into outputs (goods,
services, and ideas), different types of transformation processes take place in organizations
that provide services, such as airlines, colleges, and most nonprofit organizations, in addition
to manufacturing.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-26
Chapter 08 - Managing Service and Manufacturing Operations
11. (p. 239) Operations management includes responsibility for
A. customer service.
B. inputs and outputs.
C. product development.
D. pricing.
E. promotion.
At the heart of operations management is the transformation process through which inputs
(resources such as labor, money, materials, and energy) are converted into outputs (goods,
services, and ideas).
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
12. (p. 239) Viewed from the perspective of operations, the money used to purchase a carpenter's
tools and the electricity used to run his power saw are
A. processes.
B. outputs.
C. inventory.
D. inputs.
E. maintenance costs.
Inputs are the resources—such as labor, money, materials, and energy—that are converted
into outputs.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-27
Chapter 08 - Managing Service and Manufacturing Operations
13. (p. 239) From an operations perspective, food sold at a restaurant and services provided by a
plumbing company are
A. processes.
B. inputs.
C. outputs.
D. inventory.
E. costs.
Outputs are the goods, services, and ideas that result from the conversion of inputs.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
14. (p. 239) To ensure quality and efficiency, operations managers take ________ at various
points in the transformation process and compare them to established standards.
A. breaks
B. samples
C. calculations
D. marketing research
E. feedback
To ensure that this process generates quality products efficiently, operations managers control
the transformation process by taking measurements (feedback) at various points in and
comparing them to previously established standards.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
8-28
Chapter 08 - Managing Service and Manufacturing Operations
15. (p. 239) Operations management has the primary responsibility for
A. determining customer wants and needs.
B. conducting research on goods/service feasibility.
C. creating products that satisfy customers.
D. developing an appropriate distribution system.
E. deciding what promotional activities will be best.
All adjustments made to create a satisfying product are a part of the transformation process
and operations management as a whole.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
16. (p. 239) Transformation processes occur
A. only in manufacturing organizations.
B. only in marketing departments.
C. in all organizations.
D. only in service providers.
E. only in industrial plants.
The transformation process occurs in the production of both goods and services in all
organizations, including nonprofits.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
Essay Questions
17. (p. 239) Describe the transformation process, from inputs to outputs, for a product or service
of your choosing.
Students' answers will vary depending on the product they choose. Refer to the furniture
example in the book for a template.
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
18. (p. 238) What is operations management?
Operations management is the development and administration of the activities involved in
transforming resources into goods and services. OM applies to the creation of both tangible
and intangible products.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-01 Define operations management; and differentiate between operations and manufacturing.
Topic: The Nature of Operations Management
True / False Questions
19. (p. 241) For most organizations, the ultimate goal of the transformation process is to produce
outputs that are worth more than the combined costs of inputs.
TRUE
For most organizations, the ultimate goal of the transformation process is to produce outputs
that are worth more than the combined costs of inputs.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
20. (p. 240) Different kinds of transformation processes take place in organizations that provide
services.
TRUE
Different types of transformation processes take place in organizations that provide services,
such as airlines, colleges, and most nonprofit organizations.
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
21. (p. 240) In a nonprofit organization like Habitat for Humanity, inputs such as money,
materials, information, and volunteer time and labor are used to transform raw materials into
homes for needy families.
TRUE
Habitat for Humanity also utilizes inputs, outputs, and the transformation process. Inputs such
as money, materials, information, and volunteer time and labor are used to transform raw
materials into homes for needy families.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
22. (p. 242) Manufacturers and service providers differ in the nature and consumption of their
output.
TRUE
Manufacturers and service providers differ in several respects, including the nature and
consumption of their output, the uniformity of outputs, the uniformity of inputs, the labor
required, and the measurement of productivity.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
23. (p. 243) Service providers are generally less labor-intensive because of the high degree of
customization.
FALSE
Service providers are generally more labor-intensive because of the high level of customer
contact, perishability of the output (must be consumed immediately), and high degree of
variation of inputs and outputs (customization).
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
24. (p. 243) Variations in demand, service requirements, and the intangibility of the product
make measuring productivity more difficult for manufacturers.
FALSE
For a service provider, variations in demand (e.g., higher demand for air travel in some
seasons than in others), variations in service requirements from job to job, and the
intangibility of the product make productivity measurement more difficult.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
Multiple Choice Questions
25. (p. 241-243) Which of the following is not a point of difference between service providers and
manufacturers?
A. Services are more labor-intensive
B. Manufacturing has more uniform outputs
C. Services do not undergo a transformation process
D. It is straightforward to measure manufacturing productivity
E. Services have less control over the variability of their inputs
All products and services undergo a transformation process.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
8-32
Chapter 08 - Managing Service and Manufacturing Operations
26. (p. 242-243) To receive a haircut, you generally have to go to a barbershop or salon. To which
of the following characteristics does this pertain?
A. Uniformity of inputs
B. Uniformity of outputs
C. Labor required
D. Measurement of productivity
E. Nature and consumption of output
Most services are consumed at the point of production. Hence, in order to get a haircut, one
must go to an establishment that cuts hair.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
27. (p. 241) Why do the products of service providers tend to be more customized than those of
manufacturers?
A. Differing customers have differing needs
B. Because all customers are the same
C. Technological innovations have reduced variability
D. There is more capital required in service provision
E. It is easy to measure productivity
Services are more likely to incorporate the specific needs of customers into the service
provision, resulting in more "customized" products.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
28. (p. 241) Money, employees, time, and equipment represent an airline's ________ to the
transformation process.
A. outputs
B. inputs
C. products
D. services
E. intangibles
8-33
Chapter 08 - Managing Service and Manufacturing Operations
An airline transforms inputs such as employees, time, money, and equipment through
processes such as booking flights, flying airplanes, maintaining equipment, and training
crews.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
29. (p. 241) For most organizations, the ultimate objective is for produced outputs to be
A. easy to develop.
B. tangible, hard goods.
C. inexpensive.
D. worth more than the costs of input.
E. equal to the costs of input.
For most organizations, the ultimate objective is for the produced outputs to be worth more
than the combined costs of the inputs.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
30. (p. 242) The fact that a hairdresser gives each customer a different haircut relates to which of
the following points of difference between service providers and manufacturers?
A. Nature and consumption of output.
B. Uniformity of inputs.
C. Labor required.
D. Measurement of productivity.
E. Uniformity of output.
Manufacturers and service providers also differ in the uniformity of their output, the final
product. Because of the human element inherent in providing services, each service tends to
be performed differently; if a barber or stylist performs 15 haircuts in a day, it is unlikely that
any two of them will be exactly the same.
8-34
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
31. (p. 242) The nature of the service provider's product requires
A. less employee input.
B. a higher degree of customer contact.
C. a lesser degree of customer contact.
D. more expensive inputs.
E. more standardization.
Service providers are generally more labor-intensive (require more labor) because of the high
level of customer contact, perishability of the output (must be consumed immediately), and
high degree of variation of inputs and outputs (customization).
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
32. (p. 242) Actual performance of the service provider's product typically occurs
A. several days after purchase.
B. outside the service provider's facility.
C. at the point of consumption.
D. in the buyer's home.
E. before the point of consumption.
The actual performance of the service typically occurs at the point of consumption.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
8-35
Chapter 08 - Managing Service and Manufacturing Operations
33. (p. 242) Manufacturers' products are typically
A. more labor intensive than service providers'.
B. less uniform than service providers'.
C. more difficult to inventory than service providers'.
D. more standardized than service providers'.
E. cheaper than service providers'.
The products produced by manufacturers are more likely to be standardized than the products
produced by service organizations.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
34. (p. 243) Compared to service providers, manufacturers generally
A. are more labor intensive.
B. are more capital intensive.
C. customize their outputs.
D. have difficulty measuring productivity.
E. produce intangible outputs.
Manufacturers are more capital intensive than services providers, who are more labor
intensive.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
Essay Questions
35. (p. 243) Why do services tend to be more labor-intensive than manufacturing?
Service providers are generally more labor-intensive (require more labor) because of the high
level of customer contact, perishability of the output (must be consumed immediately), and
high degree of variation of inputs and outputs (customization).
8-36
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
36. (p. 241-243) How do operations for manufacturers and service providers differ?
Operations for manufacturers and service providers differ in several respects, beginning with
the nature and consumption of their output. Manufacturers' outputs are tangible, while service
providers' outputs are more intangible. The two types of firms also differ in terms of the
uniformity of their inputs and outputs, the labor required to produce output, and the ease of
productivity measurement.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Topic: The Nature of Operations Management
True / False Questions
37. (p. 248) A company that uses a fixed-position layout is often called a project organization
because it is involved in large, complex projects.
TRUE
A company that uses a fixed-position layout is often called a project organization because it is
involved in large, complex projects such as construction or exploration.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
38. (p. 244) It is not necessary for a product to satisfy a need or a want.
FALSE
Before making any product, a company first must determine what consumers want and then
design a product to satisfy that want.
8-37
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
39. (p. 244) Consumer needs and wants often dictate a production process.
TRUE
Often, consumers' specific needs and desires dictate a process.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
40. (p. 245) Modular design allows products to be repaired quickly, but the components are often
expensive.
TRUE
Modular design allows products to be repaired quickly, thus reducing the cost of labor, but the
component itself is expensive, raising the cost of repair materials.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
41. (p. 248) Taxes are an important consideration when deciding where to locate a production
facility.
TRUE
Inducements and tax reductions have become an increasingly important criterion in recent
years when determining a facility location.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
8-38
Chapter 08 - Managing Service and Manufacturing Operations
42. (p. 248) Intermittent organizations typically use the fixed-position layout.
FALSE
Intermittent organizations deal with products of a lesser magnitude than do project
organizations; they are not related to a fixed-position layout.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
Multiple Choice Questions
43. (p. 244) If ABC Computer Company is determining demand for its future products and how
much consumers are willing to pay, the company will likely rely on
A. the economy.
B. marketing research.
C. the competition.
D. the past.
E. intuition.
Marketing research can also help gauge the demand for a product and how much consumers
are willing to pay for it.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
44. (p. 245) The term standardization means
A. ensuring that every product has the same quality.
B. that similar products, manufactured by different companies, all operate in the same
manner.
C. making identical, interchangeable components or products.
D. making the exact product the customer wants.
E. all of the above.
Standardization is making identical, interchangeable components or even complete products.
8-39
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
45. (p. 245) A primary reason for using standardization is to
A. reduce production costs.
B. increase consumer options.
C. reduce product quality.
D. increase variations.
E. foster creativity.
With standardization, a customer may not get exactly what he or she wants, but most firms
that manufacture products in large quantities for many customers have found that they can
make them cheaper and faster by standardizing designs.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
46. (p. 245) Building a computer so that components can be installed in different configurations
to meet customers' needs is a result of
A. flexible manufacturing.
B. modular design.
C. customization.
D. specialization.
E. varied engineering.
Modular design involves building an item in self-contained units, or modules, that can be
combined or interchanged to create different products.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
8-40
Chapter 08 - Managing Service and Manufacturing Operations
47. (p. 248) Facility location decisions are complex because
A. all customers want plants nearby.
B. transportation costs are prohibitively high.
C. delivery speed is of prime concern.
D. proximity to market is crucial.
E. they involve the evaluation of a number of important factors and the costs are high.
When a company decides to relocate or open a facility at a new location, it must pay careful
attention to factors such as proximity to market, availability of raw materials, availability of
transportation, availability of power, climatic influences, availability of labor, community
characteristics (quality of life), and taxes and inducements.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
48. (p. 248) A company that manufactures large products, such as houses or bridges, may require
that all resources be brought to a central location during production. This type of facility
layout is called
A. fixed-position.
B. product.
C. line.
D. central control.
E. assembly line.
A company using a fixed-position layout brings all resources required to create the product to
a central location.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
8-41
Chapter 08 - Managing Service and Manufacturing Operations
49. (p. 248) A company performing large, complex tasks such as construction or exploration is
called a(n)
A. continuous manufacturing organization.
B. intermittent organization.
C. project organization.
D. construction company.
E. oil company.
A company using a fixed position layout may be called a project organization because it is
typically involved in large, complex projects such as construction or exploration.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
50. (p. 248) A metal fabrication plant with a cutting department, a drilling department, and a
polishing department would likely use which of the following layouts?
A. Fixed position
B. Horizontal position
C. Process
D. Geographical
E. Customer based
Firms that use a process layout organize the transformation process into departments that
group related processes. A metal fabrication plant, for example, may have a cutting
department, a drilling department, and a polishing department.
AACSB: Reflective Thinking
Bloom's: Comprehension
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
8-42
Chapter 08 - Managing Service and Manufacturing Operations
51. (p. 248) A hospital having an x-ray, obstetrics, emergency room, and other units probably
would best be classified as a(n)
A. intermittent organization.
B. project organization.
C. continuous manufacturing organization.
D. fixed organization.
E. HMO.
A hospital may have an X-ray unit, an obstetrics unit, and so on. These types of organizations
are sometimes called intermittent organizations, which deal with products of a lesser
magnitude than do project organizations, and their products are not necessarily unique but
possess a significant number of differences.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
52. (p. 248-249) An organization that creates many products with similar characteristics, such as
automobiles, television sets, or vacuum cleaners, would most likely be which of the following
types of organizations?
A. Continuous manufacturing
B. Intermittent manufacturing
C. Project manufacturing
D. Assembly line
E. Fixed-position
Companies that use assembly lines are usually known as continuous manufacturing
organizations, so named because once they are set up, they run continuously, creating
products with many similar characteristics. Examples of products produced on assembly lines
are automobiles, television sets, vacuum cleaners, toothpaste, and meals from a cafeteria.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
8-43
Chapter 08 - Managing Service and Manufacturing Operations
Essay Questions
53. (p. 251) What is sustainability and how does it impact manufacturing?
Sustainability deals with reducing the consumption of resources and the long-term well-being
of the planet, including natural entities and the interactions of individuals, organizations, and
businesses. Sustainability issues are becoming increasingly important to stakeholders and
consumers, as they pertain to the future health of the planet.
Manufacturers increasingly are taking steps to reduce waste, recycle, conserve energy, and
using renewable energy not only protect the environment, but can also gain the support of
stakeholders. Green operations and manufacturing can improve a firm's reputation and
customer and employee loyalty that leads to improved profits.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
54. (p. 249-250) How have computers and robots influenced the operations of business?
Technological developments like computers and robots have strongly influenced the
operations of many businesses. Some examples include computer-assisted design (CAD),
which helps engineers design components, products, and processes on the computer instead of
on paper; computer-assisted manufacturing (CAM), in which specialized computer systems
actually guide the transformation process; and flexible manufacturing, which uses computers
to direct machinery to adapt to different versions of similar operations. The use of robots has
also become important in industries in which human lives might be otherwise put at risk.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Topic: Planning and Designing Operations Systems
True / False Questions
55. (p. 255) A just-in-time inventory management system saves money and requires less storage
space by using smaller amounts of materials that arrive just when they are needed.
TRUE
8-44
Chapter 08 - Managing Service and Manufacturing Operations
Just-in-time (JIT) inventory management eliminates waste by using smaller quantities of
materials that arrive "just in time" for use in the transformation process and therefore require
less storage space and other inventory management expense.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
56. (p. 252) Operations managers have little concern for supply-chain management activities.
FALSE
A major function of operations is supply chain management, which refers to connecting and
integrating all parties or members of the distribution system to satisfy customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
57. (p. 252) Managing finished products and packaging them are activities most closely
associated with marketing.
FALSE
Also called logistics, supply chain management includes all the activities involved in
obtaining and managing raw materials and component parts, managing finished products,
packaging them, and getting them to customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
58. (p. 252) Purchasing is the buying of all materials needed by the organization.
TRUE
8-45
Chapter 08 - Managing Service and Manufacturing Operations
Purchasing, also known as procurement, is the buying of all the materials needed by the
organization.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
59. (p. 252) The majority of companies purchase all materials needed to make their finished
products.
FALSE
Often, companies can make some components more economically and efficiently than can an
outside supplier. Firms also sometimes find that it is uneconomical to make or purchase an
item, and instead arrange to lease it from another organization.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
60. (p. 255) A planning system that schedules the precise quantity of materials needed for
production is called a just-in-time system.
FALSE
Material-requirements planning is the inventory management system that schedules the
precise quantity of materials needed to make a product.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
8-46
Chapter 08 - Managing Service and Manufacturing Operations
Multiple Choice Questions
61. (p. 252) Which of the following activities is not included in supply chain management?
A. Getting products to customers
B. Obtaining and managing raw materials
C. Managing finished products
D. Packaging finished products
E. Researching and developing products
Supply chain management includes all the activities involved in obtaining and managing raw
materials and component parts, managing finished products, packaging them, and getting
them to customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
62. (p. 252) All activities involved in obtaining and managing raw materials and component
parts, managing finished products, packaging them, and getting them to customers are part of
A. resource management.
B. supply chain management.
C. engineering.
D. finance.
E. strategic planning.
Supply chain management includes all the activities involved in obtaining and managing raw
materials and component parts, managing finished products, packaging them, and getting
them to customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
8-47
Chapter 08 - Managing Service and Manufacturing Operations
63. (p. 252) Within organizations, purchasing is also referred to as
A. consumption.
B. disposition.
C. acquisitions.
D. procurement.
E. budgeting.
Purchasing is also known as procurement.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
64. (p. 252) The buying of all materials needed by the organization is called
A. consumer behavior.
B. capital expenditures.
C. purchasing.
D. buyer behavior.
E. acquisitions.
Purchasing is the buying of all the materials needed by the organization.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
65. (p. 254) The process of determining how many supplies and goods are needed, keeping track
of quantities on hand, each item's location, and who is responsible for it is called
A. the economic order quantity model.
B. just-in-time inventory management.
C. material-requirements planning.
D. inventory control.
E. procurement.
Inventory control is the process of determining how many supplies and goods are needed and
keeping track of quantities on hand, where each item is, and who is responsible for it.
8-48
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
66. (p. 253) The term used to refer to the raw materials, components, completed or partially
completed products, and pieces of equipment a firm uses is
A. inventory.
B. order quantities.
C. production.
D. tangibles.
E. intangibles.
Every raw material, component, completed or partially completed product, and piece of
equipment a firm uses—its inventory—must be accounted for, or controlled.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
67. (p. 253) Materials that have been purchased to be used in making other products are included
in
A. finished inventory.
B. partial inventory.
C. raw materials inventory.
D. supplier inventory.
E. components parts inventory.
Raw materials inventory includes all the materials that have been purchased to be used as
inputs for making other products.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
8-49
Chapter 08 - Managing Service and Manufacturing Operations
68. (p. 255) A model that identifies the optimum number of items to minimize the costs of
managing them is called
A. just-in-time management.
B. flexible scheduling.
C. material requirements planning.
D. the economic order quantity model.
E. logistics.
The economic order quantity model identifies the optimum number of items to order to
minimize the costs of managing (ordering, storing, and using) them.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
69. (p. 255) Minimizing inventory by providing an almost continuous flow of items from
suppliers to the production facility is referred to as
A. just-in-time management.
B. economic ordering.
C. material requirements planning.
D. logistics.
E. operations management.
Just-in-time management minimizes inventory by providing an almost continuous flow of
items from suppliers to the production facility.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
8-50
Chapter 08 - Managing Service and Manufacturing Operations
70. (p. 255) A planning system that schedules the precise quantity of materials needed for
production is called
A. just-in-time management.
B. material-requirements planning.
C. economic order quantities.
D. flexible scheduling.
E. cycle time management.
Materials-requirement planning is a planning system that schedules the precise quantity of
materials needed to make the product.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
Essay Questions
71. (p. 255) What is the economic order quantity model?
To control the number of items maintained in inventory, managers need to determine how
much of any given item they should order. One popular approach is the economic order
quantity (EOQ) model, which identifies the optimum number of items to order to minimize
the costs of managing (ordering, storing, and using) them.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
72. (p. 256-257) What considerations must managers make after materials have been procured and
their use has been determined?
Managers must consider routing and scheduling. Routing means determining the sequence of
operations through which the product must pass. The sequence depends on the product
specifications developed by the company's engineering department. Once routing has been
determined, the actual work can be scheduled. Scheduling assigns the tasks to be done to
departments or even specific machines, workers, or teams.
8-51
Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Hard
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming inputs into finished products.
Topic: Managing the Supply Chain
True / False Questions
73. (p. 261) The ISO 9000 is a series of international quality management standards for
organizations.
TRUE
The ISO 9000 is a series of international quality management standards for organizations, to
which they can voluntarily adhere.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
74. (p. 257) Quality is a critical element of operations management.
TRUE
Quality, like cost and efficiency, is a critical element of operations management, for defective
products can quickly ruin a firm.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
75. (p. 257) The degree to which a good or service meets the demands and requirements of
customers is called customer satisfaction.
FALSE
8-52
Chapter 08 - Managing Service and Manufacturing Operations
Quality reflects the degree to which a good or service meets the demands and requirements of
customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
76. (p. 258) Determining quality can be difficult.
TRUE
Determining quality can be difficult because it depends on customers' perceptions of how well
the product meets or exceeds their expectations.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
77. (p. 259) Service businesses cannot incorporate quality standards.
FALSE
Quality standards can be incorporated into service businesses as well, although measuring
quality in the services industry is especially difficult.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
78. (p. 261) Inspection reveals whether a product meets quality standards.
TRUE
Inspection reveals whether a product meets quality standards.
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
Multiple Choice Questions
79. (p. 259) When managing quality in manufacturing, when is sampling likely to be used?
A. When inspection tests are destructive
B. When every product absolutely must be tested
C. Sampling is always used in manufacturing
D. Sampling is never used in manufacturing
E. Sampling is generally used in conjunction with inspection tests
Inspection tests can destroy the thing being inspected. Sampling is used in these cases. For
example, when a light bulb is tested, it is used until it burns out to make sure it works for the
number of hours claimed. A burned-out light bulb is no longer salable, so sampling is the
preferred testing method.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
80. (p. 259) It is especially difficult to measure quality characteristics when
A. a firm uses ISO 9000.
B. a firm has a total quality management program.
C. the product is a good.
D. the product is a service.
E. a firm uses statistical process control.
It is especially difficult to measure quality when the product is a service.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
8-54
Chapter 08 - Managing Service and Manufacturing Operations
81. (p. 257) Quality
A. is a concern only for manufacturing companies.
B. is a concern only for service providers.
C. refers to the price charged for a product.
D. is a critical element of operations management.
E. depends on employees' perceptions.
Quality, like cost and efficiency, is a critical element of operations management, for defective
products can quickly ruin a firm.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
82. (p. 257) The degree to which a good or service meets the demands and requirements of
customers is called
A. efficiency.
B. productivity.
C. quality.
D. effectiveness.
E. customer satisfaction.
Quality reflects the degree to which a good or service meets the demands and requirements of
customers.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
83. (p. 260) The processes an organization uses to maintain its established quality standards are
called
A. quality control.
B. implementation.
C. inspections.
D. operations management.
E. total quality management.
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Chapter 08 - Managing Service and Manufacturing Operations
Quality control refers to the processes an organization uses to maintain its established quality
standards.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
84. (p. 260) The system in which management collects and analyzes information about the
production process to pinpoint quality problems in the production system is called
A. total quality management.
B. statistical process control.
C. quality control.
D. operations control.
E. production control.
One method through which many companies have tried to improve quality is statistical
process control is a system in which management collects and analyzes information about the
production process.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
85. (p. 260) The first step in quality control for any organization is
A. inspection.
B. establishing standards.
C. sampling.
D. implementation.
E. correction.
Regardless of whether a company has a TQM program for quality control, it must first
determine what standard of quality it desires and then assess whether its products meet that
standard.
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
86. (p. 260) ________ is a philosophy that uniform commitment to quality in all areas of an
organization will promote a culture that meets customers' perceptions of quality.
A. The marketing concept
B. Total quality manufacturing
C. ISO 9000
D. Statistical process control
E. Total quality management
Total quality management (TQM) is a philosophy that uniform commitment to quality in all
areas of the organization will promote a culture that meets customers' perceptions of quality.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
87. (p. 262) Determining how many items are to be inspected is called
A. efficiency.
B. sampling.
C. appraisal.
D. effectiveness.
E. specifications.
An important question relating to inspection is how many items should be inspected, which
requires sampling.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Easy
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
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Chapter 08 - Managing Service and Manufacturing Operations
88. (p. 262) It is desirable to test only a sample of the product in all of the following
circumstances except when
A. inspection procedures are expensive.
B. elaborate testing equipment is required.
C. testing takes a significant number of hours to complete.
D. the product is destroyed by sampling.
E. sampling is the cheapest option and does not destroy the product
Some inspection procedures are quite expensive, use elaborate testing equipment, destroy
products, and/or require a significant number of hours to complete. In such cases, it is usually
desirable to test only a sample of the output.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
Essay Questions
89. (p. 260) What is total quality management?
Total quality management (TQM) is a philosophy that uniform commitment to quality in all
areas of the organization will promote a culture that meets customers' perceptions of quality.
It involves coordinating efforts to improve customer satisfaction, increase employee
participation and empowerment, form and strengthen supplier partnerships, and foster an
organizational culture of continuous quality improvement. TQM requires continuous quality
improvement and employee empowerment.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
90. (p. 260) What is quality control?
Quality control refers to the processes an organization uses to maintain its established quality
standards. To be competitive in the marketplace, businesses should incorporate quality control
throughout the transformation process. Quality control should be viewed as an element of the
product itself, rather than as simply a function of the operations process.
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-05 Assess the importance of quality in operations management.
Topic: Managing Quality
Multiple Choice Questions
Solve the Dilemma: Planning For Pizza
91. (p. 266) What does McKing Corporation wish to do?
A. To release a new line of sandwiches
B. To start selling its food products in grocery stores
C. To diversify into selling pizzas
D. To start selling insurance
E. McKing wants to keep selling the same products it always has
The company wants to diversify into the growing pizza business.
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Topic: Solve the Dilemma
92. (p. 266) What is the problem with McKing's plan to start selling 16" pizzas at its drive
throughs?
A. There is no market for 16" fast food pizzas
B. McKing's target market does not eat very much pizza
C. The pizzas are too expensive for the average consumer
D. The pizzas are too large to be passed through existing drive-through windows
E. There is no problem with McKing's plan to expand into pizza
The problem that was discovered was that the pizzas are too large to be passed through
existing drive-through windows. The largest size that can be accommodated is 12".
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Chapter 08 - Managing Service and Manufacturing Operations
AACSB: Reflective Thinking
Bloom's: Knowledge
Difficulty: Medium
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Topic: Solve the Dilemma
Essay Questions
93. (p. 266) What mistake did McKing make in approaching the introduction of pizza?
McKing failed to consider operations issues when designing the product. Specifically, it did
not ensure that product delivery (the drive-through service) was feasible for the new pizza
product.
AACSB: Reflective Thinking
Bloom's: Analysis
Difficulty: Medium
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Topic: Solve the Dilemma
94. (p. 266) How could this product introduction have been coordinated to avoid the problems
that were encountered?
Introduction of this product could have been coordinated better by teaming operations
management personnel with the research and design personnel. Operations managers would
know how to evaluate the product from an operational issue, thus taking into consideration
how the product will be produced and delivered to the customer.
AACSB: Reflective Thinking
Bloom's: Analysis
Difficulty: Medium
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Topic: Solve the Dilemma
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Chapter 08 - Managing Service and Manufacturing Operations
95. (p. 266) If you were an executive at McKing, how would you proceed with the introduction
of pizza into the restaurants?
Students' answers will vary, but each should demonstrate an understanding of the problem
being corrected.
AACSB: Reflective Thinking
Bloom's: Analysis
Difficulty: Medium
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Topic: Solve the Dilemma
8-61