Intro to Business Management
Professor Isler
Final Exam
Fall 2003
1. When you visit a financial planner you provide her with income, expense, and goal
information. She then turns that information into a financial plan with a budget,
investment plan, and insurance plan. She is practicing operations management.
Ans: True
2. Operations management techniques focus almost exclusively on efficiency issues.
Ans: False
3. Operations management is a function exclusive to the manufacturing sector of the
economy.
Ans: False
4. In an economic sense, operations management of a service creates an intangible result
and utility for the customer.
Ans: True
5. A shopping mall is an example of the service sector of the economy.
Ans: True
6. Determining the product-service mix to be offered is a marketing function that should
not affect the operations function.
Ans: False
7. During the construction of modular homes, the materials and labor are brought to the
product rather than the product being moved along an assembly line. This is known as a
process layout.
Ans: False
8. Facility location refers to the choice of geographic sites, while facility layout refers to
the physical configuration of work within the facility.
Ans: True
9. Automation is a type of operational technology that is used only in manufacturing
organizations.
Ans: False
10. More jobs have been created due to increased use of automation than have been lost.
Ans: True
11. Sue just received a new assignment from her boss. She is supposed to find a way to use
robots to move the work-in-process from one workstation to another. In other words,
Sue is supposed to develop a flexible manufacturing system.
Ans: True
Page 1
12. Inventory management includes management of the resources that are the inputs to the
transformation process, the process itself, and the finished goods that are the outputs of
the process.
Ans: False
13. In implementing an operations management system as a control, it is important to focus
on the elements most critical to goal attainment.
Ans: True
14. When operations management is coordinated with other functions, a type of control
activity can be created.
Ans: True
15. Purchasing management deals with buying the materials needed to create products or
services.
Ans: True
16. At Applebee's restaurant the prepared food waiting to be served to customers is part of
the work-in-process inventory for Applebee's.
Ans: True
17. Work-in-process inventories are made up of partially completed products that need
further processing.
Ans: True
18. Firms with just-in-time inventory systems would be wise to have alternative suppliers
for inputs just-in-case.
Ans: True
19. The combination of all the features and characteristics of a product or service that give it
the ability to satisfy stated or implied customer needs is called satisfaction quotient.
Ans: False
20. Quality is both an absolute and a relative concept.
Ans: True
21. The American Society for Quality Control defines quality as the totality of features and
characteristics that impact on the ability of a product or service to satisfy needs.
Ans: True
22. Current thinking about the relationship between productivity and quality is that there is
a direct relationship between the two factors.
Ans: True
Page 2
23. Quality is relevant for services but not for products.
Ans: False
24. The Malcolm Baldrige Award is given annually to the US firms that have the highest
overall quality.
Ans: False
25. Acceptance sampling cannot be handled by statistical quality control (SQC) equations.
Ans: False
26. The main problem with total factor productivity computations is that all of the
ingredients have to be expressed in common terms.
Ans: True
27. Training one employee to perform a number of different jobs is known as cross-training.
Ans: True
28. The productivity of firms within a country or region has a significant impact on the
standard of living enjoyed by citizens of that country or region.
Ans: True
29. One important way that organizations can improve their operations is by spending more
funds on R&D.
Ans: True
30. The employee reward system is essential to making employee involvement work.
Ans: True
31. Operations management is the set of managerial activities used by an organization to
transform __________ into __________ and __________.
A) outputs; resources; inputs
D) resources; products; services
B) services; resources; outputs
E) None of these.
C) inputs; resources; activities
Ans: D
Page 3
32. The text notes that what we now call operations management was once called
production management and implies that there are several reasons for the change in
definition. Which of the following is NOT one of those reasons?
A) The decline in manufacturing in the United States in recent years
B) Changes in manufacturing processes such as the increased use of robots and other
computer-based technology
C) The increase in the size and importance of the service sector in the U.S. economy
D) Drastic increases in foreign competition and the subsequent effects it has had on
U.S. firms
E) The fact that many of the tools and techniques used in manufacturing can also be
used in the service sector
Ans: B
33. Since Broyhill combines fabric, wood, glue, etc… to create furniture, Broyhill is an
example of a(n) __________ company.
A) service B) manufacturing C) outsourcing D) ISO 9000 E) SQC
Ans: B
34. An organization that transforms resources into an intangible output in order to create
time or place utility for its customers is known as a(n) __________ company.
A) outsourcing B) service C) manufacturing D) ISO 9000 E) TQM
Ans: B
35. Which of the following organizations creates form utility?
A) A law firm B) H & R Block C) UPS D) Coca-Cola
Ans: D
E) Costco
36. A department store provides utility for customers because it makes it easy for them to
purchase what they want in one place. This is an example of __________ utility.
A) time B) statistical C) form D) quality E) All of these.
Ans: A
37. Which sector of the US economy was responsible for most of the growth in new jobs
during the 1990s?
A) Manufacturing B) Service C) Government D) Exports E) Imports
Ans: B
38. A __________ organization is one that transforms resources into an intangible output
and creates time and place utility for its customers.
A) manufacturing B) production C) service D) profitable E) None of these.
Ans: C
Page 4
39. Product-service mix decisions address which of the following issues?
A) Which products to offer
B) How many different products to offer
C) What quantity to produce of a product
D) All of these.
E) Only “which products to offer” and “how many different products to offer.”
Ans: E
40. Chelsea Milling Company produces Jiffy baking mix, brownie mix, corn muffin mix,
blueberry muffin mix, and apple muffin mix. These mixes represent the company's
A) product-service mix.
D) facilities location.
B) capacity mix.
E) human resource mix.
C) facilities layout.
Ans: A
41. When considering making a capacity decision, which of the following will be important
information to have?
A) Market demand for the product
B) Current capacity
C) Funds available for expansion
D) All of these.
E) Only “market demand for the product” and “current capacity.”
Ans: D
42. Time Warner sold its DVD/CD production and distribution division. This is an example
of what kind of an operations decision?
A) Product-service mix
D) Facilities location
B) Capacity
E) Human resource mix
C) Facilities layout
Ans: A
43. Which of the following decisions is likely to be the decision starting point occurring
before the other decisions?
A) The capacity decision
D) The facilities location decision
B) The product-mix decision
E) None of these.
C) The facilities layout decision
Ans: B
44. Congress talked about increasing the size of the Armed Forces after operations in Iraq,
Afghanistan, Bosnia, Liberia, and the Korean peninsula seemed to have units stretched
too thin. Congress made what kind of an operations decision?
A) Product-service mix
D) Facilities location
B) Capacity
E) Human resource mix
C) Technology
Ans: B
Page 5
45. The set of processes and systems used by organizations to convert resources into
products or services is called
A) quality.
D) automation.
B) technology.
E) None of these.
C) manufacturing.
Ans: B
46. Which of the following is an organizational technology?
A) Automation
D) CAD
B) Robotics
E) All of these.
C) Mass-production assembly line
Ans: E
47. The earliest form of automation—machine-controlled devices—were first developed
A) in the 1700s.
D) after the year 2000.
B) in the 1800s.
E) None of these.
C) in the 1900s.
Ans: A
48. Which of the following is true about the impact of automation on workers?
A) The development of automation has created jobs in some industries.
B) The development of automation has eliminated jobs in some industries.
C) Overall, there has been a net creation of jobs as a result of automation.
D) All of these.
E) Only “The development of automation has created jobs in some industries” and
“the development of automation has eliminated jobs in some industries.”
Ans: D
49. Which of the following is NOT a current use for robotics?
A) Loan approval
D) Police work
B) Brain surgery
E) Jewelry engraving
C) Agriculture
Ans: A
50. Unmanned aircraft are increasingly sent into outer space instead of astronauts. This is
an example of
A) CAD. B) CAM. C) FMS. D) robotics. E) JIT.
Ans: D
51. ________ is the process of managing operations control, resource acquisition and
purchasing, and inventory to improve overall efficiency and effectiveness.
A) Supply-chain management
D) Quality control
B) Resource management
E) Productivity control
C) Inventory management
Ans: A
Page 6
52. Many firms today are reducing the number of suppliers they use and instead are
focusing on building strong relationships with just a few suppliers. What are the
advantages of doing this?
A) Increased use of automation
B) More control over raw material delivery
C) Fewer materials used in the process
D) All of these.
E) Only “increased use of automation” and “more control over raw material
delivery.”
Ans: B
53. A crystal manufacturer has found a way to improve the management of its inventory of
lead, which is part of its __________ inventory.
A) finished-goods
D) in-transit
B) work-in-process
E) just-in-time
C) raw materials
Ans: C
54. Which of the following is NOT one of the constraints with which a purchasing agent
must deal?
A) Inventory levels and delivery dates
B) Supplier reliability
C) Integrating purchasing with production
D) Getting the best possible discounts and terms
E) The quality of what is being purchased
Ans: C
55. If you were giving advice to a manager who wanted to use a just-in-time inventory
management method, what would you say?
A) “Be sure to hold a lot of inventory in case you unexpectedly run out.”
B) “You will need to increase your warehouse and storage space.”
C) “Be prepared to find emergency supply sources.”
D) “Determine how much you need, then add a little extra just to be safe.”
E) None of these.
Ans: C
56. At Wal-Mart, 70% of merchandise is rung up at the cash register before the company
even pays for it. This is an example of
A) just-in-time inventory.
D) quality circles.
B) benchmarking.
E) computer-assisted manufacturing.
C) management by objective.
Ans: A
Page 7
57. All of the following are specific factors that can be used to assess or evaluate quality
EXCEPT
A) reliability.
B) serviceability.
C) features.
D) durability.
E) All of these can be used to assess quality.
Ans: E
58. Which of the eight dimensions of quality refers to a measure of product life?
A) Reliability
D) Features
B) Durability
E) Perceived quality
C) Serviceability
Ans: B
59. Anthony is comparing the quality of an $800 personal computer to one that cost $1,634.
This is an example of the ________ of quality.
A) relative nature
D) price dimension
B) absolute nature
E) aesthetic nature
C) conformance dimension
Ans: A
60. Which of the following is NOT one of the dimensions of quality discussed in the text?
A) Performance B) Preference C) Aesthetics D) Reliability E) Features
Ans: B
61. The probability that a DVD player will eject the disk when you push the eject button is
an example of which dimension of quality?
A) Aesthetics
D) Serviceability
B) Features
E) Perceived quality
C) Reliability
Ans: C
62. Dell printer ink cartridges are only available from Dell. The new cartridges arrive with
return bags and postage to recycle the old cartridge. This is an example of
A) features. B) aesthetics. C) reliability. D) durability. E) serviceability.
Ans: E
Page 8
63. Which of the following is NOT true regarding the relationship between productivity and
quality?
A) There is no relationship between productivity and quality.
B) Increased productivity means higher quality.
C) Higher quality results in higher productivity.
D) Productivity and quality are positively related.
E) All of these are not true.
Ans: A
64. The starting point for instituting an organizational quality program is
A) employee involvement.
B) changes in operations methods.
C) improving the quality of materials.
D) employing new forms of technology.
E) strategic commitment from top managers.
Ans: E
65. All of the following are basic components of a total quality management (TQM)
strategy EXCEPT
A) employee involvement.
B) technology.
C) materials.
D) strategic commitment.
E) All of these are basic components of a TQM strategy.
Ans: E
66. For any total quality management effort to have a chance for success, it must begin with
A) strategic commitment by top management.
B) employee involvement.
C) higher-quality materials.
D) technology.
E) None of these.
Ans: A
67. Motorola offers an eight-hour seminar based on its famed six sigma quality program,
which aims for only one defect per 1,000,000-unit production run, to businesses that are
interested it teaching their employees how to implement total quality management. This
example focuses on which component of the quality management strategy?
A) Employee involvement
D) Materials
B) Strategic commitment
E) Methods
C) Technology
Ans: A
Page 9
68. A local restaurant owner often dines at competitors' restaurants and samples items from
their menus in order to imitate or improve on them. This is an example of
A) benchmarking.
D) in-process sampling.
B) conformance sampling.
E) None of these.
C) acceptance sampling.
Ans: A
69. Each of Whirlpool's plants used to handle its own logistics. This resulted in a tangle of
routes and inefficiencies that set variable cost soaring. In the course of a day, three
Whirlpool trucks might make stops to pick up goods from a single supplier when one
truck could have done the job. Whirlpool hired Ryder Dedicated Logistics to untangle
and coordinate the transport routes so that it could get back to doing what it does best,
building appliances. Whirlpool used
A) SQC. B) TQM. C) outsourcing. D) benchmarking. E) ISO 9000.
Ans: C
70. Operations management can BEST be used to improve speed by
A) maximizing the number of approvals needed so that mistakes are caught
beforehand, then moving ahead at full speed.
B) using individual work assignments because of the clear accountability that results.
C) starting from scratch, which usually enhances speed more than modifying current
systems
D) rigidly adhering to schedules
E) eliminating elements of the organization culture that have been ineffective.
Ans: C
71. Statistical quality control (SQC) is
A) a computerized quality control monitoring service.
B) a team approach to quality control.
C) useful only in determining completed items to reject.
D) most useful in service organizations.
E) a set of specific statistical techniques used to monitor quality control.
Ans: E
72. ________ consists of a set of mathematical and/or statistical methods and procedures for
measuring and adjusting quality levels.
A) Benchmarking
D) Statistical quality control
B) Total quality management
E) None of these.
C) Conformance
Ans: D
Page 10
73. At a regional manufacturing facility, the quality control people sample ten percent of the
finished products to check for adherence to quality standards. This is an example of
A) benchmarking.
D) conformance sampling.
B) acceptance sampling.
E) None of these.
C) in-process sampling.
Ans: B
74. At a regional manufacturing facility the quality control people sample 15 percent of the
finished products to check for adherence to more than 12 quality standards. This is an
example of
A) acceptance sampling.
D) ISO 9000.
B) outsourcing.
E) None of these.
C) in-process sampling.
Ans: A
75. The type of statistical quality control that involves testing products as they are being
made is known as
A) total factor sampling.
D) conformance sampling.
B) acceptance sampling.
E) None of these.
C) in-process sampling.
Ans: C
76. An engineering consulting firm calculates the following ratio: an engineer's hours of
work/ an engineer's number of billable hours is a measure of __________ productivity.
A) labor B) partial C) total factor D) individual E) None of these.
Ans: D
77. Which of the following is classified as a partial productivity ratio?
A) Labor productivity ratio
B) Energy productivity ratio
C) Total factor productivity ratio
D) All of these.
E) Only labor productivity ratio and energy productivity ratio.
Ans: E
78. Which of the following factors is NOT included in the formula for computing total
factor productivity?
A) Labor B) Capital C) Materials D) Energy E) Inflation
Ans: E
Page 11
79. According to the text, the major problem associated with total factor productivity is that
A) the data are too hard to obtain.
B) all ingredients must be expressed in the same terms.
C) it clearly tells the manager what to do to correct a problem.
D) it is not compatible with standard accounting procedures.
E) it is nothing more than a cost-benefit analysis.
Ans: B
80. Almost 20,000 UPS employees are now equipped with ring scanners —small electronic
devices worn on their index fingers and wired to a small computer on their wrists.
When a UPS employee holds a package, the ring shoots a pattern of photons on the
package. Within moments, its location is updated at the UPS Web site. This use of an
operations improvement allows UPS to
A) improve its productivity.
B) decrease fixed cost.
C) decrease its dependence on its Web site.
D) increase customer affective responses.
E) None of these.
Ans: A
81. When energy productivity is measured by the number of outputs produced divided by
the dollars spent on energy used to generate this amount of output, this is a measure of
A) total factor productivity.
D) ISO 9000.
B) TQM.
E) None of these.
C) partial productivity ratio.
Ans: C
82. When an organization produces 100 units of output for 10 hours of direct labor, what is
its labor productivity index?
A) 0.1 B) 10 C) 1000 D) 100 E) None of these.
Ans: B
83. Which of the following countries has the highest level of total productivity?
A) United States B) Japan C) France D) Germany E) Korea
Ans: A
84. The International Organization for Standardization requires firms to document the
impact of operations on the environment. The standards are called ISO
A) 9000. B) 2000. C) 9000: 2000. D) 14000. E) None of these.
Ans: D
Page 12
85. A pet food plant has a pay-for-knowledge compensation system in which an employee's
hourly wage depends on how many different jobs she or he can do. Which of the
following statement describing research results about such programs is FALSE?
A) They increase workforce flexibility.
B) They reduce the number of employees required.
C) Unions support such programs because they give the worker more voice in
operations.
D) They are an effective means of increasing productivity.
E) The key to the success of such programs is rewards.
Ans: C
86. The total set of managerial activities an organization uses to transform resource inputs
into products and services is called __________ __________.
Ans: operations management
87. G. H. Bass & Co., maker of shoes, is an example of a(n) __________ company.
Ans: manufacturing
88. __________ is a form of business that combines and transforms inputs into tangible
outcomes that are then sold to others.
Ans: Manufacturing
89. Firms such as Verizon, the Metropolitan Museum of Art, and Wendy's are all part of the
__________ sector of the economy.
Ans: service
90. In addition to regular Tide detergent, Procter and Gamble makes and sells six other
variations of the popular laundry product. P & G made a __________ - __________
decision in this situation.
Ans: product-mix
91. Wal-Mart scatters distribution centers around the United States, which is a(n)
__________ __________ decision.
Ans: facilities location
92. The appropriate layout for a company employing a large batch (mass production)
technology is probably a ________ layout.
Ans: product
93. ________ accelerated during World War II due to a shortage of skilled labor.
Ans: Automation
94. ________ -________ ________ is a technology that relies on computers to design
products and simulate performance.
Ans: Computer-aided design
Page 13
95. ________ ________ management is concerned with managing operations control,
resource acquisition and inventory to improve efficiency and effectiveness.
Ans: Supply Chain
96. Managing the organization's raw materials, work-in-process, finished goods, and
products in transit is known as ________ control.
Ans: inventory
97. Inventory systems in which materials arrive only shortly before they are needed for the
transformation process are called __________ - __________ - __________ systems.
Ans: just-in-time
98. The total features and characteristics of a product or service that determine the ability of
that product or service to satisfy needs is __________.
Ans: quality
99. A GPS navigation system on a new car is an example of the __________ dimension of
quality.
Ans: features
100. ________ is the process of subcontracting services and operations to other firms that
can do the work better and/or less expensively.
Ans: Outsourcing
101. _________ refers to a set of quality standards created by the International Organization
for Standardization.
Ans: ISO 9000
102. The economic measure of efficiency that really amounts to an output-to-input analysis is
called __________.
Ans: productivity
103. If Nick wants to understand his company's productivity in order to pinpoint problem
areas, he should use __________ productivity ratios.
Ans: partial
104. When we analyze the productivity of companies, industries, or whole economies, we are
said to be looking at ________ ________ productivity.
Ans: total factor
105. The primary determinant of an organization's profitability is _________.
Ans: productivity
Page 14
Use the following to answer questions 106-110:
Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
Which type of layout would each of the following businesses use?
a. A product facilities layout
b. A process facilities layout
c. A fixed-position facilities layout
d. A cellular facilities layout
106. An auto repair shop in which each vehicle is diagnosed and then sent to the appropriate
area for repair
Ans: b
107. NASA assembling a space shuttle
Ans: c
108. A video game manufacturer
Ans: a
109. The Pentagon, where twenty different operations are in twenty different stages of
planning and execution
Ans: d
110. A hotel restaurant in which groups of chefs prepare desserts, salads, appetizers, entrées
and vegetables. The foods are unique, but the basic equipment and methods are the
same.
Ans: d
Use the following to answer questions 111-116:
You are thinking of purchasing a Ford Focus, ZX5 automobile. You are convinced that it is a
high-quality product, but you must convince your spouse that it is worth the expense. Label the
following descriptions according to which of the eight dimensions of quality they exemplify.
You may use a response once, more than once, or not at all.
a. Performance
b. Features
c. Reliability
d. Conformance
e. Durability
f. Serviceability
g. Aesthetics
h. Perceived quality
Page 15
111. Outfitted with a CD and MP3 player
Ans: b
112. You expect this car to last more than the six year you estimate you will want to keep it
Ans: e
113. It has a 100,000 mile tune-up interval
Ans: f
114. The EPA estimates it will get 26 mpg city and 34 highway
Ans: a
115. You think you are getting a great car for the money
Ans: h
116. It comes with dual airbags, like most new cars
Ans: d
Use the following to answer questions 117-120:
Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
a. Aggregate productivity
b. Operations management
c. Partial productivity ratio
d. Quality ratio
e. Total factor productivity
117. Total productivity achieved by a country
Ans: a
118. Indicator of how well an organization uses labor, capital, materials, and energy
Ans: e
119. Indicator of what could be changed to improve productivity
Ans: c
120. Requires all factors to be expressed in dollars
Ans: e
121. By world standards, Americans are well educated and free to pursue their goals in life.
How does that affect the growth of the service sector and decline of the manufacturing
sector?
Ans:
Page 16
122. In an earlier chapter, Woodward identified three types of technology: small batch, mass
production, and continuous flow. Describe the relationship between these types of
technology and the various forms of layout described in the discussion on operations
control.
Ans:
123. Use product-service mix, capacity, and facilities to describe the operations design of a
store you visited recently.
Ans:
124. How is robotics affecting the service sector?
Ans:
125. List and briefly describe the four kinds of inventory discussed in the text, the purpose of
each kind, and the main type of control used for each type. For what kinds of inventory
would just-in-time inventory control be appropriate?
Ans:
126. Comment on the following statement: “An Academy Award for Best Picture is an
example of an award that is given for quality.”
Ans:
127. Define “quality,” describe the eight dimensions of quality listed in the text, and give a
specific management example of each of these dimensions.
Ans:
128. Describe what role speed performs as a total quality management (TQM) tool.
Ans:
129. Define “productivity.” List and describe the various levels and forms of productivity.
Ans:
130. Consider an organization with which you are familiar. Describe ways in which the
organization could improve its productivity. Be sure to consider these categories:
spending more on R&D, revamping facilities, increasing employee participation, crosstraining, and restructuring the reward system.
Ans:
Page 17