Operations Management, 3rd Edition by Gerard Cachon | TEST BANK

CHAPTER 1 1)

Chapter 1

The set of products or services a business offers to its customers is called _________.

A) demand B) bundle C) supply D) value

2)

The set of products or services customers want is called _________.

A) demand B) bundle C) supply D) value

3)

"Match supply with demand" means _________.

A) telling customers what they need while reducing prices B) offering customers what they want while also making a profit C) explaining to customers what they should want while lowering costs D) investing in marketing and automation

4)

Which of the following is NOT a goal of operations management?

A) Understanding the drivers of customer utility B) Matching supply with demand C) Making a profit while providing customers what they need D) Providing great products at low prices to customers

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5)

Which of the following is NOT a challenge of matching supply with demand?

A) Delivering better products at low prices B) Attempting to predict demand C) Providing customers with what they want at a low cost D) Reducing demand to match supply

6)

A customer’s desire for a product or service is measured by its _________.

A) popularity B) costs C) utility D) advertisement

7) Economic theory suggests that a customer chooses a product or service to obtain the highest _________.

A) demand B) supply C) utility D) satisfaction

8)

Utility is composed of the following components EXCEPT _________.

A) customer loyalty B) price C) inconvenience D) consumption utility

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9) The features of a product or service that most, if not all, customers prefer are called _________.

A) consensus attributes B) consumption attributes C) fit attributes D) performance attributes

10) The many flavors of ice-cream offered by ice-cream parlors are reflective of the _________ of today’s customers.

A) bargaining power B) homogeneous preferences C) heterogeneous preferences D) knowledge base

11) Economists refer to the inconvenience of obtaining a product or receiving a service as _________.

A) transaction costs B) fit C) timing D) unavailability

12) A restaurant promising a meal in two minutes or less is attempting to cater to which part of the customer utility function?

A) Timing B) Preference C) Ambience D) Fit

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13)

Price utility includes all of the following EXCEPT _________.

A) cost of owning the product B) shipping cost C) financing costs D) transaction costs

14)

_________is the study of how customers derive utility from products or services.

A) Marketing B) Operations C) Economics D) Management

15) Which dimension of the customer utility function is emphasized with a restaurant’s slogan, "Eat Fresh"?

A) Timing B) Location C) Performance D) Fit

16) A firm that offers tailor-made suits to its customers is appealing to the _________ dimension of the customer utility function.

A) timing B) location C) performance D) fit

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17) Jerry is very frugal and always purchases the least expensive items whenever he goes to the store. Which dimension of the customer utility function seems to be most important to Jerry?

A) Performance B) Timing C) Price D) Location

18) A pizza delivery service attempts to appeal to the_________component or subcomponent of the customer utility function.

A) price B) timing C) location D) performance

19)

Which of the following statements about a firm’s capabilities is FALSE?

A) A firm has capabilities to do well on some dimensions of its customers’ utility function.

B) A firm has capabilities to do well on all dimensions of its customers’ utility function.

C) A firm’s capabilities can be defined as the dimensions of the customer’s utility function it is able to satisfy.

D) How well a firm can satisfy its customers’ utility function is dependent on its capabilities.

20) You are considering four hotels that differ from each other with respect to their price and customer reviews: Hotel H1

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Price $ 100

Reviews (1 = worst . . . 5 = best) 3

5

H2 H3 H4

$ 250 $ 200 $ 150

5 4 2

Which of the following is a valid conclusion?

A) H3 is Pareto dominated by H2 B) H2 is Pareto dominated by H3 C) H1 is Pareto dominated by H4 D) H4 is Pareto dominated by H1

21) You are considering four hotels that differ from each other with respect to their price and customer reviews: Hotel H1 H2 H3 H4

Price $ 100 $ 250 $ 200 $ 150

Reviews (1 = worst . . . 5 = best) 3 5 4 2

Which of these hotels is NOT on the efficient frontier?

A) H1 B) H3 C) H2 D) H4

22) You are considering four hotels that differ from each other with respect to their price and customer reviews: Hotel H1 H2 H3 H4

Price $ 100 $ 250 $ 200 $ 150

Reviews (1 = worst . . . 5 = best) 3 5 4 2

Which of these hotels is inefficient?

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A) H1 B) H2 C) H3 D) H4

23) You are considering four new vehicles that differ from each other with respect to their price and fuel economy: Vehicle V1 V2 V3 V4

Price $ 22,000 $ 27,000 $ 29,000 $ 24,000

Fuel Economy (miles per gallon) 24 26 30 27

Which of the following is a valid conclusion?

A) V2 is Pareto dominated by V1 B) V4 is Pareto dominated by V2 C) V2 is Pareto dominated by V4 D) V3 is Pareto dominated by V1

24) You are considering four new vehicles that differ from each other with respect to their price and fuel economy: Vehicle V1 V2 V3 V4

Price $ 22,000 $ 27,000 $ 29,000 $ 24,000

Fuel Economy (miles per gallon) 24 26 30 27

Which of these vehicles is NOT on the efficient frontier?

A) V1 B) V2 C) V3 D) V4

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25) You are considering four new vehicles that differ from each other with respect to their price and fuel economy: Vehicle V1 V2 V3 V4

Price $ 22,000 $ 27,000 $ 29,000 $ 24,000

Fuel Economy (miles per gallon) 24 26 30 27

Which of these vehicles is inefficient?

A) V1 B) V2 C) V3 D) V4

26) Beyond just executing the current way of doing things, operations management is about _________.

A) eliminating inefficiencies to move the firm below the efficient frontier B) making strategic trade-offs to do well on all dimensions of the customers’ utility function C) managing inputs and resources to move the firm below the efficient frontier D) innovating its operations to shift the efficient frontier in a positive direction

27) By cooking and dressing burgers before customers order them, a fast-food restaurant is sacrificing the dimension of _________ and improving the dimension of _________in the customers’ utility function.

A) timing, fit B) fit, timing C) timing, price D) price, timing

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28) A firm that targets a market segment of budget-conscious customers is likely to sacrifice some _________ to get a better _________.

A) consumption utility, price B) performance, fit C) timing, location D) location, utility

29) Three restaurants are compared along the dimensions of responsiveness and cost performance, as shown below:

Which of the following conclusions can be drawn about Restaurant C? A) It is on the efficient frontier.

B) It Pareto dominates A. C) It is inefficient.

D) It is efficient.

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30) Three restaurants are compared along the dimensions of responsiveness and cost performance, as shown below:

Which of the following conclusions can be drawn?

A) A is Pareto dominated by B. B) A is on the efficient frontier.

C) C Pareto dominates A and B. D) C is on the efficient frontier.

31) A firm invents an app that allows customers to make purchases with their smartphone.

The firm hopes its new mobile payment app will _________ the efficient frontier through _________.

A) shift, innovation B) stay on, innovation C) stay on, imitation D) shift, imitation

32)

The difference between revenue and costs is called _________.

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A) profit B) input C) supply D) demand

33) A firm invests in building a manufacturing plant. This investment is an example of _________.

A) costs for outputs B) variable costs C) costs for resources D) marketing costs

34)

A firm can increase its profitability by _________.

A) increasing costs and reducing price B) moving below the efficient frontier C) reducing efficiencies D) reducing inefficiencies

35)

Which of the following is NOT a system inhibitor?

A) Inflexibility B) Poor brand recognition C) Variability D) Waste

36)

Leftover bread that is not sold at a bakery is an example of _________.

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A) defect B) flexibility C) variability D) waste

37) A long waiting line at the teller station in a bank at various times during the day is an example of _________ and a symptom of _________.

A) defect, waste B) inflexibility, profit C) variability, inflexibility D) waste, variability

38) A sold-out concert that turns away music fans because it is unable to increase the number of seats is an example of _________.

A) defect B) inflexibility C) variability D) waste

39)

Which of the following is NOT a source of supply variability?

A) Customers with different requests B) Power outage C) Time to serve a customer D) Wrong order entered

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40) To which system inhibitor does the following customer complaint relate: "I wish they could add more cashiers in the busy hours"?

A) Defect B) Inflexibility C) Variability D) Waste

41)

More guests showing up than expected at a party is an example of _________.

A) demand variability B) supply variability C) demand inflexibility D) supply inflexibility

42)

A waitress who does not show up for work today will result in _________.

A) demand variability B) supply variability C) demand inflexibility D) supply inflexibility

43)

Which of the following statements about system inhibitors is TRUE? A) Reducing waste will to eliminate system inhibitors.

B) Increasing profit will overcome system inhibitors.

C) Eliminating system inhibitors is a one-time activity.

D) System inhibitors result in inefficiencies.

44)

Sustainability relates to the _________.

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A) environmental impact of a company’s operations B) labor practices used by a company C) ability of a company to stay in business D) ability of a company to remain competitive

45)

What is the goal of sustainable operations?

A) to remain competitive B) to stay in business C) to avoid engaging into questionable labor practices D) to maintain an ecological balance by not depleting finite natural resources

46) Engaging in questionable labor practices such as using child labor or illegal labor is an example of a (an) _________ issue.

A) strategic B) environmental C) ethical D) trade-off

47)

Operations management is about _________.

A) working harder B) avoiding work C) improving work D) dealing with customer feedback

48)

Which of the following statements about operations management is TRUE?

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A) All work requires operations.

B) Operations is only about manufacturing plants.

C) Operations management is in every job description.

D) Operations management is not relevant for lawyers.

49)

Operations comes from the Latin word "opus," which means _________.

A) continuous change B) helping people C) improvement D) work

50) Operations management improves the way work is done by all of the following means EXCEPT _________.

A) overcoming efficiencies B) eliminating waste C) decreasing variability D) increasing flexibility

51)

A doctor can apply operations management tools to _________.

A) find a cure for cancer B) discover a new drug C) improve his/her work tasks as a doctor D) improve his/her language skills

52)

Which of the following is a job of an operations manager?

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A) Managing inventory levels B) Setting up an accounting system C) Filing lawsuits against competitors D) Developing a new company logo

53)

Which of the following is NOT a job of an operations manager?

A) Acquiring inputs B) Managing resources C) Overcoming inefficiencies D) Developing a new company logo

54)

Which of the following is NOT a job of an operations manager?

A) Acquiring inputs B) Managing resources C) Overcoming inefficiencies D) Filing lawsuits against competitors

55) As an operations manager, you improve work by doing all of the following EXCEPT _________.

A) eliminating waste B) increasing flexibility C) doing the work of others D) reducing variability

56) As an operations manager, you improve work by doing all of the following EXCEPT _________.

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A) eliminating waste B) increasing flexibility C) reducing variability D) setting up a new accounting system

57) A mismatch of supply and demand can be caused by all of the following EXCEPT _________.

A) demand variability B) supply variability C) supply inflexibility D) demand inflexibility

58)

Which of the following is NOT an operational problem that you will learn in this text?

A) Process analysis B) Process improvement C) Process satisfaction D) Process quality

59) _________ addresses the question of how a firm should produce the products or services its customers want.

A) Process analysis B) Product development C) Process satisfaction D) Process quality

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60) _________ is(are) a response to the three system inhibitors and helps to answer the question of how a firm can improve the productivity of its processes.

A) Demand anticipation B) Inventory management C) Process variability D) Lean operations

61) _________ helps a firm to answer the question of how much of a product should be made or how many customers should be served.

A) Product development B) Inventory management C) Process variability D) Lean operations

62) Which key operational question corresponds to the "inconvenience" component of the customer utility function?

A) Who are the customers and what are their heterogeneous needs?

B) How efficiently will products or services be delivered?

C) What is the product or service to be delivered?

D) Where will the demand be fulfilled?

63) Which key operational question corresponds to the “performance” subcomponent of consumption utility?

A) Who are the customers and what are their heterogeneous needs?

B) How much do we charge?

C) What is the product or service to be delivered?

D) Where will the demand be fulfilled?

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64) Which key operational question corresponds to the “fit” subcomponent of consumption utility?

A) Who are the customers and what are their heterogeneous needs?

B) How much do we charge?

C) What is the product or service to be delivered?

D) Where will the demand be fulfilled?

65)

Supply is the set of products or services a business offers to its customers. ⊚ true ⊚ false

66)

Consumption utility is composed of price and convenience. ⊚ true ⊚ false

67) "Firm A Pareto dominates firm B" means that firm A’s product or service is inferior to that of firm B on all dimensions of the customer utility function. ⊚ true ⊚ false

68)

A firm must make trade-offs because no single company can excel at everything. ⊚ true ⊚ false

69)

Reducing inefficiencies will increase a firm’s profitability.

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⊚ ⊚

true false

70)

Every work requires operations. ⊚ true ⊚ false

71)

"Who are the customers?" is a key question in operations management. ⊚ true ⊚ false

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Answer Key Test name: Chap 01_3e_Cachon 1) C 2) A 3) B 4) A 5) D 6) C 7) C 8) A 9) D 10) C 11) A 12) A 13) D 14) A 15) C 16) D 17) C 18) C 19) B 20) D 21) D 22) D 23) C 24) B 25) B 26) D Version 1

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27) B 28) A 29) C 30) B 31) A 32) A 33) C 34) D 35) B 36) D 37) C 38) B 39) A 40) B 41) A 42) B 43) D 44) A 45) D 46) C 47) C 48) A 49) D 50) A 51) C 52) A 53) D 54) D 55) C 56) D Version 1

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57) D 58) C 59) A 60) D 61) B 62) D 63) C 64) A 65) TRUE 66) FALSE 67) FALSE 68) TRUE 69) TRUE 70) TRUE 71) TRUE

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CHAPTER 2 1)

Which of the following statements about a process is TRUE? A) A process cannot be measured.

B) A process can be measured.

C) A process cannot be improved.

D) A process can only be represented mathematically.

2)

Which of the following is a definition of the term "process"?

A) A set of activities that combines a collection of units.

B) A set of activities that combines a collection of supplies.

C) A set of activities that transforms a collection of inputs into outputs.

D) A set of activities that transforms a collection of outputs into inputs.

3)

A graphical representation of a process is called a _________.

A) process flow diagram B) process flow chart C) process activity diagram D) process activity chart

4)

A process scope is the set of _________.

A) flow units moving through the process B) outputs produced by the process C) inputs required by the process D) activities included in the process

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5) A CEO of a firm will be interested in a _________level of the _________to know how the entire firm is doing.

A) high, process scope B) high, flow unit C) low, process scope D) low, flow unit

6) From the perspective of a cashier in a supermarket, the appropriate level for the process scope is _________.

A) the customer checkout process B) the supermarket C) the grocery business D) the food industry

7)

A flow unit is the basic unit that _________ a process.

A) activates B) improves C) bypasses D) moves through

8)

An example of a flow unit at a fast-food restaurant is the _________.

A) cashier B) kitchen C) customer D) supplier

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9) For the purpose of process analysis, what is an appropriate flow unit to analyze the main operation of a department store?

A) Number of hours the store is open each day B) Square footage of the store C) Weekly sales, in dollars D) Number of cash registers

10) For the purpose of process analysis, what is NOT an appropriate flow unit to analyze the operation at a hair salon?

A) Number of customers served per day B) Monthly sales figures C) The dollar value of haircare products sold per day D) Number of stylists working each day

11)

Which of the following statements about a process flow diagram is FALSE? A) It cannot have multiple resources.

B) It includes inputs, resources, and outputs.

C) It has inputs flowing into a process.

D) It has outputs flowing out of a process.

12)

Which of the following statements about resources in a process flow diagram is TRUE?

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A) Resources are outputs of a process.

B) Resources are represented as arrows pointing to a process.

C) Resources are not relevant in a process.

D) Outputs of some resources can be inputs to other resources.

13)

Which of the following is an appropriate output of a refreshment stand at a cinema?

A) Corn B) Popcorn C) Ticket sales D) Movies

14)

Which of the following is an appropriate output at a cinema?

A) Popcorn B) Movie screens C) Ticket sales D) Theater seats

15)

Which of the following is an appropriate input at a bakery?

A) Steel beam B) Baked goods C) Oven D) Flour

16)

Which of the following is an appropriate output at a bakery?

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A) Steel beam B) Baked goods C) Oven D) Flour

17)

Which of the following is an appropriate resource at a bakery?

A) Steel beam B) Baked goods C) Oven D) Flour

18)

Which of the following is appropriate flow unit for a bank?

A) Tellers B) Teller stations C) Customers D) Cash

19)

Which of the following is an appropriate resource at a cinema?

A) Movie projector B) Popcorn C) Ticket sales D) Number of customers

20)

Which of the following is NOT a rule used to define a flow unit?

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A) A flow unit should correspond to what is tracked and measured in a process.

B) A flow unit should be measured consistently in the same unit as which it is defined.

C) A flow unit should be used to measure all activities within a process.

D) A flow unit should be used to measure the number of resources in a process.

21) Which of the following is an appropriate flow unit for analyzing the operations at a supermarket?

A) Customers B) Square feet in the store C) Checkout lines D) Employees

22) Which of the following is NOT an appropriate flow unit to analyze the operations at a supermarket?

A) Customers served B) Sales dollars C) Products sold D) Number of cash registers

23)

A flow unit is generally associated with the _________ of a process.

A) inputs B) resources C) outputs D) activities

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24) A process metric is something that can be _________ to reveal the _________ and _________ of a process.

A) measured, inputs, outputs B) measured, performance, capability C) speculated, inputs, outputs D) speculated, performance, capability

25)

A key process metric is/are _________.

A) flow rate B) flow units C) inputs D) resources

26)

A key process metric is/are _________.

A) raw materials B) inputs C) inventory D) outputs

27)

A key process metric is _________.

A) activity time B) process time C) completion time D) flow time

28)

Which of the following is NOT a key process metric?

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A) Flow unit B) Flow time C) Flow rate D) Inventory

29)

Flow rate tells us _________.

A) how much stuff is in the process B) how much stuff moves through the process per time unit C) how much time stuff spends in the process D) how much stuff is needed for the process

30)

Flow time tells us _________.

A) the number of flow units within a process B) the rate at which a flow unit moves through a process C) the time a flow unit spends in a process D) the time at which a flow unit starts a process

31)

Inventory tells us _________.

A) the number of flow units within a process B) the rate at which flow units move through a process C) the time a flow unit spends in a process D) the time at which a flow unit starts a process

32) Which of the following pieces of information is needed to compute flow time at a dentist's office?

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A) Traveling time of patients B) Scheduling time of patients C) Arrival time of patients D) Arrival time of staff

33)

Arrivals and departures to C&A Optometrist are collected and reported below: Patient 1 2 3 4 5

Arrival 7:45 8:00 10:00 10:15 10:35

Departure 8:45 9:00 10:30 11:45 12:00

What is the average flow time of its patients in minutes?

A) 90 B) 65 C) 63 D) 60

34)

Arrivals and departures to C&A Optometrist are collected and reported below: Patient 1 2 3 4 5

Arrival 7:45 8:00 10:00 10:15 10:35

Departure 8:45 9:00 10:30 11:45 12:00

Assume C&A Optometrist is open from 7:45 a.m. to noon. What is the flow rate of patients in C&A Optometrist per hour?

A) 1.18 B) 0.85 C) 1 D) 5

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35) C&A Bakery serves 120 customers over the course of a 10-hour day. What is the flow rate of customers in this bakery per hour?

A) 10 B) 1200 C) 12 D) 8.5

36) Ten customers visit C&A Bakery from 8 a.m. to 10 a.m. The customers spend 9, 16, 21, 10, 8, 11, 9, 20, 27, and 29 minutes in the bakery. What is the average flow time (in minutes) of a customer at this bakery?

A) 12 B) 160 C) 80 D) 16

37) Ten customers visit C&A Bakery from 8 a.m. to 10 a.m. The customers spend 9, 16, 21, 10, 8, 11, 9, 20, 27, and 29 minutes in the bakery. What is the average flow rate of customers in this bakery per hour?

A) 16 B) 10 C) 12 D) 5

38) The flow rate of customers at a state fair is 100 per hour. The fair is open from 8 a.m. to 8 p.m. How many total customers are at the fair during this time period?

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A) 1000 B) 1200 C) 120 D) 100

39)

Flow rate is usually measured in the following units EXCEPT _________.

A) customers per week B) pounds per month C) boxes per day D) dollars per customer

40)

Inventory is usually measured in the following units EXCEPT _________.

A) hours B) customers C) pounds D) boxes

41)

Which of the following statements regarding the process flow rate is FALSE?

A) Over the long run, the flow rate upon entry to the process is the same as the flow rate upon exit of the process.

B) The flow rate upon entry must match the flow rate upon exit at every moment.

C) The flow rate is always expressed in terms of flow units per unit of time.

D) In practice, high flow rates are generally desirable.

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42) The arrival and departure times for five customers at cell phone repair shop are shown below: Customer 1 2 3 4 5

Arrival 9:06 9:30 10:10 10:45 11:18

Departure 9:48 10:25 11:18 11:28 12:00

What is the average flow time of its customers in minutes?

A) 50 B) 65 C) 63.7 D) 46.8

43) The arrival and departure times for five customers at cell phone repair shop are shown below: Customer 1 2 3 4 5

Arrival 9:06 9:30 10:10 10:45 11:18

Departure 9:48 10:25 11:18 11:28 12:00

Assume the repair shop is open from 9:00 a.m. to noon. What is the average flow rate in customers per hour?

A) 0.60 B) 1.67 C) 3.33 D) 10

44) Twelve customers visit a small bank between 9 a.m. and 10:30 a.m. The customers spend 8, 13 21, 16, 7, 11, 14, 19, 27, 22, 17 and 10 minutes in the bank. What is the average flow rate of customers in this bank per hour?

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A) 12 B) 9.67 C) 8 D) 15.42

45) Twelve customers visit a small bank between 9 a.m. and 10:30 a.m. The customers spend 8, 13 21, 16, 7, 11, 14, 19, 27, 22, 17 and 10 minutes in the bank. What is the average flow time of customers in this bank per hour?

A) 12 B) 1.5 C) 16.24 D) 15.42

46) The average flow rate of customers at a post office is 42 per hour. The post office is open daily (except Sunday) from 8:30 a.m. to 5 p.m. How many total customers are expected to visit this post office each day it is open?

A) 42 B) 336 C) 357 D) 378

47)

Arrivals and departures to C&A Optometrist are collected and reported below: Patient 1 2 3 4 5

Arrival 7:45 8:00 10:00 10:15 10:35

Departure 8:45 9:00 10:30 11:45 12:00

Assume C&A Optometrist is open from 7:45 a.m. to noon. How many patients on average are in C&A Optometrist?

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A) 0.85 B) 1.27 C) 1.08 D) 4.25

48)

Which of the following factors is relevant to Little’s Law? A) Customer arrival times B) Resource input time C) Customer sequencing D) Average flow time

49) Both the average flow rate and average flow time of a process are increased by 50%.

What will be the percentage change in the average number of units in the process?

A) 225% B) 125% C) 50% D) 25%

50)

Each of these is a key metric in Little’s Law EXCEPT _________.

A) flow rate B) flow unit C) flow time D) inventory

51)

Little’s Law relates inventory, flow rate, and flow time as _________.

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A) Inventory = Flow rate + Flow time B) Inventory = Flow rate − Flow time C) Inventory = Flow rate × Flow time D) Inventory = Flow rate/Flow time

52) Ten customers visit C&A Bakery from 8 a.m. to 10 a.m. The customers spend 10, 15, 20, 11, 8, 12, 25, 18, 29, and 32 minutes in the bakery. On average, how many customers are in the bakery?

A) 18 B) 10 C) 1.5 D) 0.83

53) On average, a patient spends 5 minutes waiting and 15 minutes being treated at C&A Clinic. The average number of patients waiting and being treated at the clinic is 50. What is the average flow rate of patients per minute on a typical day?

A) 2.5 B) 20 C) 50 D) 0.5

54) A drive-through at C&A Fast Food serves 360 customers over a 12-hour day. On average, a customer spends 4 minutes waiting in line, 2 minutes placing the order, and 4 minutes completing the order before leaving the drive-through. How many customers on average are "in" the drive-through (i.e., from the time they enter to the time they exit the drive-through)?

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A) 10 B) 300 C) 30 D) 5

55) C&A Cruise owns 5 ships and wants to serve 2000 passengers each week. Each cruise ship can carry 1000 passengers on each voyage. Assume ships always travel fully loaded. What is the longest average travel time on a voyage that allows C&A Cruise to meet its goal of serving 2000 passengers per week?

A) 4 weeks B) 2.5 weeks C) 1 week D) 5 weeks

56) C&A Dairy uses 600 pounds of milk per day to make ice cream. On average, C&A Dairy uses 3 pounds of milk to make one gallon of ice cream in 5 hours. How many gallons of ice cream are being made on average at any one time if C&A Dairy operates for 10 hours a day?

A) 25 B) 50 C) 100 D) 120

57) C&A Dairy uses 600 pounds of milk per day to make ice cream. On average, C&A Dairy uses 3 pounds of milk to make one gallon of ice cream. The production process takes 2 hours of mixing and 2 hours of cooling. How many gallons of ice cream does the cooler hold on average at any one time (i.e., consider only the flow time for cooling) if C&A Dairy operates for 10 hours a day?

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A) 25 B) 40 C) 50 D) 120

58) Twenty new members are elected to an agency every two years. The agency has 50 members on average overall. How long does a member hold his/her position at the agency?

A) 50 years B) 20 years C) 10 years D) 5 years

59) C&A Museum has 1,500,000 visitors per year. Each visitor spends an average of 2 hours in the museum. What is the average number of visitors in the museum on a given day if the museum is open 300 days a year from 9 a.m. to 5 p.m.?

A) 1250 B) 2400 C) 7500 D) 8000

60) A clinical trial accepts 2000 new patients each month. Half of the patients are taking a placebo for 3 months. How many patients are taking the placebo on average at any given time?

A) 6000 B) 3000 C) 2000 D) 1000

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61) A popular roller coaster ride lasts 8 minutes. There are 24 people on average on the roller coaster during peak time. How many people are stepping onto the roller coaster per minute at peak time?

A) 3 B) 6 C) 8 D) 24

62) McKinley, a large consulting firm in the UK, has a consulting staff consisting of 300 consultants at the rank of "associate." On average, a consultant remains at the associate level for 2 years. After this time, 30% of the consultants are promoted to the rank of "engagement manager"; the other 70% have to leave the company. In order to maintain the consulting staff at an average level of 300 associates, how many new consultants does McKinley have to hire each year at the associate level?

A) 100 associates/year B) 150 associates/year C) 200 associates/year D) 600 associates/year

63) Twelve customers visit a small bank between 9 a.m. and 10:30 a.m. The customers spend 7, 12 18, 16, 7, 11, 14, 19, 27, 22, 17 and 10 minutes in the bank. What is the average number of customers in this bank?

A) 1.67 B) 2 C) 2.56 D) 122

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64) A hotel shuttle bus transports passengers between the hotel and the airport. A one-way trip takes 15 minutes at which time all passengers deboard. There are 26 passengers on the bus during peak time. How many passengers are deboarding the bus per hour at peak time?

A) 104 B) 152 C) 208 D) 390

65) Bentco Department Store has 375 customers per day. Each customer spends an average of 45 minutes in the store. What is the average number of customers in the store if the store is open from 9:30 a.m. to 10 p.m.?

A) 15.63 B) 18.75 C) 22.5 D) 30

66) A manufacturing company plans to implement a process improvement that will increase the process flow rate by 25% and decrease the process flow time by 15%. What will be the percentage change in the average number of units in the process?

A) 2.25% B) 4.75% C) 6.25% D) 10%

67)

A flow unit is generally associated with the inputs of a process. ⊚ true ⊚ false

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68) A process with a high-level scope must have different inputs and outputs than the process viewed at a lower scope. ⊚ true ⊚ false

69)

Process metrics measure the performance and capability of a process. ⊚ ⊚

70)

true false

The entry rate of inputs and the exit rate of outputs in a process match at every moment. ⊚ true ⊚ false

71) Little’s Law can be used to identify the actual time that a particular flow unit spends in a process. ⊚ true ⊚ false

72) C&A Bakery serves 200 customers in 10 hours. On average there are five customers in the bakery. This means each customer spends on average 15 minutes in the bakery. ⊚ true ⊚ false

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Answer Key Test name: Chap 02_3e_Cachon 1) B 2) C 3) A 4) D 5) A 6) A 7) D 8) C 9) C 10) D 11) A 12) D 13) B 14) C 15) D 16) B 17) C 18) C 19) A 20) D 21) A 22) D 23) C 24) B 25) A 26) C Version 1

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27) D 28) A 29) B 30) C 31) A 32) C 33) B 34) A 35) C 36) D 37) D 38) B 39) D 40) A 41) B 42) A 43) B 44) C 45) D 46) C 47) B 48) D 49) B 50) B 51) C 52) C 53) A 54) D 55) B 56) C Version 1

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57) B 58) D 59) A 60) B 61) A 62) B 63) B 64) A 65) C 66) C 67) FALSE 68) FALSE 69) TRUE 70) FALSE 71) FALSE 72) TRUE

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CHAPTER 3 1)

Which of the following statements about process analysis is TRUE? A) Process analysis is the backbone of a company’s accounting system.

B) Process analysis tracks an organization’s revenue and costs.

C) Process analysis enables a business to create demand.

D) Process analysis is a framework to understand an organization’s detailed operations.

2)

Resources are shown in a process flow diagram as _________.

A) boxes B) arrows C) circles D) triangles

3)

Inventory is shown as _________ in a process flow diagram.

A) boxes B) arrows C) circles D) triangles

4)

Which of the following is a resource in an outpatient medical clinic?

A) Flu shot B) X-ray machine C) Ambulance D) Reputation

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5) You are picking up a prescription at a pharmacy which was dropped off a short time ago.

Right now, you are waiting in line in front of the pickup window. Which process is upstream, relative to your current position in the process?

A) Paying for the prescription B) Leaving the pharmacy with the prescription C) Inspecting the prescription D) Dropping off the prescription

6) On a process flow diagram, _________ are used to show the journey of a flow unit from input to output.

A) boxes B) arrows C) circles D) triangles

7)

Refer to the process flow diagram below. Station 1 is _________ from station 2.

A) downstream B) upstream C) target D) bottleneck

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8)

Refer to the process flow diagram below. Station 3 is _________ from station 2.

A) downstream B) upstream C) target D) bottleneck

9)

Refer to the process flow diagram below. Station 2 is the _________ of Station 1.

A) customer B) supplier C) target D) bottleneck

10) A process analysis of a hospital’s emergency room can answer all of the following questions EXCEPT _________.

A) What is the average waiting time of a patient in the emergency room?

B) How many patients can be treated each day in the emergency room?

C) How busy are the physicians in the outpatient clinic?

D) How many seats are in the emergency room?

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11) Consider this checkout process at a post office: "Customers wait in a single line to be waited on by the next available postal clerk." Which process flow diagram is a correct depiction of this process?

A)

B)

C)

D)

12) Consider this checkout process at a grocery store:"There are three checkout lines, each staffed by a separate cashier. Each customer waits in one of those three lines for checkout."

Which process flow diagram is a correct depiction of this checkout process?

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A)

B)

C)

D)

13) Consider this checkout process at a store: "Customers wait in line to drop off their order in one station, then wait to pick up their order in another station." Which process flow diagram is a correct depiction of this checkout process?

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A)

B)

C)

D)

14) The _________ of a resource is how long that particular resource takes to complete one flow unit.

A) flow time B) flow rate C) processing time D) processing rate

15) The capacity of a resource determines the _________ number of flow units that can flow through that resource per unit of time.

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A) maximum B) minimum C) average D) median

16)

The process capacity determines the _________ a process can provide per unit of time.

A) minimum flow rate B) maximum flow rate C) maximum flow time D) minimum flow time

17)

One employee is in charge of the following activities at a bank’s drive-through:

Activity Greet customer Take order Process order Print receipt

Activity Time per Customer 3 seconds 5 seconds 3 minutes 12 seconds

What is the processing time (in seconds) of the drive-through process at the bank?

A) 5.75 B) 23 C) 43.75 D) 200

18)

One employee is in charge of the following activities at a bank’s drive-through:

Activity Greet customer Take order Process order Print receipt

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Activity Time per Customer 3 seconds 5 seconds 3 minutes 12 seconds

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What is the capacity (in customers per hour) of the employee?

A) 0.005 B) 0.3044 C) 18.00 D) 37.88

19)

One employee is in charge of the following activities at a bank’s drive-through:

Activity Greet customer Take order Process order Print receipt

Activity Time per Customer 3 seconds 5 seconds 3 minutes 12 seconds

What is the bank’s process capacity (in customers per minute)?

A) 0.005 B) 0.3044 C) 18.00 D) 33.75

20) A bank has three tellers. It takes a teller 5 minutes to serve one customer. What is the capacity of the bank (in customers per hour)?

A) 5 B) 15 C) 12 D) 36

21) A bank has three tellers. It takes a teller 5 minutes to serve one customer. What is the capacity of the bank (in customers per day) over the course of an 8-hour workday?

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A) 40 B) 120 C) 144 D) 288

22) A community health system’s nurse team consists of 12 nurses working in the local community. It takes a nurse 1.5 hours to complete one patient visit (including travel times and breaks). What is the capacity of the nurse team over the course of a 9-hour workday?

A) 162 patients B) 12 patients C) 72 patients D) 100 patients

23)

In a one-step process with a single resource, which of the following statements is TRUE? A) The capacity of the resource equals its processing time.

B) Thecapacity of the resource equals its processing time multiplied by 60.

C) The capacity of the resource equals (1/processing time).

D) The capacity of the resource is expressed in terms of time per flow unit.

24) Customers arrive at a hot dog stand staffed by a single employee. The employee completes the following three activities for each customer.

Activity Take order Package and dress hot dogs Process payment

Time per Customer 8 seconds 20 seconds 12 seconds

What is the capacity (in customers per hour) at the hot dog stand?

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A) 0.025 B) 1.50 C) 40.00 D) 90.00

25) Customers drive away after failing to find a place to park at a supermarket. The current process is _________.

A) capacity-constrained B) demand-constrained C) supply exceeds demand D) capacity unconstrained

26) Capacity is constrained when _________ exceeds _________ and the flow rate is equal to _________.

A) supply, demand, process capacity B) supply, demand, demand C) demand, supply, process capacity D) demand, supply, demand

27) The process is _________constrained when _________ exceeds _________ and the flow rate is equal to the demand rate.

A) demand, supply, demand B) capacity, supply, demand C) demand, demand, supply D) capacity, demand, supply

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28)

Process utilization is the ratio between _________ and _________.

A) flow time, flow rate B) flow rate, process capacity C) process capacity, flow time D) process time, process capacity

29) You observe a long line at C&A Bakery with customers leaving every 4 minutes. What is the capacity (in customers per hour) of the bakery?

A) 0.25 B) 4 C) 15 D) 12

30) A help desk can answer 120 calls per hour. The demand rate is 150 calls per hour. What are the cycle time (in minutes per call) and utilization of the call center?

A) 0.0083, 1 B) 0.00674, 0.8 C) 0.4, 0.8 D) 0.5, 1

31)

Which of the following statements about utilization of a resource is TRUE? A) It is at its maximum when the flow rate exceeds its capacity.

B) It is at its maximum when the flow rate is equal to its capacity.

C) It is at its minimum when the flow rate exceeds its capacity.

D) It is at its minimum when the flow rate is equal to its capacity.

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32)

One employee is in charge of the following activities at a refreshment stand:

Activity Greet customer Take order Process order Print receipt

Activity Time per Customer 5 seconds 25 seconds 1.5 minutes 30 seconds

If the demand rate is 20 customers per hour, what are the flow rate (in customers per hour), utilization, and cycle time (in minutes per customer)?

A) 24, 1, 0.04 B) 24, 1, 2.5 C) 20, 0.83, 0.05 D) 20, 0.83, 3

33) A patient leaves an outpatient clinic every 6 minutes. There are 5 patients in the clinic waiting to be seen by the physician. How many minutes will the 5th patient be in the clinic?

A) 6 B) 12 C) 24 D) 30

34) A team of 10 volunteers is visiting families in a local community to deliver canned goods. It takes one volunteer 2 hours to complete one visit. What is the capacity of the team over the course of an 8-hour workday?

A) 5 B) 4 C) 40 D) 50

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35) A community health system’s nurse team consists of 12 nurses working in the local community. It takes a nurse 1.5 hours to complete one patient visit (including travel times and breaks). Assuming the demand for the nurses is 60 patients per day over the course of a 9-hour workday, what is the utilization of the nurse team?

A) 100% B) 33.3% C) 66.66% D) 83.33%

36) An electric car company operates a manufacturing facility with 160 robots and 3000 employees. The process produces some 500 vehicles each week. It takes a car about 5 days to move from the beginning of the process to the end. The plant operates for 16 hours per day, 5 days a week. What is the cycle time of the process?

A) 5 minutes/car B) 0.0009 minute/car C) 9.6 minutes/car D) 40 minutes/car

37) Customers arrive at a hot dog stand staffed by a single employee. The employee completes the following three activities for each customer.

Activity Take order Package and dress hot dogs Process payment

Time per Customer 8 seconds 20 seconds 12 seconds

Assuming demand is 60 customers per hour, what is the utilization of the employee?

A) 40.00% B) 60.00% C) 66.67% D) 100.00%

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38) Customers arrive at a hot dog stand staffed by a single employee. The employee completes the following three activities for each customer.

Activity Take order Package and dress hot dogs Process payment

Time per Customer 8 seconds 20 seconds 12 seconds

Assuming demand is 60 customers per hour, what is the cycle time of the process (in minutes per customer)?

A) 0.40 B) 0.60 C) 0.6667 D) 1.00

39) Guests are arriving at a party at a rate of 8 per minute. Each guest will be checked in, served a drink, and accompanied to his/her table by one receptionist, one bartender, and one usher, respectively. Both the receptionist and usher can serve 5 guests per minute, whereas the bartender takes 2 minutes to serve one guest. Which of the following conclusions can be drawn?

A) The capacity of the bartender is the same as that of the receptionist.

B) The capacity of the bartender is higher than that of the receptionist.

C) The capacity of all three resources is the same.

D) The capacity of the usher is higher than that of the bartender.

40) Guests are arriving at a party at a rate of 8 per minute. Each guest will be checked in, served a drink, and accompanied to his/her table by one receptionist, one bartender, and one usher respectively. Both the receptionist and usher can serve 5 guests per minute, whereas the bartender takes 2 minutes to serve one guest. Which resource is the bottleneck and what is the process capacity in guests per minute?

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A) Receptionist, 5 B) Bartender, 5 C) Bartender, 0.5 D) Usher, 5

41) Guests are arriving at a party at a rate of 8 per minute. Each guest will be checked in, served a drink, and accompanied to his/her table by one receptionist, one bartender, and one usher, respectively. Both the receptionist and usher can serve 5 guests per minute, whereas the bartender takes 2 minutes to serve one guest. The _________ is a nonbottleneck resource and its utilization is _________.

A) usher, 10% B) bartender, 100% C) usher, 100% D) receptionist, 40%

42)

Which of the following statements is FALSE? A) Nonbottleneck resources have slack capacity.

B) A bottleneck resource must have a utilization of 100%.

C) Nonbottleneck resources have a less than 100% utilization.

D) A bottleneck resource does not always have the longest processing time.

43) Patients are arriving at a clinic at a rate of two per minute. Each patient’s visit consists of four steps: check in, record vital signs, receive treatment, and check out. A receptionist takes 1 minute to check a patient in. A nurse takes 2 minutes to record the patient’s vital signs. A doctor spends 10 minutes with a patient. A staff member takes 3 minutes to check a patient out. What is the process capacity in patients per hour?

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A) 60 B) 30 C) 20 D) 6

44) Patients are arriving at a clinic at a rate of two per minute. Each patient’s visit consists of four sequential steps: check in, record vital signs, receive treatment, and check out. A receptionist takes 1 minute to check a patient in. A nurse takes 2 minutes to record the patient’s vital signs. A doctor spends 10 minutes with a patient. A staff member takes 3 minutes to check a patient out. What is the utilization of the checkout resource?

A) 100% B) 30% C) 20% D) 10%

45) Patients are arriving at a clinic at a rate of two per minute. Each patient’s visit consists of four steps: check in, record vital signs, receive treatment, and check out. A receptionist takes 1 minute to check a patient in. A nurse takes 2 minutes to record the patient’s vital signs. A doctor spends 10 minutes with a patient. A staff member takes 3 minutes to check a patient out. What is the cycle time of the process in minutes?

A) 10 B) 20 C) 30 D) Cannot be determined

46)

When will the utilization of a bottleneck resource be less than 100%?

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A) When the process is capacity-constrained B) When the process is demand-constrained C) When demand is higher than process capacity D) When demand is equal to process capacity

47)

The capacity of a nonbottleneck resource is _________ the capacity of the process.

A) equal to B) smaller than C) larger than D) The answer depends on the specific process under consideration

48) Job candidates are leaving an office every 50 minutes. Each candidate goes through three activities during the office visit: verification, written test, and interview. Verification takes 1 minute, the written test takes 40 minutes, and the interview takes 10 minutes. Assume there is only one resource dedicated to each activity. What is the bottleneck capacity in candidates per hour?

A) 1.5 B) 1.2 C) 2.0 D) 2.5

49) Job candidates are leaving an office every 50 minutes. Each candidate goes through three activities during the office visit: verification, written test, and interview. Verification takes 1 minute, the written test takes 40 minutes, and the interview takes 10 minutes. Assume there is only one resource dedicated to each activity. Which of the following conclusions can be drawn?

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A) The process is capacity-constrained.

B) The process is demand-constrained.

C) The interview resource is the bottleneck.

D) The flow rate is equal to the process capacity.

50) Job candidates are leaving an office every 50 minutes. Each candidate goes through three activities during the office visit: verification, written test, and interview. Verification takes 1 minute, the written test takes 40 minutes, and the interview takes 10 minutes. Assume there is only one resource dedicated to each activity. What is the utilization of the bottleneck resource?

A) 100% B) 80% C) 20% D) 2%

51) There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two employees each for cutting and stuffing but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. What is the bottleneck in the process?

A) Cutting B) Stuffing C) Sealing D) Packaging

52) There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two employees each for cutting and stuffing but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. What is the capacity in toys per minute at the resource "stuffing"?

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A) 24 B) 12 C) 0.4 D) 0.2

53) There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two employees each for cutting and stuffing but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. What is the utilization at the "packaging" resource if demand is unlimited?

A) 100% B) 75% C) 63% D) 50%

54) Students are going through a three-step process to obtain their ID cards. Each student will spend 2 minutes at the registration desk before going to one of three cashiers to pay a fee for the card. After that, he/she will visit one of four ID processing stations to have his/her picture taken and the ID card printed. Registration takes 2 minutes. Visits to the cashier and ID processing station take 10 and 20 minutes respectively. If the demand rate is 0.5 student per minute, which of the following conclusions can be drawn if resources are doubled at the processing station?

A) The cashier station becomes the bottleneck.

B) There will be no bottleneck in the process.

C) Registration becomes the bottleneck.

D) The ID processing station becomes the bottleneck.

55) Under which scenario will the utilization of a particular resource in a sequential multistep process be 100 percent?

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A) The resource is a bottleneck and the process is demand-constrained.

B) The resource is a bottleneck and the process is capacity-constrained.

C) The resource is a nonbottleneck and the process is demand-constrained.

D) The resource is a nonbottleneck and the process is capacity-constrained.

56) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There are three machines for component install, two machines for solder, one machine for inspection, and three machines for test.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 4 minutes

What is the bottleneck of the process?

A) Component install B) Solder C) Inspection D) Test

57) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There are three machines for component install, two machines for solder, one machine for inspection, and three machines for test.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 4 minutes

What is the capacity of the resource “solder” in circuit boards per hour?

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A) 1.5 B) 40 C) 48 D) 96

58) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There are three machines for component install, two machines for solder, one machine for inspection, and three machines for test.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 4 minutes

What is the utilization of the resource “component install” if demand is unlimited?

A) 44.44% B) 50.00% C) 66.67% D) 88.88%

59) There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two employees each for cutting and stuffing, but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. Assuming demand is unlimited, how long does it take (in seconds) to produce 1,000 toys starting with an empty system?

A) 4,028 B) 4,014 C) 4,000 D) 3,996

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60) There are four steps in the manufacturing process of a stuffed toy: cutting, stuffing, sealing, and packaging. There are two machines each for cutting and stuffing, but one each for sealing and packaging. The processing times of cutting, stuffing, sealing, and packaging are 8, 5, 3, and 2 seconds per toy. Assuming demand is unlimited, how long does it take (in seconds) to produce 1,000 toys starting with a full system?

A) 4,028 B) 4,014 C) 4,000 D) 3,996

61) Students are going through a three-step process to obtain their ID cards. Each student will spend 2 minutes at the registration desk before going to one of three cashiers to pay a fee for the ID card. After that, he/she will visit one of four ID processing stations to have his/her picture taken and ID card printed. Visits to the cashier and ID processing station take 10 and 20 minutes respectively. If the demand rate is 0.125 student per minute, how long does it take to process 20 students, assuming the system is full?

A) 100 minutes B) 152 minutes C) 160 minutes D) 184 minutes

62) Students are going through a three-step process to obtain their ID cards. Each student will spend 2 minutes at the registration desk before going to one of three cashiers to pay a fee for the ID card. After that, he/she will visit one of four ID processing stations to have his/her picture taken and ID card printed. Visits to the cashier and ID processing station take 10 and 20 minutes respectively. If the demand rate is 0.125 student per minute, how long does it take to process 20 students, assuming the system is empty?

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A) 100 minutes B) 152 minutes C) 160 minutes D) 184 minutes

63) Students are going through a three-step process to obtain their ID cards. Each student will spend 2 minutes at the registration desk before going to one of three cashiers to pay a fee for the ID card. After that, he/she will visit one of four ID processing stations to have his/her picture taken and ID card printed. Visits to the cashier and ID processing station take 10 and 20 minutes respectively. If the demand rate is 0.5 student per minute, how long does it take to process 20 students, assuming the system is empty?

A) 95 minutes B) 100 minutes C) 127 minutes D) 160 minutes

64) Students are going through a three-step process to obtain their ID cards. Each student will spend 2 minutes at the registration desk before going to one of three cashiers to pay a fee for the ID card. After that, he/she will visit one of four ID processing stations to have his/her picture taken and ID card printed. Visits to the cashier and ID processing station take 10 and 20 minutes respectively. If the demand rate is 0.5 student per minute, how long does it take to process 20 students, assuming the system is full?

A) 95 minutes B) 100 minutes C) 127 minutes D) 160 minutes

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65) Every student who wishes to enter the public library at Hotel de Ville (HdV), in the center of Paris, needs to go through the following steps: a.Show your ID to one of the two guards at the entrance of the HdV building—20 seconds b.Have your bag go through the metal detector—30 seconds c.Give your ID card to the ground floor desk clerk, who will give you in exchange a magnetic badge—1 minute d.Take the stairs up to the fourth floor of the building, where the library is located—2 minutes (Note: multiple people can be on the stairs at the same time) e.Show your badge to one of the two desk clerks at the library entrance to have your badge number archived—30 seconds f.Enter the library and get assigned to a numbered seat by one of the two librarians—40 seconds When the library opens at 9 a.m., there is usually a very long queue of people waiting to get in.

How long does it take for the 25 seats in the library to be occupied (assuming there are at least 25 people in the queue)?

A) 9 minutes B) 18 minutes C) 29 minutes D) 45 minutes

66) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There are three machines for component install, two machines for solder, one machine for inspection, and three machines for test.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 4 minutes

If the demand rate is 1 circuit board per minute, how long does it take to process 200 boards, assuming the system is full?

A) 2.5 minutes B) 10 minutes C) 300 minutes D) 500 minutes

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67) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There are three machines for component install, two machines for solder, one machine for inspection, and three machines for test.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 4 minutes

If the demand rate is 0.5 circuit boards per minute, how long does it take to process 500 boards, assuming the system is empty?

A) 2.5 minutes B) 758.5 minutes C) 1,008 minutes D) 1,250 minutes

68)

The primary purpose of a process analysis is to crowdsource new product ideas. ⊚ true ⊚ false

69)

The capacity of a resource is the average flow rate of that resource. ⊚ true ⊚ false

70)

Cycle time is the time between when an order is placed and when it is completed. ⊚ true ⊚ false

71)

A bottleneck is the resource with the lowest capacity in a multistep process.

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⊚ ⊚

72)

true false

A resource with a utilization of less than 100% cannot be the bottleneck. ⊚ true ⊚ false

73) It matters whether the process starts empty or not when computing the time it takes to produce a certain order quantity. ⊚ true ⊚ false

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Answer Key Test name: Chap 03_3e_Cachon 1) D 2) A 3) D 4) B 5) D 6) B 7) B 8) A 9) A 10) C 11) B 12) A 13) D 14) C 15) A 16) B 17) D 18) C 19) B 20) D 21) D 22) C 23) C 24) D 25) A 26) C Version 1

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27) A 28) B 29) C 30) D 31) B 32) D 33) D 34) C 35) D 36) C 37) C 38) D 39) D 40) C 41) A 42) B 43) D 44) B 45) A 46) B 47) C 48) A 49) B 50) B 51) A 52) A 53) D 54) A 55) B 56) C Version 1

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57) C 58) A 59) B 60) C 61) C 62) D 63) C 64) B 65) C 66) C 67) C 68) FALSE 69) FALSE 70) FALSE 71) TRUE 72) FALSE 73) TRUE

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CHAPTER 4 1) Four employees at a fast-food restaurant each perform one of the four activities in serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. If each employee is paid $7.50 per hour, what is the cost of direct labor associated with serving one customer?

A) $0.80 B) $7.50 C) $0.50 D) $0.125

2) Four employees at a fast-food restaurant each perform one of the four activities in serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. What is the labor content associated with serving one customer?

A) 60 seconds per customer B) 24.25 seconds per customer C) 97 seconds per customer D) 388 seconds per customer.

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3) Four employees at a fast-food restaurant each perform one of the four activities in serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. What is the average labor utilization?

A) 162.7% B) 68.2% C) 50.0% D) 40.4%

4) Four employees at a fast-food restaurant each perform one of the four activities in serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. What is the total idle time?

A) 35.75 seconds B) 60 seconds C) 97 seconds D) 143 seconds

5) Which of the following statements about process efficiency is FALSE, assuming unlimited demand?

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A) A process is efficient if it can achieve a high flow rate with few resources.

B) Cost of direct labor goes up if flow rate goes up.

C) Revenue goes up if flow rate goes up.

D) Cycle time goes up if flow rate goes down.

6) What will be the percentage change in cost of direct labor if flow rate goes up by 25% while other factors remain unchanged?

A) Goes up by 20% B) Goes down by 20% C) Goes up by 80% D) Goes down by 80%

7) Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below: Resource

Self-service Receptionist Nurse Physician Checkout

Process

Processing Number of Wage rate time (minutes workers ($ per per patient) hour) Check in 1 n/a n/a Update information 5 2 15 Record vital signs 10 3 30 Treat patient 30 5 100 Collect payment 10 2 15

What is the cost of direct labor per patient if demand is unlimited?

A) $6500/patient B) $1950/patient C) $65/patient D) $217/patient

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8) Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below: Resource

Self-service Receptionist Nurse Physician Checkout

Process

Processing Number of Wage rate time (minutes workers ($ per per patient) hour) Check in 1 n/a n/a Update information 5 2 15 Record vital signs 10 3 30 Treat patient 30 5 100 Collect payment 10 2 15

What is the labor content, excluding the self-serve kiosk?

A) 11.2 min/patient B) 13.75 min/patient C) 55 min/patient D) 56 min/patient

9) Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below: Resource

Self-service Receptionist Nurse Physician Checkout

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Process

Processing Number of Wage rate time (minutes workers ($ per per patient) hour) Check in 1 n/a n/a Update information 5 2 15 Record vital signs 10 3 30 Treat patient 30 5 100 Collect payment 10 2 15

4

Which of the following options would be the best process improvement to increase flow rate, assuming unlimited demand?

A) Increase check-in capacity B) Increase the pay for the receptionists C) Hire more physicians D) Move some work from the receptionist to the checkout clerk

10) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 3 minutes

Assume demand is unlimited. If each employee is paid $18.00 per hour, what is the cost of direct labor associated with producing one circuit board?

A) $6.00 B) $3.60 C) $18.00 D) $0.90

11) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 3 minutes

Assume demand is unlimited. What is the labor content associated with producing one circuit board?

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A) 9 minutes per board B) 2.25 minutes per board C) 3 minutes per board D) 36 minutes per board

12) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 3 minutes

Assume demand is unlimited. What is the average labor utilization?

A) 118.2% B) 94.7% C) 75.0% D) 48.2%

13) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 3 minutes

Assume demand is unlimited. What is the total idle time?

A) 1.5 minutes B) 3 minutes C) 2.25 minutes D) 9 minutes

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14) If _________ is the constraint, we should _________ the staffing level to raise capacity so it matches demand.

A) demand, lower B) demand, raise C) capacity, raise D) capacity, lower

15) If _________ is the constraint, we should _________ the staffing level to lower capacity so it matches demand.

A) demand, lower B) demand, raise C) capacity, raise D) capacity, lower

16) C&A Chemicals operates three eight-hour shifts to produce 600 gallons of a chemical per day. It requires 12 minutes of labor to produce a gallon of the chemical. What is C&A’s takt time in minutes per gallon, and what is the target manpower?

A) 0.3, 40 B) 0.8, 15 C) 0.04, 5 D) 2.4, 5

17)

Which of the following statements about takt time is FALSE?

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A) Takt time is the ratio between the available time and the required production quantity.

B) Takt time is dependent on the demand level.

C) Takt time tells us how much time actually elapses between completing two consecutive units.

D) Takt time tells us how much time should elapse between completing two consecutive units.

18)

Which of the following statements about target manpower is TRUE? A) Target manpower gives the maximum number of resources required to meet demand.

B) The only way to compute target manpower is through cycle time.

C) The target manpower calculation assumes that all resources are utilized at 100%.

D) The target manpower calculation accounts for idle time in the process.

19) Which of the following statements about takt time and cycle time is TRUE, assuming the current staff level is based on takt time?

A) If takt time is longer than cycle time, target manpower will be higher than current staff level.

B) If takt time is longer than cycle time, target manpower will be lower than current staff level.

C) Supply matches demand when takt time is shorter than cycle time.

D) Supply is less than demand when takt time is equal to cycle time.

20)

What happens to takt time if demand rate is doubled?

A) Increases by 50% B) Decreases by 50% C) No change D) Takt time doubles

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21) Labor content is increased by 20% while takt time remains the same. What is the percentage change in target manpower?

A) Increases by 20% B) Decreases by 20% C) No change D) Cannot be determined

22) Both takt time and labor content are increased by 15%. What happens to target manpower?

A) Increases by 15% B) Decreases by 15% C) No change D) Cannot be determined

23) An electronics manufacturing company operates two ten-hour shifts to produce 2400 circuit boards per day. It requires 8 minutes of labor to produce each board. What is the takt time in minutes per board?

A) 0.25 B) 0.50 C) 0.75 D) 1.00

24) An electronics manufacturing company operates two ten-hour shifts to produce 2400 circuit boards per day. It requires 14 minutes of labor to produce each board. What is the target manpower?

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A) 6 B) 171.4 C) 14 D) 28

25)

Which of the following strategies will NOT off-load the bottleneck?

A) Outsource some of the activities at the bottleneck.

B) Automate some of the activities at the bottleneck.

C) Reassign some of the activities at the bottleneck to other resources with more capacity.

D) Slow down work at resources with extra capacity to match that of the bottleneck.

26) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. To which activity should C&A assign an additional employee in order to increase process capacity?

A) Greet customer B) Take order C) Process order D) Deliver order

27) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Version 1

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Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the percentage change in process capacity?

A) 100% B) 50% C) 2% D) Cannot be determined

28) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Assume demand is unlimited. Each employee is paid $7.50 per hour. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

A) 0.50 B) 0.3125 C) 0.25 D) 0.125

29) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity Greet customer

Version 1

Processing time per customer 2 seconds

Wage rate ($ per hour) 5

11

Take order Process order Deliver order

30 seconds 60 seconds 5 seconds

5 15 8

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

A) 0.275 B) 0.3125 C) 0.40 D) 0.50

30) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Wage rate ($ per hour) 5 5 15 8

Assume demand is unlimited. Which of the following conclusions can be drawn?

A) Adding two employees at the current bottleneck activity is the minimum change in manpower necessary to increase process capacity.

B) Adding one employee at a nonbottleneck activity will cause a larger decrease in the cost of direct labor than adding one employee at the bottleneck activity.

C) Adding two employees at the current bottleneck activity will increase average labor utilization more than adding one employee.

D) Adding two employees at the current bottleneck activity will not increase the process capacity more than adding one employee.

31) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity

Version 1

Processing time per customer

Wage rate ($ per

12

Greet customer Take order Process order Deliver order

2 seconds 30 seconds 60 seconds 5 seconds

hour) 5 5 15 8

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the cost of direct labor in $ per customer?

A) 0.525 B) 0.50 C) 0.40 D) 0.3125

32) C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows: Activity Greet customer Take order Process order Deliver order

Processing time per customer 2 seconds 30 seconds 60 seconds 5 seconds

Wage rate ($ per hour) 5 5 15 8

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the average labor utilization?

A) 0.400 B) 0.475 C) 0.539 D) 0.667

33) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder

Version 1

Processing Time per Circuit Board 2 minutes 2.5 minutes

13

Inspection Test

1.5 minutes 3 minutes

Assume demand is unlimited. To which step should an additional employee be assigned to increase process capacity?

A) Component install B) Solder C) Inspection D) Test

34) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 2.5 minutes 1.5 minutes 3 minutes

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the percentage change in process capacity?

A) 100% B) 40% C) 20% D) 8.75%

35) There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below: Activity Cutting Sewing Stuffing Assembling Packaging

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Processing time (minutes per toy) 10 10 5 5 25

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Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

A) Adding one additional worker to sewing.

B) Adding two additional workers to sewing.

C) Moving packaging to worker A. D) Moving assembling to worker B.

36) There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below: Activity Cutting Sewing Stuffing Assembling Packaging

Processing time (minutes per toy) 10 10 25 5 5

Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

A) Adding one additional worker to assembling.

B) Adding two additional workers to assembling.

C) Moving packaging to worker A. D) Moving sewing to worker A.

37) Line balancing is the act of allocating activities of a process across the process resources as _________ as possible so that all resources have a comparable _________.

A) irregularly, inventory level B) evenly, utilization level C) irregularly, utilization level D) evenly, inventory level

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38) A process can be balanced by moving work away from the _________ to another resource with unused capacity.

A) most expensive resource B) least expensive resource C) nonbottleneck D) bottleneck

39)

Which of the following statements about line balancing is TRUE?

A) A process can be balanced without involving the bottleneck resource.

B) Process capacity can be increased by balancing a process.

C) Average labor utilization can be increased by defining a fixed sequence of activities when no such need exists.

D) Average labor utilization cannot be increased by balancing a process.

40) An electronics manufacturing company produces circuit boards using the four-step sequential process shown below. There is a single employee at each step.

Step Component install Solder Inspection Test

Processing Time per Circuit Board 2 minutes 3 minutes 2.5 minutes 1.5 minutes

Which of the following strategies will increase the process capacity?

A) Add one additional worker to component install.

B) Add one additional worker to solder.

C) Add one additional worker to inspection.

D) Add one additional worker to test.

41)

Which of the following is NOT a benefit of specialization?

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A) Reduced idle time B) Lower wage rates C) Elimination of setups D) Reduced equipment replication

42)

Which of the following is a drawback of specialization?

A) Increased processing time B) Increased wage rates C) Demotivated workers D) Increased setup times

43) Which of the following ways to assign employees to activities will more likely lead to a higher labor utilization? Assume demand is unlimited.

A) Each employee takes care of all activities involved in the process.

B) Each employee specializes in one activity.

C) Each employee works on the bottleneck activity while nonbottleneck activities are removed from the process.

D) One employee works on the bottleneck activity while the others work on nonbottleneck activities.

44)

Which of the following is a way to address some of the shortcomings of specialization?

A) Each employee further develops his/her area of specialization.

B) Each employee brings his/her own equipment or tools to work.

C) Each employee is assigned to a team to perform a job.

D) Each employee takes care of one activity only.

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45) A possible drawback of having one employee in charge of all activities involved in serving customers at a coffee shop is _________.

A) Low labor utilization B) Unbalanced process C) High idle time D) Increased setups

46) A possible drawback of having each employee specialize in one or more activities in serving customers at a coffee shop is _________.

A) increased idle time B) higher direct labor costs C) increased equipment replication D) increased processing time

47)

Which of the following is NOT a way to improve process efficiency?

A) Staffing to meet supply B) Line balancing C) Off-loading the bottleneck D) Specialization

48)

Which of the following is a fixed cost in operating a dental clinic?

A) Advertising in the local newspaper B) Cost of dental checkup per patient C) Health insurance discounts mandated for each patient D) Dental supplies needed for each procedure

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49)

Which of the following is a variable cost in operating a dental clinic?

A) Hourly wages for full-time dental assistants B) Utility costs for the office building C) Material cost for metal fillings D) Annual salary for the dentist

50)

In what situations is labor cost considered a fixed cost?

A) Making staffing decisions to match demand B) Paying employees according to the units of products made or number of customers

served C) Paying employees by the hour even when they are idle D) Paying suppliers for materials used in the production of products or services

51)

In what situation is labor cost considered a variable cost?

A) Making short-term staffing decisions to match resource availability B) Making longer-term staffing decisions to match demand C) Paying employees by the hour even when they are idle D) When the number of employees to keep is mandated in advance and cannot be changed

52)

Which of the following is NOT a process variable that has an impact on profits?

A) Demand-constrained vs. capacity-constrained B) High margin vs. low margin.

C) High rate vs. low rate of interest on loans.

D) Bottleneck resource vs. nonbottleneck resource.

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53) Consider a capacity-constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?

A) No impact on revenue or profits B) Higher revenue and profits C) Lower revenue and profits D) Higher profits with no change in revenue

54) Process improvements can help increase revenues if the process is _________constrained.

A) customer B) demand C) capacity D) machine

55) Consider a demand-constrained process producing a high profit margin product. What will be the impact on revenue if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?

A) No impact on revenue B) 10% increase in revenue C) 10% decrease in revenue D) 5% increase in revenue

56) C&A Clothing sells T-shirts for $14 each. Material costs are $3 per shirt and fixed costs are $250 per hour including the cost of labor. C&A Clothing currently employs two workers to make T-shirts, each of whom takes three minutes to make one shirt. Assume that labor costs are considered fixed and the demand is unlimited. How much profit does C&A Clothing make per hour?

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A) $500 B) $148 C) $190 D) $750

57) Among other products, C&A Clothing sells T-shirts for $14 each. Material costs are $3 per shirt and fixed costs are $250 per hour including the cost of labor. C&A Clothing currently employs two workers to make T-shirts, each of whom takes three minutes to make one shirt.

Assume that labor costs are considered fixed and the demand is unlimited. C&A Clothing is considering moving one additional worker from elsewhere in the company to make shirts. This new worker’s wages will increase the fixed costs to $268 per hour. What will be the impact on C&A’s profit per hour, with three workers?

A) 25.4% decrease B) 106.3% increase C) 56.1% decrease D) 25.4% increase

58) C&A Toys uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Assume labor costs are considered fixed and demand is unlimited. Each toy is sold for $20. Material costs are $5 per toy.

Fixed costs are $500 per hour including the cost of labor. How much profit does C&A Toys make per hour?

A) $3100 B) $2200 C) $1900 D) $1300

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59) C&A Toys uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Assume labor costs are considered fixed and demand is unlimited. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour including the cost of labor. What will be the impact on C&A’s profit per hour if the processing time of step 2 is reduced to 10 seconds?

A) No impact on profit B) 124% increase C) 124% decrease D) Cannot be determined

60) C&A Toys uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Assume wages are a fixed cost. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour including the cost of labor. How much profit does C&A Toys make per hour?

A) $3100 B) $2200 C) $1900 D) $1300

61) C&A Toys uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Assume wages are a fixed cost. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour including the cost of labor. Demand rate is 120 toys per hour. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds?

A) No impact on profit B) Cannot be determined C) 41% increase D) 373% increase

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62) C&A Toys uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Assume wages are a fixed cost and demand is unlimited. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour including the cost of labor. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds?

A) No impact on profit B) Cannot be determined C) 40.9% increase D) 173.7% increase

63) A deli sells sandwiches for $8.50 each, on average. Material costs are $2.25 per sandwich and fixed costs are $95 per hour including the cost of labor. The shop employs three workers, each of whom makes an entire sandwich and requires five minutes to process the entire order for each customer. Assuming labor costs are fixed and demand is unlimited, how much profit does the shop make per hour, on average?

A) $95 B) $102 C) $130 D) $190

64) A deli sells sandwiches for $8.50 each, on average. Material costs are $2.25 per sandwich and fixed costs are $95 per hour including the cost of labor. The shop employs three workers, each of whom makes an entire sandwich and requires five minutes to process the entire order for each customer. Assuming labor costs are fixed and demand is 25 sandwiches per hour, how much profit does the shop make per hour, on average?

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A) $45.25 B) $61.25 C) $95.00 D) $212.50

65) Salade Normande is the producer of packaged salads that the company distributes throughout France and the Benelux area. Salads are mostly sold in large supermarkets (Carrefour, LeClerc, Champion) or at gas stations. All salads are shipped in a plastic bowl of 26cm diameter with a smaller plastic bowl for the dressing inside.

For its best-selling salad, the "Salade du Chef," the company operates a five-step process. The activities of the five steps and the associated processing times are shown in the following table.

Station

A Salad 1

Tasks

Grab an empty bowl Fill with green salad Add five slices of tomatoes

Processing Time (seconds) 6 12 8

Total time for A

26

Add four spoons of corn Add three rings of onions Add sliced cucumber

10 8 13

Total time for B

31

Carefully cut four slices of meat Weigh slices and ensure a weight of 30–32 grams Add meat slices to the bowl

20 20

Total time for C

48

Grab a sauce bowl Add sauce Seal sauce bowl Put sauce bowl into salad bowl

4 12 8 4

Total time for D

28

E Seal bin and label Clean the outside of the bowl/wipe

6

B Salad 2

C Add meat

D Add sauce container

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24

bowl

off the rim of container Cosmetic inspection Seal container Label container

6 8 7

Total time for E

27

Workers (one per station) get paid 10 euros per hour, and this type of salad is always in high demand (assume unlimited demand). Ignore any idle time of workers resulting from the beginning or the end of the day. What is the labor content for each salad?

A) 40 seconds/unit B) 80 seconds/unit C) 160 seconds/unit D) 180 seconds/unit

66) Salade Normande is the producer of packaged salads that the company distributes throughout France and the Benelux area. Salads are mostly sold in large supermarkets (Carrefour, LeClerc, Champion) or at gas stations. All salads are shipped in a plastic bowl of 26cm diameter with a smaller plastic bowl for the dressing inside.

For its best-selling salad, the "Salade du Chef," the company operates a five-step process. The activities of the five steps and the associated processing times are shown in the following table.

Station

A Salad 1

B Salad 2

C Add meat

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Tasks

Grab an empty bowl Fill with green salad Add five slices of tomatoes

Processing Time (seconds) 6 12 8

Total time for A

26

Add four spoons of corn Add three rings of onions Add sliced cucumber

10 8 13

Total time for B

31

Carefully cut four slices of meat Weigh slices and ensure a weight of 30–32 grams Add meat slices to the bowl

20 20 8

25

Total time for C

48

Grab a sauce bowl Add sauce Seal sauce bowl Put sauce bowl into salad bowl

4 12 8 4

Total time for D

28

E Seal bin and label Clean the outside of the bowl/wipe bowl off the rim of container Cosmetic inspection Seal container Label container

6

Total time for E

27

D Add sauce container

6 8 7

Workers (one per station) get paid 10 euros per hour, and this type of salad is always in high demand (assume unlimited demand). Ignore any idle time of workers resulting from the beginning or the end of the day. What is the cost of direct labor for each salad?

A) 0.23 euro/unit B) 0.67 euro/unit C) 1.89 euros/unit D) 45 euros/unit

67) Salade Normande is the producer of packaged salads that the company distributes throughout France and the Benelux area. Salads are mostly sold in large supermarkets (Carrefour, LeClerc, Champion) or at gas stations. All salads are shipped in a plastic bowl of 26cm diameter with a smaller plastic bowl for the dressing inside.

For its best-selling salad, the "Salade du Chef," the company operates a five-step process. The activities of the five steps and the associated processing times are shown in the following table.

Station

A Salad 1

B Salad 2

Version 1

Tasks

Grab an empty bowl Fill with green salad Add five slices of tomatoes

Processing Time (seconds) 6 12 8

Total time for A

26

Add four spoons of corn

10

26

Add three rings of onions Add sliced cucumber

8 13

Total time for B

31

Carefully cut four slices of meat Weigh slices and ensure a weight of 30–32 grams Add meat slices to the bowl

20 20

Total time for C

48

Grab a sauce bowl Add sauce Seal sauce bowl Put sauce bowl into salad bowl

4 12 8 4

Total time for D

28

E Seal bin and label Clean the outside of the bowl/wipe bowl off the rim of container Cosmetic inspection Seal container Label container

6

Total time for E

27

C Add meat

D Add sauce container

8

6 8 7

Workers (one per station) get paid 10 euros per hour, and this type of salad is always in high demand (assume unlimited demand). Ignore any idle time of workers resulting from the beginning or the end of the day. What is the average labor utilization in this process?

A) 13.53% B) 33.33% C) 66.67% D) 100%

68) Cost of direct labor will increase whenever labor content increases at any step in the process. ⊚ true ⊚ false

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69)

Takt time matches cycle time if supply matches demand. ⊚ true ⊚ false

70) Automating activities at a nonbottleneck resource leading to a processing time reduction can increase the amount of idle time at that resource without making the process more efficient. ⊚ true ⊚ false

71)

Line balancing can only be applied to activities with a fixed sequence. ⊚ true ⊚ false

72)

Specialization reduces processing times by making it easier to balance the line. ⊚ true ⊚ false

73) Revenue cannot be increased with an efficiency improvement on a demand-constrained process. ⊚ true ⊚ false

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Answer Key Test name: Chap 04_3e_Cachon 1) C 2) C 3) D 4) D 5) B 6) B 7) C 8) C 9) C 10) B 11) A 12) C 13) B 14) C 15) A 16) D 17) C 18) C 19) B 20) B 21) A 22) C 23) B 24) D 25) D 26) C Version 1

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27) A 28) B 29) C 30) D 31) A 32) C 33) D 34) C 35) D 36) D 37) B 38) D 39) B 40) B 41) A 42) C 43) A 44) C 45) D 46) A 47) A 48) A 49) C 50) C 51) B 52) C 53) B 54) C 55) A 56) C Version 1

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57) B 58) B 59) A 60) D 61) A 62) C 63) C 64) B 65) C 66) B 67) C 68) FALSE 69) TRUE 70) TRUE 71) FALSE 72) FALSE 73) TRUE

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CHAPTER 5 1) Customers at an e-retailer site abandon their shopping carts without completing their purchase. This is an example of _________.

A) attrition loss B) attrition gain C) attention loss D) attention gain

2) A store manager at C&A Retailers notices that 40% of customers come to browse but not buy, 45% do not require any assistance before making a purchase, and 15% of customers need assistance during their visit. This is a _________ situation where customers take different paths through the shopping process.

A) process mix B) operation mix C) product mix D) market mix

3) A store manager at C&A Retailers notices that about 38% of customers who walk into the store will make a purchase without assistance, about 42% come to browse but not buy, 14% need assistance from an assistant manager and make a purchase, and 6% need assistance from the store manager and do not buy. C&A Retailers has one greeter, two assistant managers, one store manager, and six cashiers. In setting up a demand matrix, how many rows of resource type and columns of customer type does C&A Retailers need?

A) 10, 3 B) 10, 4 C) 4, 4 D) 5, 5

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4) Not all of the 100 customers who walk into the C&A Retailers per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A Retailers has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What does the demand matrix for C&A Retailers look like?

A)

Greeter Assistant Cashier

Browse

Buy

20 0 0

80 10 75

Browse

Help

Buy

20 0 0

15 15 15

80 0 75

B)

Greeter Assistant Cashier

C)

Greeter Assistant Cashier

Browse

Help

Buy

20 0 0

10 10 10

65 0 65

D) Browse Greeter Assistant Cashier

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20 0 0

Help + Buy 10 10 10

Help + Leave 5 5 0

Buy 65 0 65

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5) Not all of the 100 customers who walk into the C&A Retailers per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A Retailers has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for the greeter?

A) 100 B) 20 C) 15 D) 10

6) Not all of the 100 customers who walk into the C&A Retailers per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A Retailers has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for assistants?

A) 100 B) 20 C) 15 D) 10

7) Not all of the 100 customers who walk into the C&A Retailers store per day will make a purchase. About 20% come to browse but not buy, 10% need assistance to complete a purchase, and 5% need assistance but leave without making a purchase. The other 65% purchase something without requiring assistance. C&A Retailers has one greeter (who greets every customer), two assistants (who deal with customers who need assistance), and two cashiers (who serve customers who purchase something). What is the total demand rate per day for cashiers?

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A) 100 B) 75 C) 65 D) 25

8)

A _________ is a combination of different types of flows through a process.

A) capacity mix B) demand matrix C) product matrix D) product mix

9) A _________ determines how many flow units of each type are flowing through each _________.

A) demand matrix, process B) demand matrix, resource C) product mix, process D) product mix, resource

10) All students register with the receptionist upon arrival at a university orientation. The receptionist will assign each student to one of five groups, each of which takes a different path during their tour of the campus. Each campus tour has its designated tour guide. In setting up a demand matrix, how many rows of resource type and columns of flow unit type does the situation have?

A) 5, 6 B) 2, 2 C) 6, 5 D) 5, 5

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11) C&A Industries makes two types of products using four machines. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The demand per day is 40 units for Product A and 160 units for Product B. What does the demand matrix for C&A Industries look like?

A) All products Machine 1 Machine 2 Machine 3 Machine 4

200 40 160 40

B)

Machine 1 Machine 2 Machine 3 Machine 4

Product A

Product B

1 1 0 1

1 0 1 0

Product A

Product B

C)

Machine 1 Machine 2 Machine 3 Machine 4

40 40 0 40

160 0 160 0

D) Product A All machines

12)

40

Product B 160

Which of the following statements is TRUE regarding implied utilization?

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A) A resource with an implied utilization of 1.4 means that capacity exceeds demand by 1.4%.

B) A resource with an implied utilization of 1.4 means that demand exceeds capacity by 1.4%.

C) A resource with an implied utilization of 1.4 means that demand exceeds capacity by 40%.

D) A resource with an implied utilization of 1.4 means that capacity exceeds demand by 40%.

13)

Which of the following statements is TRUE regarding utilization or implied utilization?

A) Utilization measures by how much demand exceeds the capacity of the resource.

B) Utilization can exceed 1.

C) Implied utilization can exceed 1.

D) Implied utilization is a measure of demand variability.

14) A process is _________constrained if the implied utilization of any resource is above 100%.

A) capacity B) demand C) bottleneck D) inventory

15) A process is _________ constrained if the highest implied utilization of all resources is less than or equal to 100%.

A) capacity B) demand C) bottleneck D) inventory

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16) The steps involved in finding the bottleneck in a process with a product mix include all the following EXCEPT _________.

A) compute the total demand for each resource B) compute the capacity level for each resource C) compute the flow rate for each resource D) compute the implied utilization for each resource

17) The resource with the _________ is the bottleneck in a process with multiple types of flow units.

A) highest capacity B) lowest capacity C) highest implied utilization D) lowest implied utilization

18) C&A Industries makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Which is the implied utilization for the bottleneck resource?

A) 1.67 B) 1.04 C) 0.69 D) 0.28

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19) C&A Industries makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. What is the implied utilization for machine 1?

A) 1.67 B) 1.04 C) 0.69 D) 0.28

20) C&A Industries makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Which resource is the bottleneck?

A) Machine 1 B) Machine 2 C) Machine 3 D) Machine 4

21) C&A Industries makes two types of products using four machines from 9 a.m. to 5 p.m. each day. Product A visits machines 1, 2, and 4. Product B only visits machines 1 and 3. The capacity is 0.4 unit per minute at machine 1, 0.12 unit per minute at machine 2, 0.2 unit per minute at machine 3, and 0.3 unit per minute at machine 4. The demand per day is 40 units for Product A and 160 units for Product B. Assume the relative proportion between the two product types remains constant. What is the flow rate for Product B in units per day?

A) 24 B) 96 C) 120 D) 192

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22)

Which of the following statements is TRUE regarding implied utilization?

A) A resource with an implied utilization of 0.7 means that capacity exceeds demand by

70%.

B) A resource with an implied utilization of 0.7 means that demand exceeds capacity by 70%.

C) A resource with an implied utilization of 0.7 means that demand exceeds capacity by 30%.

D) A resource with an implied utilization of 0.7 means that capacity exceeds demand by 42.86%.

23) Suppose implied utilization at a machine is 1.9. If total demand at the machine is 4 units per minute, what is the capacity of the machine in units per hour?

A) 7.6 B) 126.3 C) 240 D) 456

24) A deli offers two types of products—cold sandwiches and warm sandwiches. There are four employees. A cashier takes the customer’s order and processes the payment, a sandwich maker prepares cold sandwiches, a cook prepares warm sandwiches, and a manager bags the order and gives it to the customer. All customers are processed by the cashier and the manager.

Only customers who order cold sandwiches are processed by the sandwich maker, and only customers who order warm sandwiches are processed by the cook. At peak time, 50 customers arrive every hour who order cold sandwiches and 40 customers arrive every hour who order warm sandwiches. The cashier takes 45 seconds to process each order and take a payment. The sandwich maker takes 50 seconds to prepare each cold sandwich order. The cook takes 2.5 minutes to cook a warm sandwich but can process (cook) three different orders at the same time.

The manager takes 30 seconds to bag each order and pass it to the customer.

Which employee is the bottleneck at peak time?

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A) Cashier B) Sandwich maker C) Cook D) Manager

25) A deli offers two types of products—cold sandwiches and warm sandwiches. There are four employees. A cashier takes the customer’s order and processes the payment, a sandwich maker prepares cold sandwiches, a cook prepares warm sandwiches, and a manager bags the order and gives it to the customer. All customers are processed by the cashier and the manager.

Only customers who order cold sandwiches are processed by the sandwich maker, and only customers who order warm sandwiches are processed by the cook. At peak time, 50 customers arrive every hour who order cold sandwiches and 40 customers arrive every hour who order warm sandwiches. The cashier takes 45 seconds to process each order and a take payment. The sandwich maker takes 50 seconds to prepare each cold sandwich order. The cook takes 2.5 minutes to cook a warm sandwich but can process (cook) three different orders at the same time.

The manager takes 30 seconds to bag each order and pass it to the customer.

What is the implied utilization of the sandwich maker at peak time?

A) 0.69 B) 1.00 C) 1.13 D) 1.25

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26) A deli offers two types of products—cold sandwiches and warm sandwiches. There are four employees. A cashier takes the customer’s order and processes the payment, a sandwich maker prepares cold sandwiches, a cook prepares warm sandwiches, and a manager bags the order and gives it to the customer. All customers are processed by the cashier and the manager.

Only customers who order cold sandwiches are processed by the sandwich maker, and only customers who order warm sandwiches are processed by the cook. At peak time, 50 customers arrive every hour who order cold sandwiches and 40 customers arrive every hour who order warm sandwiches. The cashier takes 45 seconds to process each order and take a payment. The sandwich maker takes 50 seconds to prepare each cold sandwich order. The cook takes 2.5 minutes to cook a warm sandwich but can process (cook) three different orders at the same time.

The manager takes 30 seconds to bag each order and pass it to the customer.

What is the hourly flow rate of customers who order cold sandwiches at peak time?

A) 28.8 B) 35.6 C) 44.4 D) 72

27) About 80% of customers who receive a promotion coupon will visit the store, but only 20% of those in the store will make a purchase. What is the overall process yield of the promotion?

A) 25% B) 60% C) 20% D) 16%

28) About 80% of customers who receive a promotion coupon will visit the store, but only 20% of those in the store will make a purchase. How many promotion coupons have to be sent in order to get 100 customers to make a purchase?

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A) 1600 B) 625 C) 500 D) 125

29)

Which of the following is an example of attrition loss?

A) All customers renew their magazine subscriptions.

B) Defective units in a manufacturing process are reworked.

C) More loan applications are received than approved.

D) The number of students at the beginning of a course is the same at the end.

30) In a process with attrition loss, all flow units start at _________ resource and drop out of the process at _________ points.

A) the same, different B) a different, the same C) the same, the same D) a different, different

31) When defective flow units are removed from the process and do not return, this process is known as _________.

A) reworking B) yielding C) scrapping D) eliminating

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32) The _________ of a resource measures the percentage of _________ units that are processed at this resource.

A) yield, defective B) yield, non-defective C) capacity, defective D) capacity, non-defective

33)

Which of the following statements about the yield of a process is FALSE? A) A process can have a yield of 100%.

B) A process with attrition loss has a lower yield than one without attrition loss.

C) A process without attrition loss will have a yield of 100%.

D) A process can have a yield that exceeds 100%.

34) A three-step process is used to make a product. The yield of step 1 is 85%; of step 2, 70%; and of step 3, 60%. What is the yield of the overall process?

A) 71.7% B) 60% C) 35.7% D) 32.5%

35) A three-step process is used to make a product. The yield of step 1 is 50%; of step 2, 80%; and of step 3, 20%. How many units must be started at step 1 to get 100 good units from the process?

A) 500 B) 200 C) 150 D) 1250

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36) A three-step process is used to make a product. The yield of step 1 is 80%; of step 2, 40%; and of step 3, 50%. Step 1 takes 2 minutes per unit. Step 2 takes 4 minutes per unit. Step 3 takes 5 minutes. Which step in the process is the bottleneck, and how many good units can be produced from this process in one 8-hour day?

A) Step 3, 15 B) Step 3, 38 C) Step 2, 48 D) Step 2, 24

37) A three-step process is used to make a product. The yield of step 1 is 80%; of step 2, 40%; and of step 3, 50%. Step 1 takes 2 minutes per unit. Step 2 takes 4 minutes per unit. Step 3 takes 5 minutes. How many good units can the process produce per hour?

A) 0.05 B) 0.1 C) 3 D) 6

38) A manufacturing process consists of three steps. Step 1 has a 90% yield, step 2 has a 75% yield, and step 3 has an 85% yield. What is the overall process yield?

A) 37.5% B) 57.4% C) 75% D) 83.3%

39) A manufacturing process consists of three steps. Step 1 has a 90% yield, step 2 has a 75% yield, and step 3 has an 85% yield. If 125 units enter the process every hour, how many good units will exit step 2 every hour?

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A) 0.675 B) 71.7 C) 84.4 D) 93.4

40) A manufacturing process consists of three steps. Step 1 has a 90% yield, step 2 has a 75% yield, and step 3 has an 85% yield. How many units should enter step 1 every hour to yield 250 good units exiting at the end of the process each hour?

A) 278 B) 296 C) 333 D) 436

41) When analyzing a process flow with flow unit-dependent processing times, the flow unit is changed from using _________ to _________.

A) a minute of work, a unit of demand B) a unit of demand, a unit of work C) a unit of resource, a unit of demand D) a unit of demand, a unit of resource

42)

A workload matrix has _________ as columns and _________ as rows.

A) resource types, load types B) work types, load types C) work types, flow unit types D) flow unit types, resource types

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43) A workload matrix captures the _________ that each flow unit type requires at each resource.

A) amount of work B) amount of demand C) amount of revenue D) amount of supply

44) Which of the following statements is TRUE regarding a process flow with flow unitdependent processing times?

A) Processing times at a given resource are the same for each product/customer type.

B) A unit of demand is used as a flow unit.

C) The bottleneck is the resource with the highest implied utilization.

D) The bottleneck is the resource with the highest workload.

45)

Which of the following statements is FALSE regarding the workload matrix?

A) It has the same number of columns and rows as the demand matrix.

B) It computes the total amount of work requested at a resource across all customer (flow unit) types.

C) It captures the time available at each resource.

D) It has flow unit types as columns and resource types as rows.

46) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. Which of the following is the workload matrix for this situation?

A)

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All customers Resource X Resource Y

95 80

B) Customer A

Customer B

2 5

5 2

Resource X Resource Y

C) Customer A

Customer B

20 50

75 30

Customer A

Customer B

70

105

Resource X Resource Y

D)

All resources

47) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. What is the workload for resource X across all customer types?

A) 70 minutes per hour B) 80 minutes per hour C) 95 minutes per hour D) 105 minutes per hour

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48) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. What is the workload for resource Y across all customer types?

A) 70 minutes per hour B) 80 minutes per hour C) 95 minutes per hour D) 105 minutes per hour

49) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. Where in the process is the bottleneck and what is its implied utilization?

A) Resource X, 1.58 B) Resource X, 1.33 C) Resource Y, 1.33 D) Resource Y, 1.58

50) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. What is the flow rate for customer A, holding the mix of A and B constant?

A) 1.6 customers per hour B) 6.3 customers per hour C) 7.5 customers per hour D) 9.5 customers per hour

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51) Two types of customers are served by a two-step process. Each resource is staffed by one employee. Customer A spends two minutes at resource X and five minutes at resource Y. Customer B spends five minutes at resource X and two minutes at resource Y. The demand rate per hour is 10 customer As and 15 customer Bs. What is the flow rate for customer B, holding the mix of A and B constant?

A) 1.6 customers per hour B) 6.3 customers per hour C) 9.5 customers per hour D) 11.25 customers per hour

52) In a manufacturing process, two types of products flow through a three-step process.

Each step consists of a single machine. Product A spends 45 seconds at the first step, 35 seconds at the second step, and 50 seconds at the third step. Product B spends 36 seconds at the first step, 40 seconds at the second step, and 25 seconds at the third step. The demand rate for Product A is 100 units per hour, and the demand rate for Product B is 120 units per hour.

Where in the process is the bottleneck and what is its implied utilization?

A) Step 1, 2.45 B) Step 2, 2.31 C) Step 3, 2.22 D) Step 3, 2.75

53) In a manufacturing process, two types of products flow through a three-step process.

Each step consists of a single machine. Product A spends 45 seconds at the first step, 35 seconds at the second step, and 50 seconds at the third step. Product B spends 36 seconds at the first step, 40 seconds at the second step, and 25 seconds at the third step. The demand rate for Product A is 100 units per hour, and the demand rate for Product B is 120 units per hour.

What is the flow rate for Product B in units per hour, holding the mix of A and B constant?

A) 38.7 B) 49.0 C) 72.5 D) 120.0

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54) Rework is a _________ of activities that have to be completed by a _________ flow unit in order to be restored to a good flow unit.

A) reduction, defective B) reduction, non-defective C) repetition, defective D) repetition, non-defective

55) Which of the following process flow diagrams DOES NOT represent a process with rework?

A)

B)

C)

D)

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56)

Which of the following statements concerning rework is TRUE? A) Rework does not involve performing an extra set of activities.

B) Rework does not involve inventories.

C) Rework can never return a process yield to 100%.

D) Rework increases the demand rate for a particular resource.

57)

Which of the following statements concerning rework is TRUE? A) Rework involves only bottleneck resources.

B) Rework does not affect overall process capacity.

C) Rework leads to a lower overall process yield than scrap.

D) Rework leads to a higher overall process yield than scrap.

58) Students who failed a course last semester are retaking it this semester. This is an example of _________.

A) attrition loss B) rework C) compliance D) process reengineering

59) _________ refers to a _________ of activities or an extra set of activities that have to be completed by a defective unit in order to be restored to a good flow unit.

A) Rework, removal B) Reduce, removal C) Rework, repetition D) Reduce, repetition

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60) A four-step process is used to make a product. The first resource takes 8 minutes per unit, the second takes 7 minutes per unit, the third takes 2 minutes per unit, and the fourth takes 10 minutes per unit. 20% of all units have to be reworked. For that, they have to revisit the third and fourth resources. Each resource is staffed by one worker. Rework takes the same processing times as the first pass and always fixes the problem. Where is the bottleneck?

A) Resource 1 B) Resource 2 C) Resource 3 D) Resource 4

61) A four-step process is used to make a product. The first resource takes 8 minutes per unit, the second takes 7 minutes per unit, the third takes 2 minutes per unit, and the fourth takes 10 minutes per unit. 20% of all units have to be reworked. For that, they have to revisit the third and fourth resources. Each resource is staffed by one worker. Rework takes the same processing times as the first pass and always fixes the problem. What is the capacity of the process in units per minute?

A) 0.08 B) 0.125 C) 0.143 D) 0.417

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62) The salesforce of Small Travel Company (STC) is selling cultural immersion programs to U.S. college students that allow them to spend 3 months in Europe.

STC advertises in various college newspapers, as well as via social media. Potential customers fill out an online application form expressing their interest in more information about this experience. The form also includes their phone number for follow-up discussion, which sometimes, but not always, leads to the customer purchasing the package (more details below).

On 60 consecutive days in the winter, STC’s employees work hard to sell these programs to elite university students. The goal of the company is to sell, on average, two packages per day, leading to a total of 120 sold packages. The sales process works in four steps:1.One salesperson reaches out to the potential customer by phone in order to put together a full profile of the customer, including skills and location preferences (Germany, Italy, France, etc.). The call takes on average 20 minutes. After the call, each profile is forwarded to a language teacher.

2.The language teacher looks at the student’s profile and also organizes a quick follow-up call.

This takes, on average, 40 minutes per profile. The teacher rejects 60% of the profiles as the student would not have the language skills to benefit from an STC trip. From the remaining 40% of the profiles, half tell the teacher that they are no longer interested in participating. The teacher then forwards the remaining profiles to the STC accountant.

3.STC’s accountant then contacts the student to make a 10% down payment. This takes about 20 minutes per customer.

4.Finally, the teacher’s assistant contacts the customer to confirm the trip and start working on a travel schedule. At this point, an average of one-third of the students decide that they will not participate in the trip (in which case, STC and the student agree to give the 10% down payment to a charitable cause). This takes on average 50 minutes per student.

All employees work 8 hours per day.

How many students does STC have to contact each day through its call center to fill, on average, its target of 120 students per season (2 students per day)?

A) 5 students/day B) 15 students/day C) 35 students/day D) 120 students/day

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63) The salesforce of Small Travel Company (STC) is selling cultural immersion programs to U.S. college students that allow them to spend 3 months in Europe.

STC advertises in various college newspapers, as well as via social media. Potential customers fill out an online application form expressing their interest in more information about this experience. The form also includes their phone number for follow-up discussion, which sometimes, but not always, leads to the customer purchasing the package (more details below).

On 60 consecutive days in the winter, STC’s employees work hard to sell these programs to elite university students. The goal of the company is to sell, on average, two packages per day, leading to a total of 120 sold packages. The sales process works in four steps: 1.One salesperson reaches out to the potential customer by phone in order to put together a full profile of the customer, including skills and location preferences (Germany, Italy, France, etc.).

The call takes on average 20 minutes. After the call, each profile is forwarded to a language teacher.

2.The language teacher looks at the student’s profile and also organizes a quick follow-up call.

This takes, on average, 40 minutes per profile. The teacher rejects 60% of the profiles as the student would not have the language skills to benefit from an STC trip. From the remaining 40% of the profiles, half tell the teacher that they are no longer interested in participating. The teacher then forwards the remaining profiles to the STC accountant.

3.STC’s accountant then contacts the student to make a 10% down payment. This takes about 20 minutes per customer.

4.Finally, the teacher’s assistant contacts the customer to confirm the trip and start working on a travel schedule. At this point, an average of one-third of the students decide that they will not participate in the trip (in which case, STC and the student agree to give the 10% down payment to a charitable cause). This takes on average 50 minutes per student.

All employees work 8 hours per day.

Which resource is the bottleneck?

A) The salesperson B) The language teacher C) The accountant D) The teacher’s assistant

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64) Consider the following four-step assembly operation with quality problems. All resources are staffed by one employee.

1.The first resource has a processing time of 5 minutes per unit.

2.The second resource has a processing time of 6 minutes per unit.

3.The third resource has a processing time of 3 minutes per unit. With a 30% probability, the flow unit coming out of the third resource has to be reworked. In that case, the operations at the first, second, and third resources are repeated. You can assume that (a) rework always succeeds (i.e., a unit going through the rework loop will always work after the third resource) and (b) the processing times for units in rework are the same as for regular units.

4.The fourth resource has a processing time of 4 minutes per unit.

Which resource in the process is the bottleneck?

A) The first resource B) The second resource C) The third resource D) The fourth resource

65) Consider the following four-step assembly operation with quality problems. All resources are staffed by one employee.

1.The first resource has a processing time of 5 minutes per unit.

2.The second resource has a processing time of 6 minutes per unit.

3.The third resource has a processing time of 3 minutes per unit. With a 30% probability, the flow unit coming out of the third resource has to be reworked. In that case, the operations at the first, second, and third resources are repeated. You can assume that (a) rework always succeeds (i.e., a unit going through the rework loop will always work after the third resource) and (b) the processing times for units in rework are the same as for regular units.

4.The fourth resource has a processing time of 4 minutes per unit. What is the capacity of the process (in units per hour)?

What is the capacity of the process (in units per hour)?

A) 6.0 B) 7.7 C) 8.9 D) 20.1

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66) Consider a process that has multiple flow units with different demand rates and different paths through the process flow diagram. Consider the following statements: 1.The resource with the largest total demand rate is the bottleneck 2.The implied utilization can never be bigger than 100%.

3.The resource that has the highest implied utilization is the bottleneck.

Which of the following choices identifies the correct statement(s)?

A) III only B) I and II C) I and III D) II only

67) GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to its customers, asking for the information required for preparing tax statements. Based on 50 years of experience, GV categorizes its cases into the following two groups: ● Group 1 (new customers): 20 percent of cases ● Group 2 (repeat customers): 80 percent of cases This year, there are 35 income tax statements arriving each week. In order to prepare the income tax statement, GV has three resources, or employees. The following activities are carried out by employees: ● An administrative support person processes every tax statement. ● A senior accountant (the owner of GV) processes only tax statements for new customers. ● A junior accountant processes tax statements for repeat customers.

The administrative support person can process 40 statements per week. The senior accountant can process 10 statements per week. The junior accountant can process 30 statements per week; these statements can be completed more quickly given past information on file about the clients.

What is the implied utilization for the junior accountant?

A) 33.3% B) 66.7% C) 83.3% D) 93.3%

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68) GV is a small accounting firm supporting wealthy individuals in their preparation of annual income tax statements. Every December, GV sends out a short survey to its customers, asking for the information required for preparing tax statements. Based on 50 years of experience, GV categorizes its cases into the following two groups: ● Group 1 (new customers): 20 percent of cases ● Group 2 (repeat customers): 80 percent of cases This year, there are 35 income tax statements arriving each week. In order to prepare the income tax statement, GV has three resources, or employees. The following activities are carried out by employees: ● An administrative support person processes every tax statement. ● A senior accountant (the owner of GV) processes only tax statements for new customers. ● A junior accountant processes tax statements for repeat customers.

The administrative support person can process 40 statements per week. The senior accountant can process 10 statements per week. The junior accountant can process 30 statements per week; these statements can be completed more quickly given past information on file about the clients.

Which resource is the bottleneck?

A) The administrative support person B) The senior accountant C) The junior accountant D) There is no bottleneck

69) Which of the following statements about the concepts of "labor utilization" and "implied utilization" is correct?

A) Labor utilization is above 100% if the process is capacity constrained.

B) Labor utilization is above 100% if the process is demand constrained.

C) If the process is capacity constrained, then implied utilization is higher than the labor utilization.

D) If the process is demand constrained, then implied utilization is higher than the labor utilization.

70)

All flow units will have the same exit point in a production process. ⊚ true ⊚ false

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71)

A bottleneck resource must have an implied utilization less than 100%. ⊚ true ⊚ false

72)

The overall process yield is the sum total of the yields of all resources. ⊚ true ⊚ false

73) When analyzing a process flow with flow unit-dependent processing times, the unit of analysis should be a unit of demand. ⊚ true ⊚ false

74)

Rework always lowers the process capacity regardless of where it occurs in the process. ⊚ true ⊚ false

75) The demand rate for a resource that does rework is higher than for a resource with no rework, all else equal. ⊚ true ⊚ false

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Answer Key Test name: Chap 05_3e_Cachon 1) A 2) C 3) C 4) D 5) A 6) C 7) B 8) D 9) B 10) C 11) C 12) C 13) C 14) A 15) B 16) C 17) C 18) A 19) B 20) C 21) B 22) D 23) B 24) A 25) A 26) C Version 1

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27) D 28) B 29) C 30) A 31) C 32) B 33) D 34) C 35) D 36) D 37) C 38) B 39) C 40) D 41) B 42) D 43) A 44) C 45) C 46) C 47) C 48) B 49) A 50) B 51) C 52) A 53) B 54) C 55) A 56) D Version 1

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57) D 58) B 59) C 60) D 61) A 62) B 63) B 64) B 65) B 66) A 67) D 68) C 69) C 70) FALSE 71) FALSE 72) FALSE 73) FALSE 74) FALSE 75) TRUE

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CHAPTER 6 1) The most common forms of learning curves can use any of the following performance measures to plot against cumulative experience EXCEPT _________.

A) labor content B) unit cost C) processing time D) interest rate

2) Which of the following learning curves captures the relationship between the percentage of defects (y-axis) and the number of times an operation is performed (x-axis)?

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A)

B)

C)

D)

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3) A(n) _________ learning curve is indicative of a positive relationship between the experience with a process and its performance measure such as production yield or customer satisfaction score.

A) downward-sloping B) upward-sloping C) flat D) bell-shaped

4) A(n) _________ learning curve is indicative of a negative relationship between the experience with the process and its performance measure such as processing time or number of defects.

A) downward-sloping B) upward-sloping C) flat D) bell-shaped

5) Two different performance measures are used on the same process to demonstrate how the process improves with experience, as shown in the following learning curves. What conclusions can be drawn?

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A) The amount of learning is higher when using capacity as a performance measure as opposed to processing time.

B) Processing time should not be used as a performance measure.

C) Capacity should not be used as a performance measure.

D) The amount of learning is exactly the same using either capacity as a performance measure or using processing time.

6) Which of the following is the most likely shape of the learning curve for the given situation: "Number of errors found in essays written by students in a writing class throughout the semester."

A) Linear growth B) Exponential growth C) Exponential decay D) Diminishing-return growth

7)

When the power law is applied to unit costs, unit costs exhibit a(n) _________.

A) exponential growth B) exponential decay C) diminishing return growth D) linear growth

8) The power law can be used to represent a common form of a learning curve that uses _________ as a dependent variable and _________ as the independent variable.

A) cumulative output, unit costs B) unit costs, cumulative output C) production yield, unit costs D) learning rate, production yield

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9) Consider a process with a unit cost of $50 for the first unit and a learning rate of 0.9.

What will be the unit cost for the 64th unit?

A) 38.08 B) 29.16 C) 26.57 D) 0.06

10) A learning rate of 0.9 means each _________ of the cumulative output will reduce unit costs by _________.

A) tripling, 90% B) tripling, 10% C) doubling, 90% D) doubling, 10%

11) A learning curve which follows the power law shows the _________ gets smaller from unit to unit, but the _________ remains constant with each doubling of cumulative output.

A) absolute improvement in unit cost, percentage improvement B) percentage improvement in unit cost, absolute improvement C) absolute improvement in unit profit, percentage improvement D) percentage improvement in unit profit, absolute improvement

12) Consider a process with a unit cost of $100 for the first unit and a learning rate of 0.5.

What will be the unit cost for the 32nd unit?

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A) $30.00 B) $12.50 C) $6.250 D) $3.125

13) Consider a process with a learning rate of 0.5. What is the unit cost for the first unit if the unit cost for the 15th unit is $16?

A) $128 B) $120 C) $240 D) $256

14) Suppose the second unit of a product cost is $70. What is the expected cost of the 64th unit if the product follows an 85% learning rate?

A) $12.19 B) $26.72 C) $31.06 D) $59.50

15) Suppose the eighth unit of a product cost is $850. What is the expected cost of the 128th unit if the product follows a 75% learning rate?

A) $268.95 B) $637.50 C) $38.05 D) $53.13

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16) Consider a process with a unit cost of $250 for the first unit and a learning rate of 0.8.

What will be the unit cost for the 29th unit?

A) $138.74 B) $200.00 C) $62.44 D) $84.56

17) Suppose the 50th unit of a product cost is $35. What was the cost of the first unit if the product has a 90% learning rate?

A) $31.50 B) $63.43 C) $88.74 D) $38.89

18) Which of the following plots is the learning curve that portrays the power law on a loglog graph?

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A)

B)

C)

D)

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19) When portraying the power law on a log-log graph, the y-axis is the _________ and the x-axis is the _________.

A) cumulative output, absolute improvement in unit costs B) absolute improvement in unit costs, cumulative output C) logarithm of the unit costs, logarithm of the cumulative output D) logarithm of the cumulative output, logarithm of the unit costs

20) The _________ of the line in the log-log version of the learning curve is determined by the learning rate.

A) slope B) intercept C) logarithm D) convexity

21) If learning happens faster, the learning rate is _________ and the downward slope of the line in the log-log version of the learning curve is _________.

A) larger, flatter B) larger, steeper C) smaller, flatter D) smaller, steeper

22) _________ is a statistical approach to determine the _________ of the log-log representation of the learning curve.

A) Probability analysis, slope B) Probability analysis, intercept C) Regression analysis, slope D) Regression analysis, intercept

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23) C&A has a cumulative output of 1000 units and unit costs of $50 in 2005. A decade later, C&A has a cumulative output of 1500 units and unit costs of $40. The learning curve in a log-log graph is linear. By how much does C&A improve its unit costs with each doubling of cumulative output? (Use Table 6.2.)

A) 99% B) 68% C) 32% D) 1%

24) C&A started production in two factories in 2005. Both factories had the same cumulative output and unit costs in the first year. A decade later, factory A has a greater cumulative output than factory B. The unit costs in 2015 are the same between the two factories. Both learning curves in a log-log graph are linear. Which factory has a higher learning rate?

A) Factory A B) Factory B C) Both factories have the same learning rate.

D) Cannot be determined

25) C&A started production in two factories in 2005. Both factories had the same cumulative output and unit costs in the first year. A decade later, factory A has a greater cumulative output than factory B. The unit costs in 2015 are the same between the two factories and both learning curves in a log-log graph are linear. Which factory has a higher performance improvement (which firm learns faster)?

A) Factory A B) Factory B C) Both factories have the same learning rate.

D) Cannot be determined

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26) A process has an initial cost of $100, a learning rate of 0.7, and a cumulative experience of 500. The learning curve in a log-log graph is linear. Using the learning curve coefficient method, what will be the expected unit costs in producing the 500th unit? (Use Table 6.3.)

A) $0.04 B) $9.26 C) $6.30 D) $4.08

27) A process has a learning rate of 0.75. The expected unit cost to produce the 1000th unit is $5. The learning curve in a log-log graph is linear. Using the learning curve coefficient method, what was its initial cost? (Use Table 6.3.)

A) $97.55 B) $87.92 C) $9.75 D) $8.79

28) C&A has an initial cost of $5000 and the slope of its learning curve in a log-log graph is 1.4. What will be its expected unit cost to produce the 200th unit?

A) $1.77 B) $17.70 C) $5.59 D) $3.00

29)

Which of the following statements about learning curve coefficients is FALSE?

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A) A learning curve coefficient, LCC(x, y), gives the cost to produce 1 unit in a process with an initial cost of 1, a cumulative output of x, and a learning rate of y.

B) A higher level of experience (cumulative output) leads to a lower value of learning curve coefficient.

C) The learning curve coefficient method is the only way to predict the cost of making one unit in a process.

D) A lower value of learning rate leads to a lower value of learning curve coefficient.

30) C&A has an initial cost of $500 and a $20 unit cost at a cumulative output levle of 500.

The learning curve in a log-log graph is linear. Using the LCC method, what will be its learning rate? (Use Table 6.3.)

A) 0.7 B) 0.8 C) 0.9 D) 0.6

31) C&A has an initial cost of $500 and a $20 unit cost at a cumulative output level of 500.

The learning curve in a log-log graph is linear. Using the learning curve function directly (i.e., without using the LCC method), what will be its learning rate?

A) 0.7 B) 0.8 C) 0.9 D) 0.6

32) C&A has an initial cost of $500 and a $20 unit cost at a cumulative output of level 500.

The learning curve in a log-log graph is linear. The following measures can be computed from the given information EXCEPT _________.

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A) the profit margin B) the learning rate C) the slope of the learning curve D) the unit costs at a cumulative output of 1000

33) A process has an initial cost of $75 and a learning rate of 0.85. The learning curve in a log-log graph is linear. Using the learning curve coefficient method, what will be the expected unit cost to produce the 200th unit? (Use Table 6.3.)

A) $15.66 B) $21.65 C) $42.44 D) $63.75

34) A process has a learning rate of 0.80. The expected unit cost to produce the 100th unit is $18. The learning curve in a log-log graph is linear. Using the learning curve coefficient method, what was its initial cost? (Use Table 6.3.)

A) $22.50 B) $87.92 C) $79.27 D) $114.75

35) When considering learning only, which of the following statements is TRUE when computing the cumulative costs of producing a certain quantity of output (greater than one)?

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A) The cumulative cost of producing a certain quantity of output is higher than the product of the initial cost and the output quantity.

B) The cumulative cost of producing a certain quantity of output is equal to the product of the initial cost and the output quantity.

C) The cumulative cost of producing a certain quantity of output is lower than the product of the initial cost and the output quantity.

D) The cumulative cost of producing a certain quantity of output is equal to the quotient of the initial cost and the output quantity.

36)

Which of the following is TRUE about the cumulative learning curve coefficient?

A) A cumulative learning curve coefficient, CLCC(x, y), gives the cost to produce 1 unit in a process with an initial cost of 1, a cumulative output of x, and a learning rate of y.

B) A higher value of experience (cumulative output) leads to a higher value of the cumulative learning curve coefficient.

C) The cumulative learning curve coefficients for the first unit are the same across all learning rates.

D) A lower value of learning rate leads to a higher value of the cumulative learning curve coefficient.

37) What is the total cost of producing 100 units in a process that has a learning rate of 0.8 and an initial cost of $50? (Use Table 6.4.)

A) $4,000 B) $1,632.54 C) $22.71 D) $42.16

38) The initial cost of a product increases by 15%. What will be the impact on the cost to produce 50 units if the process has a learning curve that follows the power law?

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A) Remains the same B) Increases by 15% C) Decreases by 15% D) Increases by 30%

39) The cumulative cost of producing 100 units of a product is $7000. Assuming the process has a learning rate of 0.85 and follows the power law, what was its initial cost? (Use Table 6.4.)

A) $33.97 B) $159.99 C) $2378.76 D) $4375.00

40) What is the total cost of producing 30 units in a process that has a learning rate of 0.75 and an initial cost of $65? (Use Table 6.4.)

A) $743.98 B) $15.84 C) $343.37 D) $932.76

41) The cumulative cost of producing 50 units of a product is $13,400. Assuming the process has a learning rate of 0.90 and follows the power law, what was its initial cost? (Use Table 6.4.)

A) $376.54 B) $24,286 C) $460.85 D) $416.90

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42) The _________ the employee turnover, the _________ experience the average employee will have with their job.

A) higher, more B) higher, less C) lower, less D) greater, more

43) Company A has a more stable workforce than company B. Assuming that both companies have the same number of employees and initial costs, which of the following conclusions can be drawn?

A) Company A has a higher employee turnover than company B. B) Company A needs to recruit more new employees each year than company B. C) Employees at company A have a higher average tenure than those at company B. D) Employees at company A have less experience than company B.

44)

Which of the following statements about employee turnover is TRUE?

A) If the employee turnover decreases, the average tenure of an employee in the company decreases.

B) If the employee turnover increases, the average time an employee spends with the company increases.

C) If the employee turnover increases, the average number of employees increases.

D) If the employee turnover decreases, the average number of new employees recruited per year decreases.

45) A company has 2000 employees on average and they spend, on average, 8 years with the company. What is the average number of new employees recruited each year and the average tenure of an employee?

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A) 250, 4 B) 250, 8 C) 125, 4 D) 125, 8

46)

If employee turnover is doubled, average tenure of an employee is _________.

A) doubled B) unchanged C) halved D) quadrupled

47) When applying _________ Law to compute employee turnover, the concept of a flow unit is equivalent to a(n) _________.

A) Little’s, product B) Little’s, employee C) Moore’s, product D) Moore’s, employee

48) When you have information on the average tenure of an employee and the average number of employees, you will be able to compute each of the following EXCEPT _________.

A) employee turnover B) average time an employee spends with a company C) number of new employees each year D) learning rate of employees

49)

Employee turnover is _________.

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A) 2 × Average tenure B) 1/Average tenure C) 1/2 × Average tenure D) 1/(2 × Average tenure)

50) On average, a large company has 27,000 employees and they spend 6 years with the company. What is the average number of new employees recruited each year and the average tenure of an employee?

A) 2250, 3 B) 2250, 6 C) 4500, 3 D) 4500, 6

51)

The intent of process standardization includes the following EXCEPT _________.

A) to avoid reinventing the wheel B) to avoid recurrence of defects or mistakes that have happened in the past C) to set a high standard of performance for a particular activity in a process D) to motivate employees

52) A _________ documents the best practice of how to conduct a particular activity in a process.

A) to-do list B) labor law C) standard work sheet D) progress report

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53)

A _________ documents the task sequence of how to perform an activity correctly.

A) to-do list B) checklist C) standard work sheet D) progress report

54) The improvements gained through doing an activity over and over again is the result of _________ learning.

A) autonomous B) automatic C) induced D) inspired

55) Taking piano lessons to improve one’s piano-playing skill is an example of _________ learning.

A) autonomous B) automatic C) induced D) inspired

56)

Which of the following statements about induced learning is FALSE? A) Induced learning is a deliberate process.

B) Induced learning happens spontaneously.

C) Induced learning is an iterative process.

D) Induced learning follows the PDCA cycle.

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57)

Which of the following is NOT a part of the PDCA cycle?

A) Plan B) Design C) Check D) Act

58)

What are the four steps in the PDCA cycle?

A) Plan, Design, Confirm, Act B) Plan, Delegate, Check, Act C) Plan, Do, Check, Act D) Propose, Design, Check, Accomplish

59)

Which of the following statements about autonomous learning is TRUE? A) It is a deliberate process.

B) It improves performance.

C) It is a one-step process.

D) It follows the PDCA cycle.

60)

A(n) _________ signal-to-noise ratio is needed for learning to happen.

A) weak B) distorted C) insignificant D) strong

61)

The PDCA cycle is also referred to as the _________.

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A) signal-to-noise ratio B) standard work sheet C) Deming cycle D) checklist

62)

All learning curves have an exponential growth trajectory. ⊚ true ⊚ false

63) The power law assumes a constant percentage improvement with each doubling of cumulative experience. ⊚ true ⊚ false

64) A log-log plot of a learning curve that follows the power law shows a non-linear decrease as a curve. ⊚ true ⊚ false

65) For volumes greater than one, the cumulative learning curve coefficients are always bigger than the learning curve coefficients. ⊚ true ⊚ false

66)

Average tenure is the average time an employee spends with a company before leaving. ⊚ true ⊚ false

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67) Standardization does NOT apply to service settings because of the high variability in processing times. ⊚ true ⊚ false

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Answer Key Test name: Chap 06_3e_Cachon 1) D 2) A 3) B 4) A 5) D 6) C 7) B 8) B 9) C 10) D 11) A 12) D 13) C 14) C 15) A 16) D 17) B 18) D 19) C 20) A 21) D 22) C 23) C 24) A 25) B 26) D Version 1

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27) B 28) D 29) C 30) A 31) A 32) A 33) B 34) C 35) C 36) C 37) B 38) B 39) B 40) A 41) D 42) B 43) C 44) D 45) A 46) C 47) B 48) D 49) D 50) C 51) D 52) C 53) B 54) A 55) C 56) B Version 1

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57) B 58) C 59) B 60) D 61) C 62) FALSE 63) TRUE 64) FALSE 65) TRUE 66) FALSE 67) FALSE

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CHAPTER 7 1)

Which of the following statements about setups is FALSE? A) A setup is a set of activities.

B) A setup is a required activity.

C) Setup time is also called changeover time.

D) Setup time is dependent on the number of units subsequently produced.

2)

Which of the following is an example of a setup activity?

A) Changing the color of paint in a paint sprayer.

B) Applying finishing touches to a vehicle at an auto body shop.

C) Putting frosting on donuts at a bakery.

D) Ringing up sales at a cash register at a store.

3)

Which of the following is NOT a setup activity?

A) Preventive maintenance at a manufacturing facility.

B) Quality control activities at an oil-processing plant.

C) Calibrating an oven at a bakery.

D) Sewing buttons on a shirt at an apparel factory.

4) A cutting machine takes 10 minutes to cut a piece of component for a product. After cutting 200 pieces, the machine takes 5 minutes to be recalibrated. What is the setup time of the cutting process?

A) 5 minutes B) 10 minutes C) 15 minutes D) 20 minutes

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5) C&A Cleaner uses a five-step process to dry clean garments: tagging, pretreatment, dry cleaning, spot cleaning, and finishing. In tagging, a number tag is attached to each garment for tracking purposes. In stain pretreatment, stains are identified on garments and chemicals applied to the stains. In dry cleaning, up to 80 pounds of garments are placed in a large drum machine where water-free solvents remove traces of dirt and oil. In spot cleaning, stains on each garment which didn’t come out earlier are identified and removed. And, finally, in finishing, garments are pressed and retagged, and placed in bags for pickup. Which of these five steps is a setup activity?

A) Tagging B) Stain pretreatment C) Dry cleaning D) Finishing

6)

C&A Furniture uses a four-step process to make its famous wood table: Process Milling—table top Milling—table stand Assembly Finishing

Processing Time (minutes) 10 5 15 20

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. What is the total setup time (in minutes) in the above process?

A) 30 B) 15 C) 25 D) 55

7)

C&A Furniture uses a four-step process to make its famous wood table: Process Milling—table top Milling—table stand Assembly

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2

Finishing

20

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. C&A works an 8-hour day. What is the capacity of the milling machine (in tables per day) if the batch size is 10?

A) 2.9 B) 9.6 C) 23.4 D) 64.7

8)

C&A Furniture uses a four-step process to make its famous wood table: Process Milling—table top Milling—table stand Assembly Finishing

Processing Time (minutes) 10 5 15 20

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. C&A works an 8-hour day. What is the capacity of the milling machine (in tables per day) if the batch size is 100?

A) 6.4 B) 30.9 C) 133.3 D) 3.3

9)

C&A Furniture uses a four-step process to make its famous wood table: Process Milling—table top Milling—table stand Assembly Finishing

Processing Time (minutes) 10 5 15 20

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. C&A works an 8-hour day. What is the capacity of the milling machine (in tables per day) if the batch size is 50?

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A) 0.5 B) 3.7 C) 29.8 D) 126.2

10)

C&A Cleaner uses a five-step process to dry clean garments: Process

Tagging

Stain pretreatment

Dry cleaning

Spot cleaning

Finishing

Description Attach a number tag on garments for tracking purposes.

Identify stains on garments and apply chemicals on the site of a stain.

Place garments in a large drum machine where water-free solvents are used to remove traces of dirt and oil.

Identify and remove stains that did not come out earlier.

Press garments and retag them before placing them in bags for pickup.

Time (minutes) 1 per garment

No of Workers 1

5 per garment

2

50 per batch

n/a

10 per garment

5

4 per garment

2

A garment piece weighs 1 pound on average. What is the capacity of C&A’s entire dry-cleaning process in pounds of garments per minute if the batch size is 10 garments?

A) 1 B) 0.5 C) 0.4 D) 0.2

11)

C&A Cleaner uses a five-step process to dry clean garments:

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Process Tagging

Stain pretreatment

Dry cleaning

Spot cleaning

Finishing

Description

Time (minutes)

Attach a number tag on garments for tracking purposes.

Identify stains on garments and apply chemicals on the site of a stain.

Place garments in a large drum machine where water-free solvents are used to remove traces of dirt and oil.

Identify and remove stains that did not come out earlier.

Press garments and retag them before placing them in bags for pickup.

1 per garment

No of Workers 1

5 per garment

2

50 per batch

n/a

10 per garment

5

4 per garment

2

A garment piece weighs 1 pound on average. What is the change in capacity (in garments per minute) of C&A’s entire dry-cleaning process if the batch size increases from 15 garments to 30 garments?

A) Increases from 0.2 to 0.4 B) Decreases from 0.4 to 0.2 C) Increases from 0.3 to 0.4 D) Decreases from 0.3 to 0.2

12)

C&A Furniture uses a four-step process to make its famous wood table:

Process Milling—table top Milling—table stand Assembly Finishing

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Processing Time (minutes) 10 5 15 20

5

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. If the batch size is 10, what is the capacity of the process in tables per minute?

A) 0.049 B) 0.050 C) 0.067 D) 0.077

13)

C&A Furniture uses a four-step process to make its famous wood table:

Process Milling—table top Milling—table stand Assembly Finishing

Processing Time (minutes) 10 5 15 20

The milling machine requires a setup time of 30 minutes to make table tops and a changeover time of 25 minutes to make table stands. The company currently uses a batch size of 12 tables, but it is considering reducing the batch size to 10 tables. Which of the following conclusions can be drawn if the batch size is reduced from 12 to 10 tables?

A) The finishing operation will be the bottleneck at either batch size.

B) The milling operation will be the bottleneck at either batch size.

C) The bottleneck will switch from finishing to milling if the batch size is reduced from 12 tables to 10 tables.

D) The bottleneck will switch from milling to finishing if the batch size is reduced from 12 tables to 10 tables.

14) C&A Printing takes 10 seconds to print a page in color, but after 500 pages, the printer must be cooled down for 15 minutes. No pages can be printed while the printer is cooling down.

What is C&A’s capacity in pages per hour?

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A) 2,000 B) 1,978 C) 395 D) 305

15) Which of the following graphs correctly portrays the relationship between batch size (xaxis) and capacity of a resource with setups (y-axis)?

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A)

B)

C)

D)

16) A landscaper can load and move a wheelbarrow of mulch in 4 minutes. Due to the strenuous nature of the work, he needs to take a 12-minute break after every hour of work. What is his capacity, in wheelbarrow loads per hour?

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A) 3.75 B) 5 C) 12.5 D) 15

17) C&A Printing takes 10 seconds to print a page in color, but after 500 pages, the printer must be cooled down for 15 minutes. No pages can be printed while the printer is cooling down.

C&A’s demand rate is 10 pages per minute. What is the utilization of the printer?

A) 28% B) 50% C) 85% D) 100%

18) C&A Printing takes 10 seconds to print a page in color, but after 500 pages, the printer must be cooled down for 15 minutes. No pages can be printed while the printer is cooling down.

C&A’s demand rate is 3 pages per minute. What is the utilization of the printer?

A) 28% B) 50% C) 85% D) 100%

19) C&A Candy produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops are given below: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Regular

Sugar-Free

30 60 80

10 30 80

C&A first makes 60 pounds of regular gumdrops, then 20 pounds of sugar-free gumdrops, and then repeats this sequence. What is the utilization of the production process?

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A) 50% B) 40% C) 25% D) 20%

20) C&A Pens produces three kinds of ink pens: red, black, and blue. The data on these products are given below: Demand (pens per hour) Changeover time (min) Production rate (pens per hour)

Red

Black

Blue

50 60 200

30 30 200

10 45 200

C&A’s production sequence is making 150 red first, then switching to make 90 black before changing over to make 30 blue. What is the utilization of the production process?

A) 45.5% B) 40.4% C) 37.5% D) 75.0%

21) A two-step process is used to finish a product: painting and drying. There are 5 workers painting and each one takes an average of 60 minutes to paint each unit. Drying takes place in an oven that can hold up to 100 units, and it takes 5 minutes to load each unit. Once all the units are loaded into the oven, it takes 6 hours to dry each load. What fraction of time is the oven being loaded if C&A uses a batch size of 100 and demand is unlimited?

A) 58% B) 42% C) 20% D) 2%

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22) Which of the following statements is TRUE regarding utilization in a process with setups?

A) When batch size increases, the utilization of the bottleneck resource with setups will decrease.

B) When batch size increases, the utilization of the bottleneck resource without setups will increase.

C) When batch size increases, the utilization of the bottleneck resource without setups will decrease.

D) When batch size increases, the utilization of the bottleneck resource with setups will increase.

23) A landscaper can load and move a wheelbarrow of mulch in 4 minutes. Due to the strenuous nature of the work, he needs to take a 12-minute break after every hour of work. What is his utilization, assuming demand is 15 wheelbarrow loads per hour?

A) 66.7% B) 80% C) 83.3% D) 100%

24) A landscaper can load and move a wheelbarrow of mulch in 4 minutes. Due to the strenuous nature of the work, he needs to take a 12-minute break after every hour of work. What is his utilization, assuming demand is 10 wheelbarrow loads per hour?

A) 66.7% B) 80% C) 83.3% D) 100%

25) C&A Bakers produces three kinds of bread: wheat, white, and multigrain. The data on these products follows:

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Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Wheat

White

Multigrain

40 60 200

20 30 200

10 45 200

C&A’s production sequence is making 200 pounds of wheat first, then switching to 100 pounds of white before changing over to 50 pounds of multigrain. What is the average inventory of white bread?

A) 135 B) 45 C) 32.5 D) 30

26) C&A Candy produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops follow: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Regular

Sugar-Free

30 60 80

10 30 80

C&A first makes 90 pounds of regular gumdrops, then 30 pounds of sugar-free gumdrops, and then repeats this sequence. What is the average inventory of regular gumdrops?

A) 56.25 B) 45.00 C) 28.13 D) 22.50

27) Which of the following best shows the change of inventory level ( y-axis) over time ( xaxis) in a process with setups?

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A)

B)

C)

D)

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28)

Which of the following statements is TRUE regarding inventory in a process with setups?

A) Operating with a larger batch size will reduce inventory.

B) Operating with as large a batch size as possible is recommended.

C) Operating with a larger batch size will increase inventory.

D) Batch size has no effect on inventory level.

29) Company C produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops follow: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Regular

Sugar-Free

30 60 80

10 30 80

Company C first makes 90 pounds of regular gumdrops, then 30 pounds of sugar-free gumdrops, and then repeats this sequence. What is the average inventory of sugar-free gumdrops?

A) 28.13 B) 22.50 C) 9.38 D) 13.13

30) C&A uses a two-step process to make a part. The first step involves cutting with a machine that requires a 40-minute setup time before the production of each batch. The cutting takes 30 minutes per part. The second step is polishing the parts from cutting. The polishing takes 240 minutes per part. C&A has 5 workers to do the task. The demand rate is 3 parts per hour. What is the maximum inventory between cutting and polishing (in number of parts) if C&A operates with batches of 200 parts?

A) 200 B) 100 C) 75 D) 37.5

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31) C&A Bakers produces three kinds of bread: wheat, white, and multigrain. The data on these products follow: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Wheat

White

40 60 200

20 30 200

Multigrain 10 45 200

C&A’s production sequence is making 200 pounds of wheat first, then switching to 100 pounds of white before changing over to 50 pounds of multigrain. What is the average inventory of wheat bread, in lbs.?

A) 32.5 B) 160 C) 70 D) 80

32) C&A Bakers produces three kinds of bread: wheat, white, and multigrain. The data on these products follow: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Wheat

White

40 60 200

20 30 200

Multigrain 10 45 200

C&A’s production sequence is making 200 pounds of wheat first, then switching to 100 pounds of white before changing over to 50 pounds of multigrain. What is the average inventory of multigrain bread, in lbs?

A) 23.8 B) 43.5 C) 70 D) 100

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33) C&A Printing takes 10 seconds to print a page in color, but after 500 pages, the printer must be cooled down for 15 minutes. No pages can be printed while the printer is cooling down.

C&A’s demand rate is 3 pages per minute. What is the smallest batch size (in pages) to ensure the process is demand-constrained?

A) 500 B) 90 C) 64 D) 3

34) A machine does three setups per production cycle. Each setup takes 20 minutes. The processing time is 0.5 minute. What batch size achieves a capacity of 24 units per hour?

A) 83 B) 40 C) 30 D) 10

35) C&A uses a two-step process to make a part. The first step involves cutting with a machine that requires a 40-minute setup time before the production of each batch. The cutting takes 30 minutes per part. The second step is polishing the parts from cutting. The polishing takes 40 minutes per part. Assume demand is unlimited. What is the ideal batch size of the parts?

A) 10 B) 8 C) 4 D) 2

36) Which of the following statements is TRUE regarding the ideal batch size for a process with setups?

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A) The ideal batch size is one that minimizes inventory while satisfying demand in a supply-constrained process.

B) The ideal batch size is one that minimizes inventory while satisfying demand in a demand-constrained process.

C) The ideal batch size is one that maximizes inventory while satisfying demand in a demand-constrained process.

D) The ideal batch size is one that maximizes inventory while satisfying demand in a supply-constrained process.

37) C&A Furniture uses a machine to make one table top and four table legs to assemble into a table. The machine takes 5 minutes to set up for the tops and 10 minutes to switch from tops to legs. Each top takes 1 minute to make. Each leg takes 0.5 minute to make. The assembly step combines the top with four legs into one table every 4 minutes. Assume there is sufficient demand for every table made. Considering one table as a flow unit, what is the ideal batch size of table tops?

A) 15 B) 10 C) 6 D) 5

38) When batch size reaches the threshold, further increases in batch size will _________ inventory and _________ capacity.

A) increase, have no impact on B) decrease, have no impact on C) have no impact on, increase D) have no impact on, decrease

39) In a supply-constrained process, the ideal batch size is one that _________ inventory in the system and results in a process capacity that matches the _________.

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A) maximizes, demand rate B) minimizes, demand rate C) maximizes, bottleneck capacity D) minimizes, bottleneck capacity

40) In a demand-constrained process, the ideal batch size is one that _________ inventory in the system and results in a process capacity that matches the _________.

A) maximizes, demand rate B) minimizes, demand rate C) maximizes, bottleneck capacity D) minimizes, bottleneck capacity

41) C&A Pottery makes ceramic vases using a process that involves forming, drying, firing, and glazing. The 5 workers each take an average of 60 minutes to form a vase. The vases will then be loaded into an oven to dry. The oven can hold up to 100 pieces; it takes 5 minutes to load each vase. Once all the vases are loaded into the oven, it takes 24 hours to dry each load. The dried vases are then placed in a kiln that holds up to 100 pieces. It takes 6 minutes to load each vase and the vases will be fired in the kiln for 72 hours. After firing, 3 workers each take an average of 2 hours to glaze each vase. C&A receives an order of 1 vase per hour. What is the smallest batch size to ensure the process is demand-constrained?

A) 98 B) 80 C) 32 D) 26

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42) C&A Pottery makes several lines of ceramic vases using a process that involves forming, drying, firing, and glazing. The 5 workers each take on average 60 minutes to form a vase. The vases will then be loaded into an oven to dry. The oven can hold up to 200 pieces and it takes 5 minutes to load each vase. Once all the vases are loaded into the oven, it takes 25 hours to dry each load. The dried vases are then placed in a kiln that holds up to 200 pieces. It takes 6 minutes to load each vase and the vases will be fired in the kiln for 72 hours. After firing, 4 workers each takes an average of 2 hours to glaze each vase. C&A can sell each vase that is made. What is the ideal batch size to minimize inventory while allowing the process to produce at maximum flow rate?

A) 306 B) 240 C) 180 D) 60

43) Consider a two-step process. Step 1 consists of a single resource with a setup time of 30 minutes. Step 2 consists of a single resource without a setup. The processing time at both steps is 5 minutes per unit. When we compute the ideal batch size, we find the formula does not produce a mathematically feasible answer. What is a valid explanation for this unusual finding?

A) Given equal processing times, the resource without a setup will always be the bottleneck; therefore, the batch size formula does not apply since matching of capacities is not possible.

B) Given equal processing times, the resource with a setup will always be the bottleneck; therefore, the batch size formula does not apply since matching of capacities is not possible.

C) The setup time should be reduced.

D) The resource without a setup has excess capacity.

44) A milling machine requires four setups per production cycle. Each setup takes 25 minutes. The processing time is 0.6 minute per unit. What batch size (rounded to the nearest whole number) will achieve a capacity of 50 units per hour?

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A) 50 B) 98 C) 167 D) 214

45) A company uses a two-step process to make a part. The first step involves a drill press that requires a 60-minute setup time before the production of each batch can begin. After that, one unit can be drilled every 6 minutes. The second step involves attaching the drilled item to another device which takes 8 minutes per unit. Assuming demand is unlimited, what is the ideal batch size of the parts?

A) 60 B) 30 C) 10 D) 8

46) A company uses a two-step process to make a part. The first step involves a drill press that requires a 60-minute setup time before the production of each batch can begin. After that, one unit can be drilled every 6 minutes. The second step involves attaching the drilled item to another device which takes 8 minutes per unit. Demand is 5 units per hour. What is the ideal batch size of the parts?

A) 60 B) 30 C) 10 D) 8

47) C&A Candy produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops follow: Demand (lbs per hour)

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Regular

Sugar-Free

30

10

20

Changeover time (min) Production rate (lbs per hour)

60 80

30 80

How many pounds of gumdrops should C&A produce in each production cycle to minimize inventory while satisfying demand?

A) 30 B) 80 C) 90 D) 120

48) C&A Candy produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops are given below: Regular

Sugar-Free

30 60 80

10 30 80

Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

How many pounds of regular gumdrops should C&A produce before switching to sugar-free in order to minimize inventory while satisfying demand?

A) 30 B) 80 C) 90 D) 120

49) C&A Bakers produces three kinds of bread: wheat, white, and multigrain. The data on these products are given below: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Wheat

White

Multigrain

50 60 200

20 30 200

10 45 200

How many pounds of white bread should C&A produce in each production cycle to minimize inventory while satisfying demand?

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A) 37.5 B) 75 C) 187.5 D) 300

50) C&A Bakers produces three kinds of bread: wheat, white, and multigrain. The data on these products follow: Demand (lbs per hour) Changeover time (min) Production rate (lbs per hour)

Wheat

White

Multigrain

50 60 200

20 30 200

10 45 200

How many pounds of wheat bread should C&A produce with each batch in order to minimize inventory while satisfying demand?

A) 37.5 B) 75 C) 187.5 D) 300

51) C&A Dairy makes 5 different flavors of ice cream. The machine must be set up properly for making each flavor. Setup time is 45 minutes and production time is 30 minutes per gallon for each flavor of ice cream. Demands (in gallons per hour) for the ice cream are given below: Vanilla 0.3

Cherry 0.2

Strawberry 0.1

Chocolate 0.5

Mint 0.1

How many gallons of ice cream should C&A produce in each production cycle to minimize inventory while satisfying demand?

A) 281.25 B) 16.75 C) 112.50 D) 11.25

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52) C&A Dairy makes 5 different flavors of ice cream. The machine must be setup properly for making each flavor. Setup time is 45 minutes and production time is 30 minutes per gallon for each flavor of ice cream. Demands (in gallons per hour) for the ice cream follow: Vanilla 0.3

Cherry 0.2

Strawberry 0.1

Chocolate 0.5

Mint 0.1

How many gallons of vanilla ice cream should C&A produce in each production cycle to minimize inventory while satisfying demand?

A) 281.25 B) 2.8 C) 1.50 D) 11.25

53) The reason why resources with setups are used is because the advantage of a _________ can outweigh the disadvantage of the setup.

A) small inventory B) high utilization C) fast processing time D) large inventory

54) C&A Candy produces two kinds of gumdrops: regular and sugar-free. The data on these gumdrops follow: Regular

Sugar-Free

Demand (lbs per hour)

30

10

Changeover time (min)

60

30

Production rate (lbs per hour)

80

80

How many pounds of sugar-free gumdrops should C&A produce before switching to regular gumdrops in order to minimize inventory while satisfying demand?

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A) 30 B) 80 C) 90 D) 120

55) C&A Dairy makes 5 different flavors of ice cream. The machine must be setup properly for making each flavor. Setup time is 45 minutes and production time is 30 minutes per gallon for each flavor of ice cream. Demands (in gallons per hour) for the ice cream follow: Vanilla 0.3

Cherry 0.2

Strawberry 0.1

Chocolate 0.5

Mint 0.1

How many gallons of chocolate ice cream should C&A produce in each production cycle to minimize inventory while satisfying demand?

A) 0.5 B) 1.2 C) 4.7 D) 11.25

56)

Which of the following is NOT a solution to the problem of setup times?

A) Reengineer the setup process to increase the processing time.

B) Reduce product variety.

C) Change an internal setup task to an external setup task.

D) Reengineer the setup process to reduce the setup time.

57) Which of the following is an external setup task for a printer with a single paper tray and ink cartridge?

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A) Changing the paper tray for a different kind of paper stock needed B) Changing the ink cartridge of a printer C) Preparing a paper tray with the paper stock needed for the next printing task D) Canceling all printing tasks to remove a paper jam

58)

Which of the following is an internal setup task?

A) Purchasing additional ink cartridges to carry in inventory B) Cooling the printer with a fan while it is operating C) Preparing a paper tray with the paper stock needed for the next printing task D) Clearing a paper jam

59)

Which of the following is NOT a way to reduce setup times?

A) Change internal to external setups.

B) Reduce internal setups.

C) Adopt mixed-model assembly.

D) Produce each type of a product in as large of a batch as possible.

60)

Which of the following statements about heijunka is FALSE?

A) It is a strategy to assemble different products in very small batches one after the other.

B) It is a strategy to schedule production to resemble as much as possible the true rate of demand.

C) It is a strategy that works if setup times are reduced to an inconsequential level.

D) It is a strategy of producing products without variety.

61) Which of the following curves is a correct portrayal of the relationship between variety and efficiency?

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A)

B)

C)

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D)

62) Considering the trade-off between variety and efficiency, which of the following is the correct portrayal of a solution to reduce variety in order to gain a higher efficiency?

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A)

B)

C)

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D)

63) Considering the trade-off between variety and efficiency, which of the following is the correct portrayal of a solution to increase both variety and efficiency?

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A)

B)

C)

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D)

64) If a resource with setups produces in _________ batches and does _________ setups, then its capacity will be _________.

A) small, infrequent, unconstrained.

B) small, frequent, low.

C) large, frequent, unconstrained.

D) large, infrequent, low.

65)

Which of the following statements about managing processes with setups is FALSE? A) Setup times are always a problem for any resource.

B) A possible solution to the setup problem is to eliminate product variety.

C) Setups can be considered as wastes in a process.

D) Setup times create inflexibility in a process.

66)

The goal of Single-Minute Exchange of Die (SMED) is to reduce _________.

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A) setup time to one minute or less.

B) setup time to a single-digit number of minutes (nine or fewer).

C) product variety to nine or fewer models.

D) processing time to one minute or less.

67)

Setup time depends on the actual number of units to be made. ⊚ true ⊚ false

68)

The capacity of a resource with setups is dependent on the batch size. ⊚ true ⊚ false

69) A resource with setups can achieve a flow rate that is equal to its capacity when producing. ⊚ true ⊚ false

70) A batch size should be chosen for a process with setups to make a trade-off between capacity and inventory. ⊚ true ⊚ false

71) The average inventory of all items produced by a resource with setups will increase when there is an increase in the variety of products produced on that resource. ⊚ true ⊚ false

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72)

It is impossible to increase efficiency and variety at the same time. ⊚ true ⊚ false

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Answer Key Test name: Chap 07_3e_Cachon 1) D 2) A 3) D 4) A 5) C 6) D 7) C 8) B 9) C 10) D 11) C 12) A 13) C 14) D 15) B 16) C 17) C 18) B 19) B 20) C 21) B 22) D 23) C 24) A 25) B 26) C Version 1

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27) B 28) C 29) D 30) C 31) D 32) A 33) B 34) C 35) C 36) B 37) A 38) A 39) D 40) B 41) B 42) C 43) B 44) C 45) B 46) C 47) D 48) C 49) B 50) C 51) D 52) B 53) C 54) A 55) C 56) A Version 1

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57) C 58) D 59) D 60) D 61) C 62) A 63) D 64) B 65) A 66) B 67) FALSE 68) TRUE 69) FALSE 70) TRUE 71) TRUE 72) FALSE

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CHAPTER 8 1) Lean operations is about reducing two forms of waste, wasted _________ and wasted _________.

A) inventory, capacity B) resource time, flow unit time C) inventory, flow time D) inventory, processing time

2)

Which of the following is NOT an example of wasted capacity?

A) Idle time B) Rework C) Setup D) Flow time

3)

The goal of lean is to _________ from the system.

A) extract profit B) increase output C) eliminate waste D) generate value

4)

Which of the following is an example of wasted flow time?

A) A long waiting time at a checkout B) Idle time of a cashier C) Merchandise returned to a store D) Ringing up sales at a register

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5)

Which of the following terms is interchangeable with "lean"?

A) Value adding B) Toyota Production System C) Green D) No waiting

6) Which of the following is NOT a component of worker time on the job?

A) Waste B) Value-added work C) Commuting D) Non-value-added work

7)

Which of the following is an example of value-added work?

A) Taking orders from customers B) Repairing a defective product C) Unpacking boxes in a stock room D) Waiting for customers to order

8) The overall equipment effectiveness (OEE) formula computes the fraction of a resource’s _________, which is _________.

A) available time, value-added time B) equipment time, labor time C) value-added time, wasted time D) available time, wasted time

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9) A machine is available 10 hours a day. Each part takes 80 minutes to fabricate and 10 minutes to setup. 10% of the parts made are defective and must go through the machine again to be reworked, during which both setup and fabrication have to be performed again. The machine is idle for any unused time. On average, 5 good parts are made each day. What is the overall equipment effectiveness of the machine?

A) 0.067 B) 0.667 C) 0.75 D) 0.80

10)

Which of the following is NOT one of the seven sources of waste?

A) Inventory B) Overproduction C) Processing D) Movement

11)

Which of the following is NOT an element of the Toyota Production System?

A) Scientific management B) Kaizen C) Lean D) Genchi genbutsu

12)

Which of the following statements about sources of production waste is FALSE?

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A) Working overtime is a waste because it means more labor cost is spent on a flow unit than necessary.

B) Rework is a waste because it means resources are used to correct mistakes instead of adding value.

C) Waiting is a waste because it means resources are idle and are not fully utilized.

D) Over-processing is a waste because it means more time is spent on flow units than necessary.

13)

To avoid rework is to _________.

A) do it at the right time B) do it right using the longest time C) do it right using the shortest time D) do it right the first time

14) Which of the following statements is FALSE regarding overall equipment effectiveness (OEE)?

A) OEE identifies what percent of a resource’s time is spent on value-added work.

B) OEE is part of a productivity analysis of a resource.

C) OEE can exceed a value of one.

D) OEE identifies the portion of a worker's time which is being wasted.

15)

Which of the following is an example of waste of worker intellect?

A) Walking from one part of the building to the other B) Discounting process improvement suggestions from workers C) Working overtime D) Taking lunch breaks

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16)

Which of the following is a means to counter overproduction?

A) Keep resources busy.

B) Keep moving things around.

C) Produce expected demand.

D) Produce at the actual rate of demand.

17) A machine is available two shifts per day and 10 hours per shift. It produces 75 units per day, on average. Each unit requires 10 minutes to produce. The remainder of the day is spent performing setups, doing preventative maintenance, and being idle. What is the overall equipment effectiveness of the machine?

A) 0.313 B) 0.625 C) 0.75 D) 0.833

18) A machine is available three shifts per day and 8 hours per shift. It produces 425 units per day, on average. Each unit requires 2 minutes to produce. The remainder of the day is spent performing setups, doing preventative maintenance and being idle. What is the overall equipment effectiveness of the machine?

A) 0.32 B) 0.48 C) 0.59 D) 0.89

19)

The following are sources of wasted time of a flow unit EXCEPT _________ times.

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A) storage B) transportation C) processing D) setup

20)

Wastes of flow time become visible by taking the perspective of the _________.

A) flow unit B) manager C) supplier D) labor content

21)

Which of the following statements about wasting time of a flow unit is TRUE?

A) By reducing the waiting time of a flow unit, the time it takes to turn inputs into output is decreased.

B) The process flow diagram shows how much time a flow unit spends at each step in the process.

C) The value-added time of a flow unit is equal to its takt time.

D) Holding everything constant, an increase in flow time improves the extent to which an operation is considered lean.

22) Which of the following can NOT be used to determine the extent to which an operation is lean?

A) Inventory turns B) Value-added percentage C) Overall equipment effectiveness D) Labor content

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23)

Which of the following can be used to uncover a waste of flow time?

A) Inventory level B) Overall equipment effectiveness C) Labor content D) Overtime

24)

The value-added percentage is defined as _________ divided by _________.

A) value-added time of a flow unit, available time B) available time, value-added time of a flow unit C) value-added time of a flow unit, flow time D) flow time, value-added time of a flow unit

25) A lean operation strives to achieve a reduction of _________ and _________ simultaneously.

A) demand in capacity, available time B) demand in capacity, flow time C) waste in capacity, flow time D) waste in capacity, available time

26) A patient spent 24 minutes waiting in the reception area before seeing a doctor. The visit with the doctor lasted 6 minutes. What is the value-added percentage of the patient?

A) 17% B) 20% C) 25% D) 80%

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27) A circuit board in an electronics manufacturing process has a 17-hour flow time, on average. Two hours of this time is spent being processed. Twelve hours is spent waiting between resources and the other three hours is spent on setup activities. What is the value-added percentage of the process?

A) 11.8% B) 17.7% C) 29.4% D) 70.6%

28) A salesperson spends his 8-hour day as follows: 4.5 hours driving between client locations, 45 minutes eating lunch, 2 hours engaging in sales activities, and 45 minutes making personal phone calls. What is the value-added percentage of his sales process?

A) 81.3% B) 56.3% C) 34.4% D) 25.0%

29)

Which of the following is NOT one the 4Ps of Toyota production system?

A) People and partners B) Profit C) Processes D) Philosophy

30) The Toyota Production System is often depicted as a house. The roof of TPS consists of the principle of _________ and the goal to _________.

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A) waste reduction, maximize profit B) waste reduction, match supply with demand C) built-in quality, match supply with demand D) built-in quality, operate just-in-time

31) The Toyota Production System is often depicted as a house. The two pillars of the TPS are _________ and _________.

A) waste reduction, just-in-time flow B) process improvement, just-in-time flow C) waste reduction, built-in quality D) built-in quality, just-in-time flow

32) The Toyota Production System is often depicted as a house. The foundation of TPS consists of _________ and _________.

A) waste reduction, just-in-time B) process improvement, just-in-time C) process improvement, stable processes D) waste reduction, process improvement

33)

The Toyota Production System can be represented in the shape of a _________.

A) boat B) box C) house D) pyramid

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34) _________ means to produce in the amounts needed, when needed, and where needed using a single unit flow.

A) Just-in-time B) Built-in quality C) Process improvement D) Stable environment

35) _________ means to detect and address defects when and where they occur and prevent them from recurring.

A) Just-in-time B) Built-in quality C) Process improvement D) Stable environment

36) _________ means a process has a smooth flow with little variability and built-in flexibility.

A) Just-in-time B) Built-in quality C) Process improvement D) Stable environment

37) The benefits of a smooth single-unit flow include all of the following EXCEPT _________.

A) reduced worker turnover B) less inventory C) shorter flow times D) faster feedback

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38)

Which of the following process changes is NOT needed to implement ikko-nagashi?

A) Implementing a push system B) Operating based on takt time C) Leveling demand D) Transferring units piece by piece

39) In a pull system, an information flow of external demand is moving _________ and the physical flow of the flow units is moving _________.

A) downstream, upstream B) upstream, downstream C) upstream, upstream D) downstream, downstream

40)

A kanban system _________ work through the process based on _________.

A) pushes, capacity B) pulls, capacity C) pushes, demand D) pulls, demand

41)

Which of the following is a way to implement a pull system?

A) Make to stock B) Make to order C) Make to capacity D) Make to inventory

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42) A production process has two workstations. The first workstation has a capacity of 200 units per hour and the second workstation has a capacity of 150 units per hour. Demand for the process is 250 units per hour. What is the utilization of the first workstation in a push process?

A) 100% B) 80% C) 75% D) 60%

43)

Which of the following statements about ikko-nagashi is TRUE? A) It is about optimizing transfer batch size with a given process layout.

B) It is the same as a kanban system.

C) It is about flowing one unit at a time from one resource to the next.

D) It is about organizing work flow by function or equipment.

44) Daily demand for a product is 200 units. The production lead time is 3 days. A 1-day safety stock is kept. How many kanban containers are needed if one container holds 100 units?

A) 8 B) 6 C) 2 D) 1

45) What is the relationship between the number of kanban cards in a process and the inventory level?

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A) There is no more inventory in the process than was authorized via kanban cards.

B) The inventory of the process grows with the square root of the number of kanban cards.

C) The inventory of the process is reduced by adding more kanban cards.

D) There is no relationship between kanban cards and inventory levels.

46)

Which one of the following is a consequence of uneven workflow?

A) Multiple job assignments B) No idle time in the production process C) Overburdening of workers and equipment D) Just-in-time production

47) A production process has three workstations. The first workstation has a capacity of 125 units per hour, the second workstation has a capacity of 115 units per hour, and the third workstation has a capacity of 140 units per hour. Demand for the process is 180 units per hour.

What is the utilization of the first workstation in a push process?

A) 63.9% B) 77.8% C) 92.0% D) 100%

48) Daily demand for a product is 384 units. The production lead time is 5 hours. A 2-hour safety stock is kept. How many kanban containers are needed if one container holds 16 units and the process operates 12 hours per day?

A) 8 B) 14 C) 16 D) 24

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49) Daily demand for a product is 1200 units. The production lead time is 3 hours. A 1-hour safety stock is kept. How many kanban containers are needed if one container holds 24 units and the process operates 10 hours per day?

A) 5 B) 12 C) 20 D) 50

50) C&A Dairy makes two flavors of ice cream – chocolate and vanilla. Each gallon is produced and shipped in discrete containers. The demand for the ice cream (in gallons) is given as follows: Day 1 2 3 4 5

Chocolate 20 60 30 50 10

Vanilla 40 100 30 70 100

C&A operates 8 hours a day, 5 days a week. What is the takt time and how should C&A schedule the production of its ice cream to level demand?

A) 5.5 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla B) 5.5 minutes per gallon, alternate between 1 unit of chocolate and 2 units of vanilla C) 4.7 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla D) 4.7 minutes per gallon, alternate between 1 unit of chocolate and 2 units of vanilla

51) C&A Dairy makes two flavors of ice cream—chocolate and vanilla. Each gallon is produced and shipped in discrete containers. The demand for the ice cream (in gallons) is given as follows: Day 1 2 3

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Chocolate 30 60 40

Vanilla 60 100 90

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4 5

40 30

80 70

C&A operates 8 hours a day, 5 days a week. Given a labor content of 12 minutes per gallon, what is the target manpower?

A) 10 workers B) 2 workers C) 4 workers D) 3 workers

52) C&A Dairy makes two flavors of ice cream—chocolate and vanilla. Each gallon is produced and shipped in discrete containers. The demand for the ice cream (in gallons) is given as follow: Day 1 2 3 4 5

Chocolate 50 25 70 65 40

Vanilla 20 25 30 35 15

C&A operates 10 hours a day, 5 days a week. What is the takt time and how should C&A schedule the production of its ice cream to level demand?

A) 8 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla B) 8 minutes per gallon, alternate between 2 units of chocolate and 1 unit of vanilla C) 6.2 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla D) 6.2 minutes per gallon, alternate between 2 units of chocolate and 1 unit of vanilla

53) C&A Dairy makes two flavors of ice cream—chocolate and vanilla. Each gallon is produced and shipped in discrete containers. The demand for the ice cream (in gallons) is given as follow: Day 1 2 3 4

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Chocolate 30 25 50 35

Vanilla 40 20 60 35

15

5

60

45

C&A operates two shifts per day, 8 hours per shift, and 5 days a week. What is the takt time and how should C&A schedule the production of its ice cream to level demand?

A) 4 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla B) 12 minutes per gallon, alternate between 2 units of chocolate and 1 unit of vanilla C) 12 minutes per gallon, alternate between 1 unit of chocolate and 2 units of vanilla D) 12 minutes per gallon, alternate between 1 unit of chocolate and 1 unit of vanilla

54)

TPS’s quality improvement involves all of the following EXCEPT _________.

A) avoid recurrence B) detect-stop-alert C) kanban D) root cause analysis

55) C&A uses an assembly line of 20 stations to make a product. The cycle time is 5 minutes per unit. Station 6 is the most error-prone operation. Inspection occurs at the last station. What will be the information turnaround time for a defect made at station 6 if there is no inventory between stations?

A) 100 minutes B) 70 minutes C) 5 minutes D) 0.2 minute

56) A computer is assembled on an assembly line consisting of 12 stations. The cycle time is 3 minutes per unit. Station 4 is the most error-prone operation. Inspection occurs at the last station. What will be the information turnaround time for a defect made at station 4 if there is no inventory between stations?

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A) 0.33 minutes B) 3 minutes C) 24 minutes D) 36 minute

57) C&A uses a line of 5 stations to make a product. The cycle time is 30 seconds per unit.

The inventory between stations is 10 units. Inspection happens at the end of the process. Which of the following is NOT a way to shorten the information turnaround time for a defect made at station 2?

A) Reduce the amount of inventory between stations.

B) Reduce cycle time.

C) Inspect at every station.

D) Add another station after station 2.

58) The key concepts that characterize TPS’s approach towards root-cause problem solving are _________ and _________.

A) kaizen and jidoka B) genchi genbutsu and jidoka C) kaizen and genchi genbutsu D) kaizen and zero inventory

59)

In the Toyota Production System, jidoka refers to _________.

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A) Level production, where different models are produced alongside each other on the assembly line B) Continuous improvement, where workers organize meetings to discuss ways of improving the production process C) The inventory retrieval system, where parts are replenished only when they are needed D) Mechanisms used in production to stop the process and alert workers when a quality problem is detected

60)

What term refers to fool-proofing an operation to avoid the recurrence of defects?

A) Poka-yoke B) Autonomation C) Heijunka D) Andon

61)

Which of the following statements about the Toyota Production System is TRUE?

A) An Andon cord that is rarely pulled is a good indicator of success of TPS implementation.

B) Implementing TPS amounts to selecting the right lean tools to use.

C) TPS is only relevant for manufacturing operations.

D) All dimensions of TPS need to be adopted by an organization to get the full benefits of lean.

62)

What term refers to combining machines in production with the intelligence of workers?

A) Genchi genbutsu B) Heijunka C) Muri D) Autonomation

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63)

Which of the following is the idea behind genchi genbutsu?

A) Work should be designed by engineers.

B) Improvement of work can only come from management.

C) Work can be designed by those who are not fully familiar with the process.

D) Workers should be the ones observing and improving a process.

64) An example of a lean operation is to have workers circulating in a store, waiting for customers to check out on mobile payment units. ⊚ true ⊚ false

65) A worker moving inventory from one machine to another is considered non-value-added work. ⊚ true ⊚ false

66)

An operation is lean if it only strives to reduce waste in its capacity. ⊚ true ⊚ false

67)

The 4Ps of the TPS are place, promotion, people, and profit. ⊚ true ⊚ false

68)

A process should operate at a rate equal to the discretionary flow of resources. ⊚ true ⊚ false

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69) A short information turnaround time requires many inspection points throughout the process to identify quality problems when and where they arise. ⊚ true ⊚ false

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Answer Key Test name: Chap 08_3e_Cachon 1) B 2) D 3) C 4) A 5) B 6) C 7) A 8) A 9) B 10) C 11) A 12) A 13) D 14) C 15) B 16) D 17) B 18) C 19) C 20) A 21) A 22) D 23) A 24) C 25) C 26) B Version 1

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27) A 28) D 29) B 30) B 31) D 32) C 33) C 34) A 35) B 36) D 37) A 38) A 39) B 40) D 41) B 42) A 43) C 44) A 45) A 46) C 47) C 48) B 49) C 50) D 51) D 52) B 53) D 54) C 55) B 56) C Version 1

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57) D 58) C 59) D 60) A 61) D 62) D 63) D 64) FALSE 65) TRUE 66) FALSE 67) FALSE 68) FALSE 69) TRUE

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CHAPTER 9 1) C&A Pies runs a pizza restaurant. Which of the following is an outcome variable for C&A? A) The amount of cheese purchased from the supplier B) The weather condition C) The delivery time of the pizza D) The number of employees working for C&A

2) C&A Cleaners operates a dry-cleaning service. Which of the following is an input variable for C&A? A) Stains left on garments after dry cleaning B) The average satisfaction of the customers C) Weather conditions D) The temperature of the dry-cleaning machine

3) C&A Cleaners operates a dry-cleaning service. Which of the following is an outcome variable for C&A? A) Stains left on garments after dry cleaning B) The average age of the customers C) Weather conditions D) The temperature of the dry-cleaning machine

4)

Which of the following is NOT one of the steps in statistical process control?

A) Capability analysis B) Conformance analysis C) Assignable cause investigation D) Common cause investigation

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5) C&A Chips' potato chip filling process has a lower specification limit of 4.5 oz. and an upper specification limit of 5.5 oz. The standard deviation is 0.3 oz. and the mean is 5 oz. What is the process capability index for the chip filling process?

A) 3.33 B) 1.67 C) 0.56 D) 0.28

6) A can-filling process has a lower specification limit of 11.9 oz. and an upper specification limit of 12.1 oz. The standard deviation is 0.02 oz. and the mean is 12 oz. What is the process capability index for the can-filling process?

A) 3.33 B) 1.67 C) 0.56 D) 0.28

7) C&A Chips' potato chip filling process has a lower specification limit of 4.5 oz. and an upper specification limit of 5.5 oz. The standard deviation is 0.3 oz. and the mean is 5 oz. What is the probability that a bag will weigh more than 5.5 oz.?

A) 95.2% B) 90.4% C) 9.56% D) 4.78%

8) A can-filling process has a lower specification limit of 11.9 oz. and an upper specification limit of 12.1 oz. The standard deviation is 0.2 oz. and the mean is 12 oz. What is the probability that a can will have less than 11.9 oz in it?

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A) 0.02% B) 9.35% C) 30.85% D) 69.15%

9) C&A Chips' potato filling process has a lower specification limit of 4.5 oz. and an upper specification of 5.5 oz. The standard deviation is 0.3 oz. and the mean is 5 oz. What is the parts per million defective? Choose the closest answer.

A) 952,000 B) 904,000 C) 95,600 D) 47,800

10) A can-filling process has a lower specification limit of 11.9 oz. and an upper specification limit of 12.1 oz. The standard deviation is 0.1 oz. and the mean is 12 oz. What is the parts per million defective? Choose the closest answer.

A) 158,700 B) 317,400 C) 32,600 D) 16,300

11) Consider a product with 500 components. Each component has a defect probability of 0.015%. What is the defect probability of the final product if all components must work properly?

A) 0% B) 0.015% C) 7.23% D) 92.77%

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12) Consider a product with 20 components. Each component has a defect probability of 0.5%. What is the defect probability of the final product if all components must work properly?

A) 0.24% B) 9.54% C) 28.74% D) 90.46%

13) A jar-filling process has a lower specification limit of 9.5 oz. and an upper specification of 10.5 oz. The standard deviation is 0.5 oz. and the mean is 10 oz. Which value comes closest to the standard deviation required in this process to achieve a ppm of 5000?

A) 0.17 B) 0.20 C) 0.32 D) 0.24

14)

Which of the following statements is TRUE about capability analyses?

A) A higher process capability index means the process has a higher defect probability.

B) A higher process capability index means the process has a lower defect probability.

C) A process must have its mean centered in the middle of its tolerance interval in order to perform capability analyses.

D) A process capability index of 1.33 means that a process has a six-sigma capability.

15) C&A Industries is making steel rods with an average diameter of 2 mm. The process has a standard deviation of 0.2 mm. The upper and lower specification limits are 2.2 mm and 1.8 mm respectively. What is the probability that the rod’s diameter will either be too wide or too narrow? Choose the closest answer.

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A) 84.13% B) 68.27% C) 31.73% D) 15.87%

16) C&A Industries is making steel rods with an average diameter of 2 mm. The process has a standard deviation of 0.2 mm. The upper and lower specification limits are 2.2 mm and 1.8 mm respectively. What is C&A’s process capability index?

A) 0.333 B) 0.667 C) 0.167 D) 0.844

17) C&A Industries is making steel rods with an average diameter of 2 mm. The process has a standard deviation of 0.1 mm. The upper and lower specification limits are 2.2 mm and 1.8 mm respectively. What is C&A’s process capability index?

A) 0.333 B) 0.667 C) 0.167 D) 0.844

18) A key joint in a precision machining process has a lower specification limit of a width of 0.99 mm and an upper specification limit of 1.01 mm. The standard deviation is 0.005 mm and the mean is 1 mm. What is the process capability index for the precision machining process?

A) 0.01 B) 0.33 C) 0.67 D) 0.99

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19) A key joint in a precision machining process has a lower specification limit of a width of 0.99 mm and an upper specification limit of 1.01 mm. The standard deviation is 0.005 mm and the mean is 1 mm. The company wants to reduce its defect probability and operate a "six sigma process." To what level would this company have to reduce the standard deviation in the process to meet this target?

A) 0.000001 B) 0.00001 C) 0.0017 D) 0.00017

20)

<p>An chart has _________ on the x-axis and _________ on the y-axis.

A) sample sizes, sample variations B) sample sizes, sample means C) time periods at which samples are taken, sample means D) time periods at which samples are taken, sample variations

21)

A control chart is used to identify the _________ in a process.

A) input variables B) output variables C) assignable causes of variation D) normal causes of variation

22) The control limits, calculated as three standard deviations from the long-term sample mean, imply that _________ of the sample points are expected to fall between the upper and lower control limits.

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A) 100% B) 99.7% C) 50% D) 3%

23)

Which of the following statements about a control chart is TRUE?

A) If a process is in control, then no defects can be found.

B) It is possible that the outcome of a process is within the control limits but outside the specification limits.

C) Control limits are the same as specification limits.

D) It is impossible that the outcome of a process is outside the control limits but within the specification limits.

24) C&A Goods manufactures treats for dogs. Six samples each of five bags of treats were randomly selected and weighed, yielding the following data: Bag (lbs) Sample 1 2 3 4 5 6

1 10.2 8.9 10.6 9.6 5.9 12.1

2 11.8 11.2 8.8 6.5 8.6 7.3

3 10.1 12.4 7.6 12.5 10.3 5.9

4 5.9 7.6 11.3 10.4 11.8 10.8

5 8.6 5.9 9.9 6.9 10.1 11.1

<p>Based on the sample data, what will be the center line of a 3-sigma chart?

A) 12.25 B) 9.35 C) 6.50 D) 2.12

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25) C&A Goods manufactures treats for dogs. Six samples each of five bags of treats were randomly selected and weighed, yielding the following data: Bag (lbs) Sample 1 2 3 4 6 6

1 10.2 8.9 10.6 9.6 5.9 12.1

2 11.8 11.2 8.8 6.5 8.6 7.3

3 10.1 12.4 7.6 12.5 10.3 5.9

4 5.9 7.6 11.3 10.4 11.8 10.8

5 8.6 5.9 9.9 6.9 10.1 11.1

<p>Based on the sample data, what will be the upper control limit of a 3-sigma chart?

A) 12.2 B) 11.9 C) 15.7 D) 28.1

26) C&A Goods manufactures treats for dogs. Six samples each of five bags of treats were randomly selected and weighed, yielding the following data: Bag (lbs) Sample 1 2 3 4 5 6

1 10.2 8.9 10.6 9.6 5.9 12.1

2 11.8 11.2 8.8 6.5 8.6 7.3

3 10.1 12.4 7.6 12.5 10.3 5.9

4 5.9 7.6 11.3 10.4 11.8 10.8

5 8.6 5.9 9.9 6.9 10.1 11.1

<p>Based on this sample data, what will be the lower control limit of a 3-sigma chart?

A) 6.8 B) 6.5 C) 3.7 D) 3.0

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27) Which of the following control charts indicates that the process is in control, assuming the two horizontal lines shown represent the upper control limit and lower control limit.

A)

B)

C)

D)

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28) _________ illustrate how the _________ variable is being influenced by the input and _________ variables.

A) Fishbone diagrams, environmental, outcome B) Flow diagrams, environmental, outcome C) Fishbone diagrams, outcome, environmental D) Flow diagrams, outcome, environmental

29)

Which of the following is NOT a component of a fishbone diagram?

A) A horizontal arrow pointing at the outcome variable B) Diagonal arrows connecting root causes of process defects to the horizontal arrow C) Small lines connecting the underlying causes of a root cause to the diagonal arrow D) The frequency of occurrence of defects in the outcome variable

30)

Which of the following is another name for the fishbone diagram?

A) Cause-effect diagram B) Pareto diagram C) Frequency diagram D) Flow diagram

31)

Which of the following is another name for the fishbone diagram?

A) Pareto diagram B) Taichi diagram C) Toyota diagram D) Ishikawa diagram

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32) The Pareto principle states that _________ of the problems can be traced back to _________ of the root causes.

A) 10%, 90% B) 90%, 10% C) 20%, 80% D) 80%, 20%

33)

Which of the following is the Pareto principle?

A) The majority of problems can be explained by one root cause.

B) The majority of problems can be explained by a few root causes.

C) The majority of problems can be explained by many root causes.

D) The majority of problems can be explained by many symptoms.

34) The "Five Whys" tool helps to uncover the _________ as opposed to the _________ of a problem.

A) symptoms, root causes B) root causes, symptoms C) solutions, root causes D) solutions, symptoms

35) In the view of the Toyota Production System, how many times should one continually ask why a quality problem has occurred?

A) 1 B) 3 C) 5 D) 10

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36) The data that should be collected in order to construct a Pareto diagram include all of the following EXCEPT _________.

A) causes of defects B) number of defect occurrences C) associated defect types D) the bottleneck location

37)

Which of the following is the correct definition of a robust process?

A) A robust process is one that can tolerate variations in input and environmental variables with an increase in outcome variation.

B) A robust process is one that cannot tolerate variations in input and environmental variables.

C) A robust process is one that can tolerate variations in input and environmental variables without an increase in outcome variation.

D) A robust process is one that cannot tolerate variations in outcome variables.

38)

Which of the following is NOT a strategy to make a process robust?

A) Foolproofing B) Overengineering C) Underengineering D) Early warning signs

39)

Which of the following is an example of overengineering?

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A) A saw that will not start if the blade is not inserted properly in its housing B) A building that can withstand a major earthquake C) A colorful liquid laundry packet that resembles a piece of candy D) A beeping sound that happens when the battery in a smoke detector is getting low

40)

Which of the following is an example of foolproofing?

A) A saw that will not start if the blade is not inserted properly in its housing B) A building that can withstand a major earthquake C) A colorful liquid laundry packet that resembles a piece of candy D) A beeping sound that happens when the battery in a smoke detector is getting low

41)

Which of the following is an example of an early warning sign?

A) A saw that will not start if the blade is not inserted properly in its housing B) A building that can withstand a major earthquake C) A colorful liquid laundry packet that resembles a piece of candy D) A beeping sound that happens when the battery in a smoke detector is getting low

42)

Which of the following is NOT an example of robust process design?

A) A saw that will not start if the blade is not inserted properly in its housing B) A building that can withstand a major earthquake C) A colorful liquid laundry packet that resembles a piece of candy D) A fire alarm that goes off when a fire is detected in a building

43) If outcome variables do not follow a continuous distribution, then the _________ of a defect is/are analyzed to improve the process.

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A) degree of specification conformance B) degree of control conformance C) discrete probabilities D) continuous probabilities

44) A component is assembled in a four-step process. The probability of making a defect in step 1 is 10%; in step 2, 20%; in step 3, 8%; and in step 4, 5%. What is the probability that the final component will be defective if all steps must be performed correctly?

A) 99.99% B) 62.9% C) 37.1% D) 0.008%

45) A component is assembled in a four-step process. The probability of making a defect in step 1 is 4%; in step 2, 7%; in step 3, 5%; and in step 4, 9%. What is the probability that the final component will be defective if all steps must be performed correctly?

A) 0.0013% B) 22.8% C) 77.2% D) 99.87%

46) A product test is designed in such a way that for a defective product to be undiscovered, all four inspections would have to fail to catch the defect. The probability of catching the defect in inspection 1 is 90%; in inspection 2, 80%; in inspection 3, 18%; and in inspection 4, 95%.

What is the probability of catching a defect?

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A) 99.9% B) 62.9% C) 37.1% D) 0.008%

47) A product test is designed in such a way that for a defective product to be undiscovered, all four inspections would have to fail to catch the defect. The probability of catching the defect in inspection 1 is 82%; in inspection 2, 74%; in inspection 3, 78%; and in inspection 4, 80%.

What is the probability of a defect passing through undetected?

A) 99.79% B) 62.14% C) 37.86% D) 0.21%

48) A product test is designed in such a way that for a defective product to be undiscovered, all four inspections would have to fail to catch the defect. The probability of catching the defect in inspection 1 is 82%; in inspection 2, 74%; in inspection 3, 78%; and in inspection 4, 80%.

What is the probability of catching a defect?

A) 99.79% B) 62.14% C) 37.86% D) 0.21%

49) A component is assembled in a three-step process. The probability of making a defect in step 1 is 8%; in step 2, 12%; and in step 3, 7%. How many leaves does the event tree of this process have?

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A) 2 B) 4 C) 8 D) 16

50) A component is assembled in a four-step process. The probability of making a defect in step 1 is 10%; in step 2, 20%; in step 3, 8%; and in step 4, 5%. How many leaves does the event tree of this process have?

A) 2 B) 4 C) 8 D) 16

51)

A p-chart is used to track a process with _________ outcomes.

A) continuous B) quantitative C) variable D) binary

52)

A p-charts is also called a(n) _________ chart.

A) X-bar B) continuous-based control C) attribute-based control D) variable-based control

53)

Sample sizes for p-charts typically range from

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A) 5 to 10 B) 10 to 20 C) 30 to 50 D) 50 to 200

54) C&A Industries takes 100 samples of 50 units each for inspection. The total number of defects is found to be 75 units. What is the center line of a 3-sigma p-chart?

A) 100 B) 75 C) 0.75 D) 0.015

55) C&A Industries takes 100 samples of 50 units each for inspection. The total number of defects is found to be 75 units. What is the upper control limit of a 3-sigma p-chart?

A) 0 B) 0.015 C) 0.017 D) 0.067

56) C&A Industries takes 100 samples of 50 units each for inspection. The total number of defects is found to be 75 units. What is the lower control limit of a 3-sigma p-chart?

A) 0 B) 0.015 C) 0.017 D) 0.067

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57) If you are to monitor the fraction of customers who are not satisfied with your services, which of the following control charts will you use?

A) X-bar chart B) p-chart C) Fishbone chart D) Pareto chart

58) A new backpack that has a zipper which is broken due to a supplier problem is indicative of a quality problem resulting from assignable cause variations. ⊚ true ⊚ false

59)

A defect occurs only because of abnormal variations in input variables. ⊚ true ⊚ false

60) A process capability index of 2 means that the upper and lower specification limits of the process are six standard deviations above and below the mean respectively. ⊚ true ⊚ false

61)

Eliminating variations is always possible. ⊚ true ⊚ false

62)

<p>An chart is used to track a process with binary outcome variables. ⊚ true ⊚ false

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Answer Key Test name: Chap 09_3e_Cachon 1) C 2) D 3) A 4) D 5) C 6) B 7) D 8) C 9) C 10) B 11) C 12) B 13) A 14) B 15) C 16) A 17) B 18) C 19) C 20) C 21) C 22) B 23) B 24) B 25) A 26) B Version 1

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27) D 28) C 29) D 30) A 31) D 32) D 33) B 34) B 35) C 36) D 37) C 38) C 39) B 40) A 41) D 42) C 43) C 44) C 45) B 46) A 47) D 48) A 49) C 50) D 51) D 52) C 53) D 54) D 55) D 56) A Version 1

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57) B 58) TRUE 59) FALSE 60) TRUE 61) FALSE 62) FALSE

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CHAPTER 10 1) The goal of inventory management is to have the right _________, in the right _________, at the right _________.

A) product, range, season B) price, place, supplier C) price, range, season D) product, place, time

2)

Which of the following is NOT a category of inventory?

A) Raw materials B) Finished goods C) Assembly-line workers D) Work in process

3)

Which of the following is an example of raw material inventory for C&A Bakery?

A) Flour B) Cupcake mix prepared from scratch C) Ovens D) Cupcakes freshly out of the oven

4)

Which of the following is an example of work-in-process inventory for C&A Bakery?

A) Flour B) Cupcake mix prepared from scratch C) Ovens D) Cupcakes freshly out of the oven

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5)

Which of the following is an example of finished goods inventory for C&A Bakery?

A) Flour B) Cupcake mix prepared from scratch C) Ovens D) Cupcakes freshly out of the oven

6) From the perspective of a manufacturing company, which type of firm would provide the raw material inventory that is utilized in its production activities?

A) Suppliers B) Wholesalers C) Retailers D) Distributors

7)

Which of the following is an essential skill for inventory management?

A) Forecasting future demand B) Negotiating product prices C) Designing appealing websites D) Developing new product ideas

8)

Which of the following is NOT an essential skill for inventory management?

A) Product and demand tracking B) Forecasting future demand C) Analytical skills D) Negotiation

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9) A(n) _________ tag is a small electronic device that transmits a unique radio signal to identify the object to which it is attached.

A) bar code B) QR C) RFID D) price

10)

Which of the following is a question that product and demand tracking is able to answer?

A) What is the holding cost per unit?

B) How much product do you have at the moment?

C) What is the selling price of your product?

D) Who are your suppliers?

11)

The reasons for holding inventory include all the following EXCEPT _________.

A) it takes time to transform inputs into outputs and move them to where they are needed B) to allow output rate to remain relatively stable as demand varies predictably over time C) to ensure employees are motivated D) to serve as a buffer against demand uncertainty

12) Expecting the cost of a popular brand of canned soup to increase in the future, a supermarket orders extra cases of the soup. This is an example of holding inventory because of changes in the _________ of the inventory.

A) value B) demand C) management D) classification

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13) A machine in a production process has been breaking down frequently and affecting downstream resources. Pending the machine problem being addressed, management has been working the machine overtime at the end of each day to build inventory immediately after it so that future breakdowns will not affect the process to such an extent. This is an example of holding inventory for what reason?

A) Seasonality B) Flow time C) Batching D) Buffers

14)

_________protects a firm against unpredictable demand.

A) Kanban B) Safety stock C) Just in time D) Disruption

15)

Which of the following is a reason for batching?

A) Price fluctuations B) Demand fluctuations C) Fixed costs associated with starting the process D) Variable costs associated with starting the process

16)

Inventory can be measured in many ways EXCEPT in _________.

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A) physical units B) days-of-supply C) profit D) dollars

17) C&A Candy has on average $5,000 in inventory and its daily sales are $250. What is its days-of-supply?

A) 1,250,000 B) 500 C) 250 D) 20

18) C&A Candy has on average $5,000 in inventory and its daily sales are $250. What are C&A’s weekly inventory turns (assuming demand occurs seven days a week)?

A) 20 B) 2.86 C) 0.35 D) 0.05

19) The days-of-supply of a process is the _________ it takes for a unit to flow through the system.

A) total amount of time B) total amount of physical units C) average amount of time D) average amount of physical units

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20) The days-of-supply of a process is the amount of time it takes for the _________ to flow through the system at the _________.

A) average inventory, maximum flow rate B) average inventory, average flow rate C) maximum inventory, maximum flow rate D) maximum inventory, average flow rate

21) The inventory turns of a process are the number of times the _________ flows through a process in a(n) _________.

A) maximum inventory, designated interval of time B) maximum inventory, average interval of time C) average inventory, designated interval of time D) average inventory, average interval of time

22) Higher days of supply means _________ inventory. Higher turns mean _________ inventory.

A) more, more B) more, less C) less, more D) less, less

23) C&A Dairy sells two kinds of eggs: brown and white. Brown eggs are 5% more expensive than white. Which of the following is the most appropriate way to measure how many eggs C&A has in inventory?

A) In dollars B) In dozens C) In inches D) In ounces

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24) C&A Dairy sells 1,200 dozen eggs each day. If C&A’s days-of-supply increases from 2 days to 5 days, what will happen to its average inventory?

A) Increases from 2,400 to 6,000 dozen B) Decreases from 600 to 240 dozen C) Remains the same D) Cannot be determined

25) C&A Deli sells two kinds of sandwiches: regular and deluxe. Each regular sandwich costs $1.50 to make and each deluxe sandwich costs $2.50 to make. On average, C&A has 5 regular and 10 deluxe sandwiches in inventory and 0.5 days-of-supply. What is C&A's average daily cost of goods sold?

A) $97.50 B) $32.50 C) $65.00 D) Cannot be determined

26) C&A Deli sells two kinds of sandwiches: regular and deluxe. Each regular sandwich costs $1.50 to make and each deluxe sandwich costs $2.50 to make. On average, C&A has 5 regular and 10 deluxe sandwiches in inventory and 0.5 days-of-supply. How many sandwiches does C&A expect to sell each day?

A) 15 B) 30 C) 50 D) 100

27)

Inventory turns for perishable items are usually _________ those for durable goods.

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A) higher than B) lower than C) the same as D) twice as much as

28)

Days-of-supply for durable goods are usually _________ those for perishable items.

A) higher than B) lower than C) the same as D) half the number of

29)

Inventory turns for apparel tend to be _________ those for fresh vegetables.

A) higher than B) lower than C) the same as D) half the number of

30)

Inventory turns and days-of-supply measure _________ items remain in _________.

A) how long, inventory B) how valuable, inventory C) how long, sales D) how valuable, sales

31) A hardware store has on average $61,200 in inventory and its daily sales are $600. What is its days-of-supply?

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A) 38 B) 102 C) 600 D) 36,720,000

32) A hardware store has on average $61,200 in inventory and its daily sales are $600. What is its monthly inventory turns (assuming demand occurs 25 business days a month)?

A) 102 B) 4.08 C) 0.25 D) 0.01

33) An ice cream stand sells three different flavors of ice cream: vanilla, chocolate, and strawberry. Each gallon of vanilla costs $6.00 to purchase, each gallon of chocolate costs $6.50 to purchase, and each gallon of strawberry costs $7.00 to purchase. On average, the stand has 8 gallons of vanilla, 6 gallons of chocolate, and 4 gallons of strawberry in inventory and 1.5 daysof-supply. Each gallon of ice cream serves 16 customers, on average. What is the ice cream stand’s average daily cost of goods sold?

A) $76.67 B) $115.00 C) $172.50 D) $196.48

34) An ice cream stand sells three different flavors of ice cream: vanilla, chocolate, and strawberry. Each gallon of vanilla costs $6.00 to purchase, each gallon of chocolate costs $6.50 to purchase, and each gallon of strawberry costs $7.00 to purchase. On average, the stand has 8 gallons of vanilla, 6 gallons of chocolate, and 4 gallons of strawberry in inventory and 1.5 daysof-supply. Each gallon of ice cream serves 16 customers, on average. How many customers does the ice cream stand expect to serve each day?

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A) 12 B) 18 C) 96 D) 192

35) To evaluate inventory turns for a publicly traded company, data on average inventory can be found in which one of the following financial reports?

A) Income statement B) Balance sheet C) Balance scorecard D) Sustainability report

36) Average inventory is reported as a(n) _________ in a publicly traded company’s _________.

A) income, income statement B) asset, income statement C) asset, balance sheet D) income, balance sheet

37) To evaluate inventory turns for a publicly traded company, data on flow rate can be found in which one of the following financial reports?

A) Income statement B) Balance sheet C) Balance scorecard D) Sustainability report

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38) Flow rate can be estimated from the value of _________ reported in a publicly traded company’s _________.

A) revenue, balance sheet B) cost of goods sold, balance sheet C) revenue, income statement D) cost of goods sold, income statement

39) C&A Industries reports annual sales of $5 million, cost of goods sold of $2 million, inventory of $0.5 million, and net income of $0.75 million. What are C&A’s annual inventory turns?

A) 10 B) 4 C) 0.25 D) 0.1

40) C&A Industries reports annual sales of $5 million, cost of goods sold of $2 million, inventory of $0.5 million, and net income of $0.75 million. What is C&A’s months-of-supply of inventory?

A) 0.5 B) 3 C) 8 D) 1.2

41)

A company turns its inventory eight times a year. What is its months-of-supply?

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A) 0.67 B) 1.5 C) 8 D) 96

42) C&A Industries reports has annual turns of 10, cost of goods sold of $9 million, and revenue of $20 million. What is its average inventory?

A) $90 million B) $20 million C) $1.1 million D) $0.9 million

43) C&A Industries reports annual sales of $20 million, cost of goods sold of $7 million, inventory of $5 million, and net income of $2 million. What is C&A’s flow rate?

A) $20 million per year B) $7 million per year C) $5 million per year D) $2 million per year

44) C&A Industries reports annual sales of $30 million, cost of goods sold of $15 million, inventory of $5 million, and net income of $2 million. What is C&A’s monthly inventory turns?

A) 0.25 B) 0.33 C) 3 D) 4

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45) C&A Industries reports annual sales of $30 million, cost of goods sold of $15 million, inventory of $5 million, and net income of $2 million. What is C&A’s months-of-supply?

A) 0.25 B) 0.33 C) 3 D) 4

46) C&A Industries reports has monthly turns of 4, cost of goods sold of $12 million, and revenue of $36 million. What is its average inventory?

A) $0.25 million B) $0.75 million C) $1.33 million D) $4 million

47) C&A Industries reports has four months-of-supply, cost of goods sold of $12 million, and revenue of $36 million. What is its average inventory?

A) $0.25 million B) $0.75 million C) $1.33 million D) $4 million

48) C&A Industries reports holds on average $20,000 in inventory throughout the year. Its cost of goods sold is $250,000 and sales are $400,000. What is C&A’s inventory turns?

A) 1.6 per year B) 12.5 per year C) 20 per year D) Cannot be determined

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49) A hardware store reports annual sales of $375,000, cost of goods sold of $185,400, inventory of $65,000, and net income of $80,000. What is its annual inventory turns?

A) 0.16 B) 0.32 C) 2.85 D) 6.25

50) A hardware store reports annual sales of $375,000, cost of goods sold of $185,400, inventory of $65,000, and net income of $80,000. What is its months-of-supply of inventory?

A) 0.5 B) 2.0 C) 2.9 D) 4.2

51)

A company turns its inventory 5 times a year. What is its months-of-supply?

A) 0.4 B) 2.4 C) 5 D) 60

52) A pawn shop turns its inventory 3 times a year. It has a cost of goods sold of $60,000 and a revenue of $125,000. What is its average inventory?

A) $180,000 B) $60,000 C) $41,667 D) $20,000

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53)

The following table provides past financial information for Kroger (in $ million):

Sales Cost of goods sold Inventory

95,751 76,858 6,244

What were Kroger’s inventory turns?

A) 5.5 turns/year B) 8.1 turns/year C) 12.3 turns/year D) 15.3 turns/year

54)

The following provides past financial information for Lowes (in $ million):

Sales

50,521

Cost of goods sold

33,194

Inventory

8,600

How many days of supply did Lowes hold?

A) 43.6 days B) 94.6 days C) 142.6 days D) 201.5 days

55) A local parts supply store has provided the following financial information for the past year (in $): Sales

344,740

Cost of goods sold

207,852

Inventory

44,224

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What were the inventory turns in the past year?

A) 0.2 turns/year B) 4.7 turns/year C) 7.8 turns/year D) 12.2 turns/year

56) A local parts supply store has provided the following financial information for the past year (in $): Sales

344,740

Cost of goods sold

207,852

Inventory

44,224

How many days of supply did the store hold in the past year (assume 365 days per year)?

A) 220.1 days B) 116.4 days C) 77.7 days D) 46.8 days

57)

A _________ is a situation when a customer wants a product but it is not available.

A) stockout B) stock up C) holdout D) holdup

58)

Which consequence of stockouts is the most costly?

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A) Customer waits for the item to become available B) Loss of the sale C) Loss of the sale of one item, but the customer purchases another item D) Loss of the sale and loss of the customer

59)

Which consequence of stockouts is the least costly?

A) Customer waits for the item to become available B) Loss of the sale C) Loss of the sale of one item, but the customer purchases another item D) Loss of the sale and loss of the customer

60)

Inventory holding costs include all of the following EXCEPT _________.

A) cost of lost sales B) storage cost C) spoilage cost D) opportunity cost of capital

61)

Which of the following statements is FALSE regarding inventory holding costs?

A) A holding cost percentage is the ratio of the cost to hold an item in inventory for a particular time period relative to the cost to purchase the item.

B) A holding cost percentage must be defined for a certain time period.

C) A holding cost percentage specifies how long the item is actually held.

D) No matter what the holding cost percentage is, the longer an item is held in inventory, the higher the cost.

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62) C&A Clothiers sells T-shirts for $20 that cost $5 to produce. The annual holding cost percentage is 10% and the T-shirts turn 25 times a year. What holding cost does C&A incur for each T-shirt?

A) $0.50 B) $0.08 C) $0.04 D) $0.02

63) Inventory holding costs are generally expressed as a _________ of the cost to _________ an item.

A) sum, purchase B) percentage, rework C) percentage, purchase D) sum, rework

64) Bread expires at the end of the day and cannot be sold. This is an example of which component of the store’s inventory holding cost?

A) Storage cost B) Spoilage cost C) Obsolescence cost D) Opportunity cost of capital

65) C&A Antiques' annual holding cost percentage is 15%. It has annual turns of 5. How much does it cost C&A to hold an item with a purchase cost of $100?

A) $75 B) $20 C) $15 D) $3

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66) Assume that the holding cost of inventory at Macy’s is 35% per year. Assume further that Macy’s turns its inventory 3 times per year. How much does it cost Macy’s to hold a dress that it purchased for $50?

A) $0.88/dress B) $2.16/dress C) $5.83/dress D) $12.94/dress

67) A home improvement store sells a cordless drill for $90 that costs $48 to purchase. The annual holding cost percentage is 12% and the item turns 8 times a year. What holding cost does the store incur for each drill?

A) $0.36 B) $0.72 C) $1.35 D) $5.76

68)

Manufacturers usually carry work-in-process inventory. ⊚ true ⊚ false

69) The use of a production smoothing strategy can create inventory for products that experience a seasonal fluctuation in demand. ⊚ true ⊚ false

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70) Measuring inventory in terms of dollars tells us whether the amount of inventory is large or not. ⊚ true ⊚ false

71) Companies belonging to the same industry segment should have the same inventory turns. ⊚ true ⊚ false

72)

Inventory turns can be evaluated for any publicly traded company. ⊚ true ⊚ false

73) The actual inventory holding cost incurred by an item depends on how long it actually spends in inventory. ⊚ true ⊚ false

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Answer Key Test name: Chap 10_3e_Cachon 1) D 2) C 3) A 4) B 5) D 6) A 7) A 8) D 9) C 10) B 11) C 12) A 13) D 14) B 15) C 16) C 17) D 18) C 19) C 20) B 21) C 22) B 23) A 24) A 25) C 26) B Version 1

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27) A 28) A 29) B 30) A 31) B 32) C 33) A 34) D 35) B 36) C 37) A 38) D 39) B 40) B 41) B 42) D 43) B 44) A 45) D 46) A 47) D 48) B 49) C 50) D 51) B 52) D 53) C 54) B 55) B 56) C Version 1

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57) A 58) D 59) A 60) A 61) C 62) D 63) C 64) B 65) D 66) C 67) B 68) TRUE 69) TRUE 70) FALSE 71) FALSE 72) TRUE 73) TRUE

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CHAPTER 11 1) A supply chain for goods and services consists of a _________ of firms and locations that begins with _________ and ends with _________.

A) merging, public entities, private entities B) merging, private entities, public entities C) network, final users, raw materials D) network, raw materials, final users

2) A supply chain that involves suppliers of raw materials in Germany, manufacturers in China, distributors in Spain, and retailers in the United States has _________ different levels or stages.

A) 5 B) 4 C) 3 D) 2

3) Which of the following statements is TRUE regarding a supply chain of physical products?

A) A supply chain must have five levels.

B) A supply chain must involve global companies.

C) A supply chain must start with raw materials.

D) A supply chain must have distributors.

4)

Which of the following statements is TRUE regarding tier 1 suppliers?

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A) Tier 1 suppliers are the starting point of a supply chain.

B) Tier 1 suppliers are the primary suppliers to tier 2 suppliers.

C) Tier 1 suppliers are the primary suppliers to manufacturers.

D) Tier 1 suppliers are the primary suppliers to retailers.

5)

A supermarket is typically at the _________ level of a supply chain.

A) supplier B) manufacturer C) distributor D) retailer

6)

A distribution center is also called a _________.

A) tier 1 supplier B) tier 2 supplier C) fulfillment center D) finishing center

7) Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company B is a _________ in the supply chain of ice cream.

A) tier 2 supplier B) tier 1 supplier C) manufacturer D) retailer

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8) Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company C is a _________ in the supply chain of ice cream.

A) retailer B) tier 1 supplier C) manufacturer D) distributor

9) Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company A is a _________ in the supply chain of ice cream.

A) tier 2 supplier B) tier 1 supplier C) manufacturer D) retailer

10) Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company D is a _________ in the supply chain of ice cream.

A) tier 2 supplier B) tier 1 supplier C) manufacturer D) retailer

11)

Which of the following is NOT a value that distributors provide in a supply chain?

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A) Faster delivery lead times to retailers B) Smaller order quantities C) Cost-effective storage of inventory D) Less product handling

12)

Which of the following is an advantage of a supply chain without a distributor?

A) Faster delivery lead times to retailers B) Smaller order quantities C) Cost-effective storage of inventory D) Less product handling

13)

An outdated term for a distribution center is a _________.

A) tier 1 supplier B) retailer C) manufacturer D) warehouse

14) From which supply chain level would an online order placed on Walmart.com likely be shipped?

A) retailer B) distribution center C) manufacturer D) tier 1 supplier

15)

Your local Walmart store is an example of which level in a supply chain?

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A) retailer B) distribution center C) manufacturer D) tier 1 supplier

16)

The path that recycled printer toner cartridges follow is an example of a(an) _________.

A) reverse supply chain B) forward supply chain C) efficient supply chain D) market-responsive supply chain

17) The four key costs associated with a supply chain include all of the following EXCEPT _________.

A) lead time B) transportation C) labor D) procurement

18)

_________ is responsible for negotiating the price of goods purchased from its suppliers.

A) Human resources B) Procurement C) Distribution D) Manufacturing

19)

_________ refers to the cost of having people perform various supply chain functions.

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A) Procurement B) Inventory C) Transportation D) Labor

20) Which of the following is NOT a mode of transportation in the context of supply chain management?

A) Railroad B) Truck C) Elevator D) Air

21)

Lead time is the time between when an order is _________ and when it is _________.

A) submitted, delivered B) submitted, canceled C) delivered, returned D) returned, canceled

22) Which of the following is NOT a factor that influences the realized lead time for an order?

A) Operational capabilities of the sender B) Mode of transportation C) Availability of inventory D) Operational capabilities of the receiver

23)

Which of the following is NOT a way to measure the availability of inventory?

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A) In-stock probability B) Stockout probability C) Flow rate D) Fill rate

24) Company A carries 5,000 items. Customers ordered 1,000 items from inventory last week. Company A was able to fulfill 600 items of the order. What is the in-stock probability for last week?

A) 0.08 B) 0.12 C) 0.6 D) 0.92

25) Company B carries 5,000 items. Customers ordered 1,000 different items last week.

Company B was able to fulfill 600 items of the order. What is the stockout probability for last week?

A) 0.08 B) 0.4 C) 0.6 D) 0.92

26) Company A failed to satisfy 15% of customers’ orders last month. Company A stocks 100 items and all 100 were ordered last month. What is Company A’s in-stock probability?

A) 15% B) 85% C) 100% D) 30%

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27) Company B sold 50% of the 5,000 items that it carried last week. There were 500 items for which some demand was not satisfied. What is the stockout probability for last week?

A) 0.1 B) 0.2 C) 0.5 D) 0.9

28) C&A Jewelers sold 30% of the 5,000 items that it carried last week. There were 500 items for which some demand was not satisfied. What is the in-stock probability for last week?

A) 0.1 B) 0.7 C) 0.3 D) 0.9

29) A large online retailer carries 550,000 items. Customers ordered 205,000 different items from inventory last week. The retailer was able to satisfy all demand for 170,000 of those items.

What is the in-stock probability for last week?

A) 30.9% B) 82.9% C) 93.6% D) 99.7%

30) A large online retailer carries 550,000 items. Customers ordered 205,000 different items from inventory last week. The retailer was able to satisfy all demand for 170,000 of those items.

What is the stockout probability for last week?

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A) 6.4% B) 17.1% C) 20.6% D) 93.6%

31) A large online retailer sold 44% of the 550,000 items that it carried last week. There were 12,500 items for which some demand was not satisfied. What is the stockout probability for last week?

A) 2.3% B) 5.2% C) 94.8% D) 97.7%

32) A large online retailer sold 44% of the 550,000 items that it carried last week. There were 12,500 items for which some demand was not satisfied. What is the in-stock probability for last week?

A) 2.3% B) 94.8% C) 97.7% D) 99.7%

33)

_________ decisions usually influence a firm’s performance in _________.

A) Tactical, the next few years B) Tactical, the next few days C) Strategic, the next few weeks D) Strategic, the next few days

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34)

Which of the following is a tactical decision in the context of supply chain management?

A) To decide whether to produce within the country or overseas B) To decide whether to make or buy a group of items C) To decide whether to expand capacity or not D) To decide whether to use overtime this week or not

35) Which of the following is a strategic decision in the context of supply chain management?

A) To decide how much inventory to order from a supplier this week B) To decide whether or not a shipment should be expedited C) To decide whether to outsource production or not D) To decide employees’ weekly work schedule

36)

Which of the following statements about supply chain decisions is TRUE?

A) Tactical decisions are not as important as strategic decisions.

B) Strategic decisions change frequently to achieve the right level of flexibility to counteract the amount of variability in a supply chain.

C) All supply chains face the same amount of variability.

D) Supply chain decisions are about selecting the right level of flexibility to counteract the amount of variability in a supply chain.

37)

Which of the following is an example of functional products?

A) Toilet paper B) Designer handbags C) Fashionable clothing D) Luxury cars

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38)

Characteristics of functional products include all of the following EXCEPT _________.

A) frequent markdowns.

B) low risk of obsolescence.

C) low gross margin.

D) numerous competitors.

39)

Characteristics of innovative products include _________.

A) frequent markdowns B) low risk of obsolescence C) low gross margin D) numerous competitors

40) _________ products are relatively _________ because they can experience substantial variability.

A) Functional, safe B) Functional, risky C) Innovative, risky D) Innovative, safe

41)

_________ efficient supply chains are designed to _________.

A) Physically, minimize costs B) Physically, maximize flexibility C) Market, minimize costs D) Market, maximize flexibility

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42) Characteristics of market-responsive supply chains include all of the following EXCEPT _________.

A) flexibility emphasized over cost B) low factory utilization C) functional products D) fast and expensive modes of transportation

43)

Characteristics of physically efficient supply chains include _________.

A) flexibility emphasized over cost B) low factory utilization C) functional products D) fast and expensive modes of transportation

44) Which of the following is a match between the type of supply chain and the type of product?

A) Physically efficient and innovative B) Market-responsive and functional C) Physically efficient and functional D) Market-responsive and flexible

45)

_________ decisions usually influence a firm’s performance over _________.

A) Tactical, the next few years B) Tactical, the next few decades C) Strategic, the next few weeks D) Strategic, the next few years

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46)

Which of the following is NOT a component of demand variability?

A) Level B) Innovation C) Variety D) Location

47) The bullwhip effect can cause the variability in _________ to be substantially greater than variability in _________.

A) consumer demand, supplier demand B) distributor demand, supplier demand C) manufacturer demand, supplier demand D) supplier demand, consumer demand

48) Firm A adds jackets to its line of designer clothing. Which form of demand variability would be introduced by Firm A? A) Level B) Innovation C) Variety D) Location

49) The bullwhip effect is the tendency for _________ to be more volatile at _________ levels of the supply chain.

A) supply, higher B) demand, higher C) demand, lower D) supply, lower

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50)

Which of the following is NOT a reason for the bullwhip effect?

A) Ordering a quantity that exceeds demand B) Ordering a quantity that exactly matches demand C) Stocking up with items on sale D) Placing orders in batches

51)

Which of the following will NOT mitigate variability within the supply chain?

A) Designing a product with proprietary components B) Working with suppliers who adopt industrywide standards C) Requiring suppliers to be financially sound D) Sharing customer and demand information with suppliers

52) Supply chain partners can increase the variability in the supply chain in a number of ways EXCEPT _________.

A) failing to deliver the quantity needed B) failing to deliver the quality needed C) failing to operate in an acceptable manner D) failing to cooperate with competitors

53) C&A Clothiers, an American company, decides to make and sell its products in Australia.

C&A is able to mitigate what kind of disruptions to its supply chain?

A) Natural B) Political C) Currency fluctuations D) Supplier

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54) A small, independently operated deli has decided to open a new store on the opposite side of town. Which form of demand variability would this introduce?

A) Level B) Location C) Variety D) Innovation

55)

Which of the following is a supply chain strategy?

A) Online retailing B) Stock-to-order C) Vertical sourcing D) Innovation

56) Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired.

What is Store A’s average holding cost incurred each week for on-order inventory if lead time is five weeks?

A) $2,500.00 B) $285.40 C) $250.00 D) $28.54

57) Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired.

What is Store A’s average on-hand inventory if lead time is five weeks?

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A) 2500.00 B) 285.40 C) 250.00 D) 28.54

58) Store A orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired.

What will be the effect on Store A’s average on-hand inventory if lead time increases from two weeks to five weeks?

A) It will increase.

B) It will decrease.

C) It will remain the same.

D) It will double.

59) Store B orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. The holding cost is $10 per unit per week and a 0.99 in-stock probability is desired.

What is Store B’s weekly inventory holding cost if lead time is two weeks?

A) $1,000.00 B) $24.04 C) $120.18 D) $1,201.78

60) Store B orders on a weekly basis. Its weekly demand is 50 units with a standard deviation of five units. What is Store B’s weekly inventory holding cost per unit if its weekly inventory holding cost is $1,201.78?

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A) $20.18 B) $24.04 C) $120.18 D) $59.56

61)

Reasons for overseas sourcing include reducing _________.

A) inventory costs B) labor costs C) transportation costs D) product value

62) With _________ operations, a product is made before the _________ for that product has been identified.

A) make-to-order, demand B) make-to-stock, supply C) make-to-stock, demand D) make-to-order, supply

63)

Make-to-order is a viable strategy when _________.

A) customers are not willing to wait for the product B) product variety is desirable C) products are inexpensive to hold in inventory D) product differentiation cannot be delayed

64)

Compared to online retailers, traditional retailers tend to face _________.

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A) demand location uncertainty B) demand level uncertainty C) lower holding costs D) higher shipping costs

65) With _________ operations, a product is made after the _________ for that product has been identified.

A) make-to-order, demand B) make-to-stock, supply C) make-to-stock, demand D) make-to-order, supply

66) A parts supply store orders a particular item on a weekly basis. The weekly demand is 30 units with a standard deviation of four units. The holding cost is $5 per unit per week and a 90% in-stock probability is desired. What is the store’s average on-hand inventory for this item if lead time is three weeks?

A) 10.24 B) 30.00 C) 58.76 D) 90.00

67) A parts supply store orders a particular item on a weekly basis. The weekly demand is 30 units with a standard deviation of four units. The holding cost is $5 per unit per week and a 90% in-stock probability is desired. What is the store’s average holding cost incurred each week for the on-order inventory of this item if lead time is three weeks?

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A) $90.00 B) $150.00 C) $450.00 D) $900.00

68) A parts supply store orders a particular item on a weekly basis. The weekly demand is 30 units with a standard deviation of four units. The holding cost is $5 per unit per week and a 90% in-stock probability is desired. What is the store’s weekly holding cost for this item if lead time is three weeks?

A) $16.71 B) $50.12 C) $100.24 D) $501.20

69) A parts supply store orders a particular item on a weekly basis. The weekly demand is 30 units with a standard deviation of four units. The holding cost is $5 per unit per week and a 90% in-stock probability is desired. What is the store’s weekly holding cost per unit for this item if lead time is three weeks?

A) $16.71 B) $50.12 C) $100.24 D) $501.20

70) A supply chain with a distributor has more product handling than one without a distributor. ⊚ true ⊚ false

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71)

Tier 2 suppliers are primary suppliers to manufacturers. ⊚ true ⊚ false

72)

Inventory availability is a service metric to evaluate the performance of a supply chain. ⊚ true ⊚ false

73)

Lead time is a way to measure the availability of inventory. ⊚ true ⊚ false

74) Managers are much more prone to underinvest in flexibility when the product is innovative than to overinvest in flexibility when the product is functional. ⊚ true ⊚ false

75)

Online retailers face demand location uncertainty. ⊚ true ⊚ false

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Answer Key Test name: Chap 11_3e_Cachon 1) D 2) B 3) C 4) C 5) D 6) C 7) B 8) C 9) A 10) D 11) D 12) D 13) D 14) B 15) A 16) A 17) A 18) B 19) D 20) C 21) A 22) D 23) C 24) D 25) A 26) B Version 1

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27) A 28) D 29) C 30) A 31) A 32) C 33) B 34) D 35) C 36) D 37) A 38) A 39) A 40) C 41) A 42) C 43) C 44) C 45) D 46) B 47) D 48) C 49) B 50) B 51) A 52) D 53) C 54) B 55) A 56) A Version 1

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57) D 58) A 59) D 60) B 61) B 62) C 63) B 64) A 65) A 66) A 67) C 68) D 69) A 70) TRUE 71) FALSE 72) TRUE 73) FALSE 74) TRUE 75) FALSE

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CHAPTER 12 1) The assumptions behind the economic order quantity (EOQ) model include all of the following EXCEPT __________.

A) a constant rate of demand B) a fixed ordering cost per year C) a fixed lead time D) a fixed purchase price per unit

2)

Which of the following is TRUE regarding the economic order quantity (EOQ) model?

A) Demand rate is dependent on order quantity.

B) Ordering cost per order is dependent on order quantity.

C) Holding cost per unit per year is independent of order quantity.

D) Holding cost per unit per year is dependent on the selling price per unit.

3) Input parameters for the economic order quantity (EOQ) model include all of the following EXCEPT _________.

A) order quantity B) demand rate C) holding cost per unit per year D) ordering cost per order

4) Which of the following graphs correctly portrays the relationship between ordering cost per year (y-axis) and order quantity (x-axis) according to the economic order quantity model?

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A)

B)

C)

D)

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5) Which of the following graphs correctly portrays the relationship between holding cost per year (y-axis) and order quantity (x-axis) according to the economic order quantity model?

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A)

B)

C)

D)

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6) Which of the following graphs correctly portrays the relationship between total inventory costs per year (y-axis) and order quantity (x-axis) according to the economic order quantity model?

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A)

B)

C)

D)

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7) Which of the following graphs correctly portrays the relationship between inventory level (y-axis) and time (x-axis) according to the economic order quantity model?

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A)

B)

C)

D)

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8) C&A Vitamins sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges C&A $30 per order and $50 per bottle.

C&A’s annual holding cost percentage is 40%. Assume C&A operates 50 weeks in a year. What is C&A’s total ordering and holding cost per year if C&A orders 500 bottles at a time?

A) $11,800 B) $10,036 C) $6,800 D) $5,036

9) C&A Vitamins sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges C&A $30 per order and $50 per bottle.

C&A’s annual holding cost percentage is 40%. Assume C&A Vitamins operates 50 weeks in a year. What order quantity minimizes C&A’s total ordering and holding cost per year?

A) 300 B) 2121 C) 600 D) 30

10) C&A Vitamins sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges C&A $30 per order and $50 per bottle.

C&A’s annual holding cost percentage is 40%. Assume C&A Vitamins operates 50 weeks in a year. What is C&A’s total ordering and holding cost per year if the order quantity is 200?

A) $6,500 B) $4,243 C) $3,000 D) $600

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11) C&A Vitamins sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges C&A $40 per order and $50 per bottle.

C&A’s annual holding cost percentage is 30%. Assume C&A Vitamins operates 50 weeks in a year. What is the economic order quantity?

A) 200 B) 400 C) 500 D) 800

12) C&A Lawn Care purchases cases of fertilizer for its lawn-care business from a supplier who charges C&A $30 per order and $50 per case. Each case consists of five bags of fertilizer.

C&A needs 2000 bags of fertilizer a year. C&A’s annual holding costs are 30%. How many cases of fertilizer should C&A order from its supplier with each order to minimize the total annual ordering and holding cost?

A) 40 B) 49 C) 67 D) 89

13) C&A Lawn Care purchases cases of fertilizer for its business from a supplier who charges $40 per order and $60 per case. Each case consists of four bags of fertilizer. Firm A needs 1600 bags of fertilizer a year. C&A’s annual holding costs are 25%. What is C&A’s economic order quantity?

A) 92 B) 80 C) 46 D) 40

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14) Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer.

Store A needs 1,000 bags of fertilizer a year. How many orders does Store A place per year if the order quantity is 40 cases?

A) 40 B) 20 C) 25 D) 5

15) Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer.

Store A needs 1,000 bags of fertilizer a year. Store A’s annual holding costs are 30%. If Store A’s order quantity is 40 cases, what is its average inventory level (in cases)?

A) 89 B) 45 C) 40 D) 20

16) C&A Lawn Care purchases fertilizer for its lawn-care business from a supplier who charges $30 per order and $50 per case. Each case consists of five bags of fertilizer. C&A needs 2,000 bags of fertilizer a year. C&A’s annual holding costs are 30%. What is C&A’s holding cost per case per year?

A) $3 B) $5 C) $10 D) $15

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17) C&A Lawn Care purchases fertilizer for its lawn-care business from a supplier who charges $30 per order and $50 per case. Each case consists of five bags of fertilizer. C&A needs 2,000 bags of fertilizer a year. C&A’s annual holding costs are 30%. What is C&A’s holding cost per bag per year?

A) $3 B) $5 C) $10 D) $15

18) Which of the following statements concerning the economic order quantity (EOQ) model is FALSE? A) The holding cost per unit of time is equal to the ordering cost per unit of time when ordering at the EOQ level.

B) The sum of the holding cost and ordering cost per unit of time is minimized when ordering at the EOQ level.

C) If the order quantity is large, the ordering cost dominates the EOQ cost.

D) If the order quantity is large, the holding cost dominates the EOQ cost.

19) C&A Lawn Care purchases cases of fertilizer for its lawn-care business from a supplier who charges C&A $30 per order and $50 per case. Each case consists of five bags of fertilizer.

C&A needs 2000 bags of fertilizer a year. C&A’s annual holding costs are 30%. If C&A uses the economic order quantity when placing orders, what will be its annual ordering and holding cost per case of fertilizer?

A) $0.15 B) $0.30 C) $1.25 D) $1.50

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20) Bakery A uses 60 bags of flour each month. The flour is purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. What is its economic order quantity?

A) 30 B) 15 C) 9 D) 4.5

21) Bakery A uses 60 bags of flour each month. The flour is purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A chooses to use the economic order quantity for flour purchases, what will be its average inventory?

A) 30 B) 15 C) 9 D) 4.5

22) Bakery A uses 60 bags of flour each month. The flour is purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A chooses to use the economic order quantity for flour purchases, how many orders will be placed with the supplier each year?

A) 7 B) 15 C) 24 D) 30

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23) Bakery A uses 60 bags of flour each month. The flour is purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A chooses to use the economic order quantity for flour purchases, what will be the total of its holding and ordering costs per year?

A) $138 B) $277 C) $480 D) $960

24) Holding all other parameters fixed, an increase in which of the following parameters in the economic order quantity (EOQ) model will NOT always increase total annual ordering and holding cost?

A) Holding cost per unit per year B) Ordering cost per order C) Order quantity D) Demand rate

25) A parts supply store sells 90 automotive batteries per week at $130 per battery. The battery is ordered from a distributor who charges the store $100 per order and $75 per battery.

C&A’s annual holding cost percentage is 20%. Assume the store operates 50 weeks in a year. If the store orders 200 batteries at a time, what is its average inventory level of batteries?

A) 90 B) 100 C) 200 D) 2,250

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26) A parts supply store sells 90 automotive batteries per week at $130 per battery. The battery is ordered from a distributor who charges the store $100 per order and $75 per battery.

C&A’s annual holding cost percentage is 20%. Assume the store operates 50 weeks in a year.

What is the store’s total ordering and holding cost per year if it orders 200 batteries at a time?

A) $1,545 B) $3,750 C) $5,250 D) $6,800

27) A parts supply store sells 90 automotive batteries per week at $130 per battery. The battery is ordered from a distributor who charges the store $100 per order and $75 per battery.

C&A’s annual holding cost percentage is 20%. Assume the store operates 50 weeks in a year.

What order quantity minimizes the store’s total ordering and holding cost per year?

A) 35 B) 128 C) 212 D) 245

28) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. How many cases of oil should the store order from its supplier to minimize its total annual ordering and holding cost?

A) 30 B) 57 C) 103 D) 228

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29) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. If the store uses the economic order quantity when placing orders, what will be its annual ordering and holding cost per case (round the EOQ and total cost to the nearest dollar)?

A) $1,084 B) $1,625 C) $3,284 D) $7,065

30) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. If the store’s order quantity is 50 cases, what is its average inventory level (in cases)?

A) 12.5 B) 25 C) 50 D) 58.3

31) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. If the store’s order quantity is 50 cases, how many orders does the store place each year?

A) 3.5 B) 7 C) 14 D) 168

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32) As demand increases, the sum of the ordering and holding costs per period for the economic order quantity _________ at a rate _________ than demand.

A) increases, faster B) decreases, faster C) increases, slower D) decreases, slower

33) The sum of ordering and holding costs per period for the economic order quantity becomes a _________ percentage of the purchasing cost as the demand rate _________.

A) fixed, increases B) fixed, decreases C) larger, increases D) smaller, increases

34) Which of the following is TRUE regarding the source of economies of scale in inventory management according to the economic order quantity model?

A) The source of economies of scale is the fixed demand rate.

B) The source of economies of scale is the fixed order quantity.

C) The source of economies of scale is the fixed ordering cost.

D) The source of economies of scale is the fixed holding cost.

35) Which of the following is a consequence of economies of scale according to the economic order quantity model?

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A) If a product is not popular, its total economic order quantity costs are a small portion of the purchase cost.

B) If the demand rate for a product is high, its total economic order quantity costs are a large portion of the purchase cost.

C) More product variety always results in higher profit.

D) More product variety does not always result in higher profit.

36) Bakery A uses 80 bags of chocolate chips each year. The chocolate chips are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A chooses an order quantity of 10 bags, what are its ordering and holding costs per year expressed as a percentage of their annual purchasing cost?

A) 2% B) 3% C) 4% D) 5%

37) Restaurant A uses 60 bags of tomatoes each month. The tomatoes are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Restaurant A’s annual inventory holding cost percentage is 40%. If Restaurant A chooses to use the economic order quantity when placing an order for tomatoes, what are its ordering and holding costs per year expressed as a percentage of the annual purchasing cost?

A) 1.7% B) 2.2% C) 3.4% D) 5.0%

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38) Restaurant A uses 60 bags of potatoes each month. The potatoes are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Restaurant A’s annual inventory holding cost percentage is 40%. If Restaurant A’s demand for the potatoes is decreased by 10%, what will be the change in its economic order quantity?

A) Decreases from 8.7 bags to 8.2 bags B) Remains the same C) Increases from 28.5 to 30 bags D) Decreases from 30 to 28.5 bags

39) Bakery A uses 80 bags of chocolate chips each year. The chocolate chips are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A’s annual inventory holding cost percentage is 40%. If Bakery A’s demand for the chip is doubled, what will be the percentage change in its economic order quantity?

A) 100% increase B) 100% decrease C) 41% increase D) 41% decrease

40) Product _________ refers to the situation when customers are willing to purchase a less preferred version when their most preferred version is not available.

A) substitution B) promotion C) economy D) sustainability

41) _________ in demand rate of a product makes its inventory management _________ because of an increase in inventory costs relative to purchasing costs.

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A) A decrease, more efficient B) An increase, less efficient C) An increase, more efficient D) A decrease, less efficient

42)

When is expanding product variety not a good idea?

A) When adding variety increases the overall margin.

B) When adding variety increases total demand insignificantly C) When adding variety increases consumer value significantly D) When adding variety increases overall profitability

43)

Economies of scale describes the relationship between _________ and _________.

A) product variety, demand B) operational efficiency, demand C) product variety, supply D) operational efficiency, supply

44)

Which of the following is a pallet?

A) It is the quantity of inventory that is stacked on a wooden platform designed to be moved by a forklift.

B) It is the amount of time that inventory stays on a wooden platform designed to be moved by a forklift.

C) It is the quantity of inventory ordered to minimize moving time.

D) It is the quantity of inventory ordered to minimize inventory costs.

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45) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. If the store chooses an order quantity of 75 cases, what is its total ordering and holding costs per year expressed as a percentage of its annual purchasing cost?

A) 2.4% B) 3.6% C) 4.4% D) 4.7%

46) A automotive supply store purchases cases of motor oil from a supplier who charges the store $80 per order and $35 per case. Each case contains 12 quarts of oil. Demand at the store for the oil is 700 quarts per month. The store’s annual holding cost percentage is 30%. If the store chooses to use the economic order quantity when placing an order for oil, what are its ordering and holding costs per year expressed as a percentage of the annual purchasing cost (round the EOQ to the nearest whole number in subsequent calculations)?

A) 2.4% B) 3.6% C) 4.4% D) 4.7%

47) Which of the following is NOT a possible complication that prevents a firm from ordering at the economic order quantity level?

A) A supplier offers a quantity discount.

B) A supplier places order quantity restrictions.

C) A supplier charges the fixed cost to place an order.

D) An area offers limited space to hold the inventory received from a supplier.

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48) Company A purchases cases of fertilizer for its lawn-care business from a supplier who charges $30 per order and $50 per case. Each case consists of five bags of fertilizer. Company A needs 2,000 bags of fertilizer a year. Company A’s annual holding costs are 30%. If Company A only has room to hold 25 cases of fertilizer, how many cases should Company A order each time to minimize the total holding and ordering cost?

A) 25 B) 20 C) 16 D) 10

49) Company A purchases fertilizer for its lawn-care business from a supplier who charges $30 per order and $50 per case. Each case consists of five bags of fertilizer and the order size must be an integer multiple of five bags. Company A needs 2015 bags of fertilizer a year.

Company A’s annual holding costs are 30%. What is the order quantity to minimize the total holding and ordering cost?

A) 202 bags B) 201 bags C) 200 bags D) 205 bags

50) Company A purchases cases of fertilizer for its lawn-care business from a supplier who charges Company A $30 per order and $50 per case. Each case consists of five bags of fertilizer and the order size must be an integer multiple of five bags. Company A needs 2,000 bags of fertilizer a year. Company A’s annual holding costs are 30%. What would be the order quantity that minimizes annual ordering and holding costs?

A) 40 cases B) 30 cases C) 20 cases D) 10 cases

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51) Company A purchases cases of fertilizer for its lawn care business from a supplier who charges Company A $30 per order and $50 per case. Each case consists of five bags of fertilizer.

Company A needs 2,000 bags of fertilizer a year. Company A’s annual holding costs are 30%. If Company A only has room to hold 30 cases of fertilizer, what would be the annual ordering and holding costs per case of fertilizer?

A) $0.64 B) $5.57 C) $1.11 D) $1.56

52) Firm A’s demand for a product is 100,000 units per year. It has a holding cost of $10 per unit per year and an ordering cost of $50 per order. If the firm is required to order an integer multiple of 500 units, what order quantity should it use to minimize ordering and holding costs?

A) 500 B) 1,000 C) 1,500 D) 2,000

53) Firm B’s demand for a product is 100,000 units per year. It has a holding cost of $50 per unit per year and an ordering cost of $10 per order. If the firm is required to order an integer multiple of 150 units, what order quantity should it use to minimize ordering and holding costs?

A) 150 B) 200 C) 300 D) 450

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54) The _________ of the product refers to how high the product can be put on top of another without causing damage to the lower layers.

A) weight limit B) batch size C) pallet dimension D) stackability

55) Which of the following is TRUE when solving for the optimal order quantity in the presence of a quantity discount?

A) The economic order quantity at the regular price is the optimal order quantity only if it is less than the threshold needed for the quantity discount.

B) The economic order quantity at the discount price is always the optimal order quantity.

C) The economic order quantity at the regular price is always the optimal order quantity.

D) The economic order quantity at the regular price is the optimal order quantity if it is greater than or equal to the threshold needed for the quantity discount.

56) Firm B’s demand for a product is 10 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 25 units or higher. Firm B incurs a 30% annual holding cost. What is the optimal order quantity for Firm B? A) 20 B) 21 C) 22 D) 25

57) Firm B’s demand for a product is 10 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 25 units or higher. Firm B incurs a 30% annual holding cost. How much does Firm B save each year (including purchasing, ordering, and holding costs) if it purchases enough units to get the discount?

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A) $122.25 B) $120.00 C) $6.00 D) $2.25

58) Firm B’s demand for a product is 10 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 15 units or higher. Firm B incurs a 30% annual holding cost. What is the optimal order quantity for Firm B (i.e., the order quantity that minimizes the total purchasing, ordering, and holding cost)?

A) 15 B) 20 C) 21 D) 22

59) Firm A’s demand for a product is 15 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 15 units or higher. Firm A incurs a 25% annual holding cost. What is Firm A’s annual holding cost if it orders at a quantity of 28 units?

A) $30.00 B) $32.14 C) $31.50 D) $27.00

60) Firm A’s demand for a product is 15 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 15 units or higher. Firm A incurs a 25% annual holding cost. What is Firm A’s annual ordering costs if it orders at a quantity of 28 units?

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A) $30.00 B) $32.14 C) $31.50 D) $27.00

61) Firm A’s demand for a product is 15 units per month. Its supplier charges an ordering cost of $5 per order and $10 per unit with a 10% discount for orders of 15 units or higher. Firm A incurs a 25% annual holding cost. Firm A orders at a quantity of 28 units. What is its total annual cost, including purchasing cost (round to the nearest dollar)?

A) $1,260 B) $1,256 C) $1,620 D) $1,684

62) Firm C’s demand for a product is 60 units per month. Its supplier charges an ordering cost of $40 per order and $35 per unit with a 20% discount for orders of 100 units or more. Orders must be placed in integer multiples of 100 units. Firm C incurs a 20% annual holding cost. What is the optimal order quantity that minimizes the total annual purchasing, ordering, and holding cost?

A) 91 B) 100 C) 101 D) 110

63) Firm C’s demand for a product is 60 units per month. Its supplier charges an ordering cost of $40 per order and $35 per unit with a 20% discount for orders of 100 units or more. Firm C incurs a 20% annual holding cost. What is the optimal order quantity that minimizes the total annual purchasing, ordering, and holding cost?

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A) 91 B) 100 C) 101 D) 110

64) Firm C’s demand for a product is 60 units per month. Its supplier charges an ordering cost of $40 per order and $35 per unit with a 20% discount for orders of 100 units or more. Firm C incurs a 20% annual holding cost. Calculate the economic order quantity without the discount.

Then calculate the economic order quantity with the discounted price. What will be the change in Firm C’s total annual cost (purchasing, holding, and ordering) if it decides to take advantage of the quantity discount?

A) $5,040 increase B) $5,040 decrease C) $5,107 increase D) $5,107 decrease

65) An automotive supply store sells a product that has a demand of 400 units per month. Its supplier charges an ordering cost of $60 per order and $25 per unit with a 20% discount for orders of 250 units or higher. The store incurs a 20% annual holding cost. What is the store’s annual holding cost if it orders at a quantity of 300 units?

A) $4 B) $5 C) $600 D) $1,200

66) An automotive supply store sells a product that has a demand of 400 units per month. Its supplier charges an ordering cost of $60 per order and $25 per unit with a 20% discount for orders of 250 units or higher. The store incurs a 20% annual holding cost. What is the store’s annual ordering cost if it orders at a quantity of 300 units?

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A) $60 B) $80 C) $480 D) $960

67) An automotive supply store sells a product that has a demand of 400 units per month. Its supplier charges an ordering cost of $60 per order and $25 per unit with a 20% discount for orders of 250 units or higher. The store incurs a 20% annual holding cost. What is the store’s total annual cost (purchasing, ordering, and holding) if it orders at a quantity of 300 units?

A) $96,000 B) $97,560 C) $120,000 D) $121,560

68)

A firm's ordering cost per year is independent of its order quantity decision. ⊚ true ⊚ false

69)

Limited inventory always increases demand because of the scarcity effect. ⊚ true ⊚ false

70) As demand increases, the optimal economic order quantity increases at the same rate of demand. ⊚ true ⊚ false

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71)

Expanding product variety does not always result in an increase in profit. ⊚ true ⊚ false

72) When solving for an optimal order quantity in the presence of order quantity restrictions, the best approach is to order at a feasible quantity closest to the economic order quantity. ⊚ true ⊚ false

73) When solving for an optimal order quantity in the presence of a quantity discount, the best approach is to select an order quantity which takes advantage of the discount. ⊚ true ⊚ false

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Answer Key Test name: Chap 12_3e_Cachon 1) B 2) C 3) A 4) A 5) B 6) D 7) A 8) C 9) A 10) A 11) B 12) A 13) C 14) D 15) D 16) D 17) A 18) C 19) D 20) A 21) B 22) C 23) D 24) C 25) B 26) B Version 1

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27) D 28) C 29) A 30) B 31) C 32) C 33) D 34) C 35) D 36) D 37) A 38) D 39) C 40) A 41) D 42) B 43) B 44) A 45) D 46) C 47) C 48) A 49) C 50) A 51) D 52) B 53) A 54) D 55) D 56) D Version 1

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57) A 58) C 59) C 60) B 61) D 62) B 63) C 64) D 65) C 66) D 67) B 68) FALSE 69) FALSE 70) FALSE 71) TRUE 72) FALSE 73) FALSE

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CHAPTER 13 1) Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives a 70% discount for its bread at the end of the day. What is the salvage value of its bread?

A) $2.00 B) $0.60 C) $0.50 D) $0.10

2)

Which of the following is a plot of the density function of a normal distribution?

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A)

B)

C)

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D)

3)

The __________ function returns the __________ that a particular outcome occurs.

A) density, frequency B) density, probability C) distribution, probability D) distribution, frequency

4)

A wide and short density function has a large __________ relative to the __________.

A) mean, standard deviation B) mean, outcome C) standard deviation, mean D) standard deviation, median

5) The __________ function provides the probability that an uncertain outcome is at a certain level or __________.

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A) density, lower B) distribution, lower C) density, higher D) distribution, higher

6)

Which of the following is a plot of the distribution function of a normal distribution?

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A)

B)

C)

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D)

7) Demand is modeled with a normal distribution that has a mean of 300 and a standard deviation of 50. What is the probability that demand is 400 or less? Use Table 13.4.

A) 97.7% B) 95.4% C) 47.7% D) 2.3%

8) Demand is modeled with a normal distribution that has a mean of 300 and a standard deviation of 50. What is the probability that demand is 400 or more? Use Table 13.4.

A) 97.7% B) 95.4% C) 47.7% D) 2.3%

9) Demand is modeled with a normal distribution that has a mean of 300 and a standard deviation of 50. What is the probability that demand is between 200 and 400? Use Table 13.4.

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A) 97.7% B) 95.4% C) 47.7% D) 2.3%

10)

The inputs to the newsvendor model include all of the following EXCEPT __________.

A) underage cost B) overage cost C) fixed cost D) demand forecast

11)

The ___________ is the cost of ordering one unit ___________.

A) underage cost, exactly B) overage cost, exactly C) underage cost, too few D) overage cost, too few

12)

The ___________ is the cost of ordering one unit ___________.

A) underage cost, exactly B) overage cost, exactly C) underage cost, too many D) overage cost, too many

13) Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for its bread at the end of the day. What is the overage cost?

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A) $1.50 B) $0.50 C) $0.40 D) $0.10

14) Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for its bread at the end of the day. What is the underage cost?

A) $1.50 B) $0.50 C) $0.40 D) $0.10

15) Bakery A sells bread for $2 per loaf that costs $0.80 per loaf to make. Bakery A gives a 75% discount for its bread at the end of the day. What is the critical ratio?

A) 0.80 B) 0.71 C) 0.29 D) 0.20

16) Bakery A sells bread for $2 per loaf that costs $0.80 per loaf to make. Bakery A gives a 75% discount for its bread at the end of the day. Demand for the bread is normally distributed with a mean of 300 and a standard deviation of 30. Using Excel, what order quantity maximizes expected profit for Bakery A? A) 325.25 B) 324.00 C) 306.00 D) 300.17

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17) Which of the following statement is TRUE regarding the optimal order quantity that maximizes expected profit?

A) It always is equal to the mean of the demand distribution.

B) It is a balance between the salvage value and the overage cost.

C) It is a balance between the underage cost and overage cost.

D) More should be ordered when the overage cost exceeds the underage cost.

18) A donut shop sells specialty donuts for $1 each that cost $0.30 each to make. The shop gives a 60% discount for its donuts at the end of the day. What is the salvage value of each donut?

A) $0.12 B) $0.40 C) $0.60 D) $1.00

19) Suppose the critical ratio is F(Q*) = 0.65. Which of the following interpretations is FALSE? A) At the optimal order quantity, there is 65% probability of meeting all demand.

B) At the optimal order quantity, there is 35% probability of not meeting all demand.

C) At the optimal order quantity, there is 65% probability of not meeting all demand.

D) At the optimal order quantity, expected profit is maximized.

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20) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. What is the overage cost?

A) $5 B) $7 C) $12 D) $13

21) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. What is the underage cost?

A) $5 B) $7 C) $12 D) $13

22) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. What is the critical ratio?

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A) 0.65 B) 0.50 C) 0.35 D) 0.25

23) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. Using Excel, what order quantity maximizes the expected profit for the souvenir store?

A) 234.59 B) 250.00 C) 265.41 D) 298.75

24) Which of the following is NOT a performance measure of the newsvendor model that you learned in this chapter?

A) Expected sales B) Expected supply C) In-stock probability D) Stockout probability

25) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 150 and a standard deviation of 60. What is its expected inventory if Store A’s order quantity is 90 units?

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A) 5 B) 10 C) 50 D) 65

26) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 200. What are expected sales for Store A if the order quantity is 400 units? Use Table 13.4 A) 260 B) 262 C) 340 D) 360

27) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 250. Store A purchases the product for $10 each unit and sells each for $30. Inventory is salvaged for $5. What is its expected profit if Store A’s order quantity is 400 units? Use Table 13.4.

A) $4,063 B) $6,560 C) $8,560 D) $10,560

28) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. What is its in-stock probability if Store A’s order quantity is 800 units? Use Table 13.4

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A) 97.7% B) 84.1% C) 15.9% D) 2.3%

29) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. What is its stockout probability if Store A’s order quantity is 800 units?

A) 97.7% B) 84.1% C) 15.9% D) 2.3%

30) Which of the following shows the trade-off between expected profit (y-axis) and in-stock probability (x-axis)?

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A)

B)

C)

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D)

31)

Which of the following statements is FALSE regarding in-stock probability?

A) In-stock probability is equal to the critical ratio when expected profit is maximized.

B) In-stock probability is greater than the critical ratio when expected profit is maximized.

C) In-stock probability is a measure of customer service.

D) In-stock probability has a value between 0 and 1.

32) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $30. Inventory is salvaged for $5. What is its expected profit if Store A’s order quantity is 525 units?

A) $10,000 B) $7,815 C) $7,185 D) $2,815

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33) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. What is the expected inventory if the souvenir store’s order quantity is 230 sweatshirts?

A) 7.9 B) 25.0 C) 27.9 D) 47.9

34) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. What is the expected inventory if the souvenir store’s order quantity is 270 sweatshirts?

A) 7.9 B) 25.0 C) 27.9 D) 47.9

35) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. What is the expected profit if the souvenir store’s order quantity is 230 sweatshirts? Use Table 13.4.

A) $1,665 B) $2,348 C) $2,832 D) $3,752

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36) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them for $25 each. The sweatshirts cost $12 each to purchase from their supplier. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. The week after New Year’s, unsold shirts are donated free to a local Goodwill store. The souvenir store receives a tax refund (credit) of $5 for every sweatshirt that it donates. What is the expected profit if the souvenir store’s order quantity is 294 sweatshirts? Use Table 13.4.

A) $2,832 B) $2,888 C) $3,258 D) $3,524

37) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. What is the in-stock probability if the souvenir store orders 262 sweatshirts?

A) 38.2% B) 54.8% C) 58.6% D) 61.8%

38) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. What is the stockout probability if the souvenir store orders 262 sweatshirts?

A) 38.2% B) 54.8% C) 58.6% D) 61.8%

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39) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. How many units should be ordered to achieve a 99.7% in-stock probability? Use Table 13.4.

A) 1,310 B) 1,340 C) 1,650 D) 1,695

40) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $20. Inventory is salvaged for $5. Which of the following statements is TRUE if Store A increases its in-stock probability from 98% to 99%?

A) Expected profit decreases.

B) Order quantity decreases.

C) Order quantity remains unchanged.

D) Expected profit increases.

41) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $20. Inventory is salvaged for $5. Which of the following statements is TRUE if Store A increases its in-stock probability from 98% to 99%?

A) Expected inventory increases.

B) Order quantity remains the same.

C) Order quantity decreases.

D) Expected inventory decreases.

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42) A souvenir store sells New Year’s Eve sweatshirts with the year and a slogan printed on them. Demand for the sweatshirts is normally distributed with a mean of 250 and a standard deviation of 40. How many sweatshirts should be ordered to achieve a 90% in-stock probability?

Use Table 13.4.

A) 198 B) 302 C) 324 D) 370

43) Which of the following is most likely the density function of demand for products with a coefficient of variation above one, i.e., an extreme amount of variability?

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A)

B)

C)

D)

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44) Demand for a company’s product is normally distributed with a mean of 50 and a standard deviation of 10. What is the coefficient of variation of its demand forecast?

A) 0.2 B) 5 C) 10 D) 50

45) Among the four products given below, which is most likely to have the lowest mismatch costs expressed as a percentage of maximum profit?

Product

Mean of demand

A B C D

500 300 600 400

Standard deviation of demand 300 100 500 200

Critical ratio 0.6 0.7 0.4 0.5

A) Product A B) Product B C) Product C D) Product D

46) The relative consequence of mismatch costs in the newsvendor model is small if demand uncertainty is __________ or critical ratio is __________.

A) high, high B) high, low C) low, low D) low, high

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47) Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit?

A) $12,500 B) $8,000 C) $7,500 D) $5,000

48) Mismatch costs are the difference between the __________ and __________ in the newsvendor model.

A) maximum profit, expected profit B) maximum profit, expected sales C) minimum profit, expected profit D) minimum profit, expected sales

49)

Mismatch costs are the sum of the costs of __________ and __________.

A) stockouts, work-in-process inventory B) stockouts, leftover inventory C) overstock, leftover inventory D) overstock, work-in-process inventory

50)

Expected profit __________ as the coefficient of variation __________.

A) increases, stays the same B) decreases, increases C) decreases, decreases D) stays the same, increases

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51)

Expected profit __________ as the critical ratio __________.

A) increases, stays the same B) decreases, increases C) decreases, decreases D) stays the same, increases

52)

Maximum profit is computed as the product of __________ and __________.

A) expected demand, profit per unit sold B) actual demand, unit selling price C) expected demand, unit selling price D) actual demand, profit per unit sold

53) Which of the following graphs shows the relationship between expected profit in the newsvendor model ( y-axis) and standard deviation of demand ( x-axis)?

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A)

B)

C)

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D)

54)

Coefficient of variation is the ratio of the __________ to the __________.

A) maximum profit, expected demand B) standard deviation of demand, expected demand C) maximum profit, expected profit D) standard deviation of demand, expected profit

55)

The two factors which influence mismatch costs are __________ and __________.

A) critical ratio, coefficient of correlation of demand B) critical ratio, coefficient of variation of demand C) overage cost, coefficient of correlation of demand D) overage cost, coefficient of variation of demand

56) Which of the following statements is TRUE regarding the coefficient of variation of demand?

A) It is an absolute measure of demand uncertainty.

B) Its value is always between -1 to 1.

C) Its value is always greater than or equal to 0.

D) Its value is always between 0 and 1.

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57) Among the four products given below, which is most likely to have the lowest mismatch costs expressed as a percentage of maximum profit?

Product

Mean of demand

A B C D

250 300 300 200

Standard deviation of demand 150 250 120 100

Critical ratio 0.5 0.3 0.6 0.4

A) Product A B) Product B C) Product C D) Product D

58) Which of the following is NOT a way to manage a newsvendor product that has substantial mismatch costs?

A) Increase underage costs relative to overage costs B) Reduce demand uncertainty C) Pool similar products D) Increase product variety

59)

__________ is a statistical measure of the interaction between two uncertain events.

A) Variation B) Range C) Standard deviation D) Correlation

60) Two events are __________ if when the outcome of one event is high, then the outcome of the other event is also high.

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A) positively correlated B) uncorrelated C) negatively correlated D) independent

61)

Which of the following is TRUE about correlation?

A) Correlation has a value in between zero and one.

B) Two independent events will have a zero correlation.

C) Product pooling is most effective if the correlation between two products is one.

D) A product with a high demand uncertainty has a high correlation.

62) The capability to respond to updated __________ information is called __________ response.

A) supply, slow B) supply, quick C) demand, quick D) demand, slow

63) The capacity that allows a firm to react to changes in its __________ is called __________ capacity.

A) demand forecast, proactive B) demand forecast, reactive C) supply forecast, proactive D) supply forecast, reactive

64)

Which of the following statements is FALSE regarding a make-to-order system?

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A) It is the opposite of mass customization.

B) The production of a unit begins only after its demand is known.

C) It does not have leftover inventory.

D) It helps to reduce mismatch costs.

65) Product pooling __________ demand across correlated products to __________ coefficient of variation, thereby reducing mismatch costs.

A) aggregates, increase B) aggregates, decrease C) segregates, increase D) segregates, decrease

66)

Product pooling is more effective with products whose demands are __________.

A) positively correlated B) uncorrelated C) negatively correlated D) known in advance

67) __________ is an effective strategy to manage mismatch costs by increasing the __________ of a firm’s production process.

A) Quick response, variability B) Pooling, variability C) Quick response, flexibility D) Pooling, flexibility

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68) Make-to-order systems are most effective in environments with the following characteristics, EXCEPT those in which __________.

A) critical ratio is high B) critical ratio is low C) customers prefer variety D) customers are willing to wait

69) The heating cost for homes tends to increase as the outdoor temperature decreases.

Therefore, we can conclude that heating cost and outdoor temperature are __________.

A) positively correlated B) uncorrelated C) negatively correlated D) independent

70) A critical ratio of 0.7 means there is a 70% chance that demand is less than or equal to the optimal order quantity. ⊚ true ⊚ false

71) The optimal order quantity that maximizes expected profit is always equal to the mean of the demand distribution. ⊚ true ⊚ false

72)

The in-stock probability cannot be greater than the critical ratio. ⊚ true ⊚ false

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73)

Expected profit is a direct measure of how well a company serves its customers. ⊚ true ⊚ false

74) A newsvendor earns a high percentage of the maximum profit if its critical ratio is close to one. ⊚ true ⊚ false

75) A make-to-order system is more suitable if leftover inventory is expensive for the product. ⊚ true ⊚ false

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Answer Key Test name: Chap 13_3e_Cachon 1) B 2) D 3) B 4) C 5) B 6) A 7) A 8) D 9) B 10) C 11) C 12) D 13) D 14) A 15) A 16) A 17) C 18) B 19) C 20) B 21) D 22) A 23) C 24) B 25) A 26) D Version 1

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27) B 28) B 29) C 30) D 31) B 32) C 33) A 34) C 35) C 36) B 37) D 38) A 39) B 40) A 41) A 42) B 43) C 44) A 45) B 46) D 47) C 48) A 49) B 50) B 51) C 52) A 53) B 54) B 55) B 56) C Version 1

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57) C 58) D 59) D 60) A 61) B 62) C 63) B 64) A 65) B 66) C 67) C 68) A 69) C 70) TRUE 71) FALSE 72) FALSE 73) FALSE 74) TRUE 75) TRUE

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CHAPTER 14 1) For which of the following products will it be most suitable to use the order-up-to model to manage its inventory?

A) Designer handbags B) Laundry detergents C) Newspapers D) Halloween costumes

2)

Which of the following does not apply to the order-up-to model?

A) Replenishment orders are received after a fixed amount of time.

B) Lead time is dependent on order quantity.

C) Each period’s demand is represented by the same distribution function.

D) There is no limit on the quantity that can be ordered within a period.

3) The time between two ordering opportunities for an order-up-to product is called a _________ and it has a _________ duration.

A) lead time, fixed B) period, variable C) lead time, variable D) period, fixed

4)

Which of the following is TRUE regarding the order-up-to model?

A) Each period’s demand cannot exceed available inventory.

B) Backordering happens when demand is less than available inventory.

C) Supply is not capacity constrained.

D) Opportunities to order replenishment inventory occur at random intervals.

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5) _________ inventory is the number of units ordered in previous periods which has not yet been received and, therefore, is _________ to serve demand.

A) On-hand, unavailable B) On-hand, available C) On-order, unavailable D) On-order, available

6) There are 50 boxes of cereal in inventory before demand occurs. Demand in the period is 80 boxes. This means at the end of the period, on-hand inventory is _________ boxes and the backorder is _________ boxes.

A) 50, 0 B) 50, 30 C) 0, 0 D) 0, 30

7)

Which of the following is the way inventory position is calculated?

A) On-order inventory − On-hand inventory − Backorder B) On-order inventory + On-hand inventory + Backorder C) On-order inventory + On-hand inventory − Backorder D) On-order inventory − On-hand inventory + Backorder

8)

The _________ is the desired inventory position after an order is _________.

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A) order-up-to level, received B) order-up-to level, submitted C) order quantity, received D) order quantity, submitted

9)

Which of the following is a push system?

A) Newsvendor model B) Order-up-to model C) Kanban system D) Bucket brigade

10)

Which of the following is NOT a characteristic of a pull system?

A) It is most effective if demand is represented by the same distribution function in every

period.

B) It is most effective in preventing excessive buildup of inventory.

C) It initiates production only when demand of another unit occurs.

D) It is good at anticipating shifts in future demand.

11) A firm chooses an order-up-to level of 10 units. At the start of this week there are 5 units in inventory and 1 unit on order. No units are on backorder. How much should be ordered this week?

A) 10 B) 6 C) 5 D) 4

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12) A firm chooses an order-up-to level of 80 units. At the start of this week there are no onhand units, 20 on-order units, and 5 backordered units. How much should be ordered this week?

A) 5 B) 15 C) 65 D) 80

13) less.

A _________ distribution is suitable for modeling demand with a mean of _________ or

A) normal, 100 B) normal, 20 C) Poisson, 100 D) Poisson, 20

14)

Which of the following regarding the order-up-to level is FALSE? A) It is the desired inventory position after an order is submitted.

B) It is the sum of the beginning inventory position and the order quantity in a particular

period.

C) It is the order quantity which maximizes expected profit.

D) It is a value that is selected by the user of the order-up-to model.

15) There are 100 boxes of cereal in inventory before demand occurs. Demand in the period is 60 boxes. This means at the end of the period, on-hand inventory is _________ boxes and the backorder is _________ boxes.

A) 40, 0 B) 0, 60 C) 60, 0 D) 60, 40

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16) A firm chooses an order-up-to level of 55 units. At the start of this week there are 20 units in inventory and 25 units on order. No units are on backorder. How much should be ordered this week?

A) 5 B) 10 C) 45 D) 55

17) A firm chooses an order-up-to level of 135 units. At the start of this week there are 30 onhand units, 45 on-order units, and 15 backordered units. How much should be ordered this week?

A) 15 B) 60 C) 75 D) 135

18)

Which of the following is NOT a performance measure of the order-up-to model?

A) Expected on-hand inventory B) Expected on-order inventory C) Expected gross margin D) Stockout probability

19) A product’s demand over (L + 1) periods follows a normal distribution with mean of 100 and standard deviation of 50. The order-up-to level is 125. What is the expected on-hand inventory? Use Table 14.1.

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A) 125.10 B) 100.42 C) 34.89 D) 31.52

20) A product’s demand over (L + 1) periods follows a Poisson distribution with mean of 0.6.

The order-up-to level is 4. What is the expected on-hand inventory? Use Table 14A.2.

A) 2.4 B) 3.4 C) 4.4 D) 5.4

21) A product’s demand over (L + 1) periods follows a normal distribution with mean of 80 and standard deviation of 20. The order-up-to level is 100. What is the in-stock probability? Use Table 14.1.

A) 1 B) 0.8413 C) 0.5987 D) 0.3413

22) A product’s demand over (L + 1) periods follows a Poisson distribution with mean of 3.2.

The order-up-to level is 5. What is the stockout probability? Use Table 14A.2.

A) 0.8946 B) 0.7355 C) 0.2645 D) 0.1054

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23) Which of the following comparisons between the order-up-to model and the newsvendor model is TRUE? A) Both models sell leftover inventory at a discounted price.

B) Both models allow the decision maker to order inventory many times.

C) The newsvendor model should be applied when demand is uncertain and the order-upto model should be applied when demand is constant.

D) The decision maker chooses the order-up-to level in the order-up-to model and the order quantity in the newsvendor model.

24) A product’s demand per period follows a Poisson distribution with mean of 0.50. The lead time is 3 periods and the order-up-to level is 4. What is the expected on-order inventory?

A) 0.5 B) 1.0 C) 1.5 D) 2.0

25) A product’s demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-up-to level is 200 and the lead time is 2 periods. What is the expected on-order inventory?

A) 400 B) 120 C) 60 D) 20

26) A product’s demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-up-to level is 200 and the lead time is 2 periods. What is the expected on-hand inventory? Use Table 14.1.

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A) 140 B) 80 C) 21 D) 8

27) A product’s demand in each period follows a normal distribution with mean of 60 and standard deviation of 10. The order-up-to level is 200 and the lead time is 2 periods. What is its stockout probability? Use Table 14.1.

A) 1 B) 0.885 C) 0.115 D) 0

28) A product’s demand per period follows a Poisson distribution with mean of 0.55. The lead time is 3 periods and the order-up-to level is 4. What is its expected on-hand inventory? Use Table 14A.2.

A) 3.45 B) 2.91 C) 2.39 D) 1.91

29) A product’s demand per period follows a Poisson distribution with mean of 0.55. The lead time is 3 periods and the order-up-to level is 4. What is its stockout probability? Use Table 14A.2.

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A) 99.97% B) 92.75% C) 7.25% D) 0.03%

30) A product’s demand over (L + 1) periods follows a normal distribution with mean of 700 and standard deviation of 250. The order-up-to level is 925. What is the expected on-hand inventory? Use Table 14.1.

A) 125.1 B) 148.6 C) 204.0 D) 250.1

31) A product’s demand over (L + 1) periods follows a Poisson distribution with mean of 2.8.

The order-up-to level is 7. What is the expected on-hand inventory? Use Table 14A.2.

A) 4.21 B) 2.8 C) 1.4 D) 0.9919

32) A product’s demand over (L + 1) periods follows a normal distribution with mean of 700 and standard deviation of 250. The order-up-to level is 925. What is the stockout probability?

Use Table 14.1.

A) 6.24% B) 18.41% C) 24.62% D) 81.59%

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33) A product’s demand over (L + 1) periods follows a Poisson distribution with mean of 2.8.

The order-up-to level is 7. What is the stockout probability? UseTable 14A.2.

A) 0.81% B) 4.21% C) 95.79% D) 99.19%

34) A product’s demand per period follows a Poisson distribution with mean of 6. The lead time is 4 periods and the order-up-to level is 10. What is the expected on-order inventory?

A) 4 B) 6 C) 24 D) 32

35) A product’s demand in each period follows a normal distribution with mean of 250 and standard deviation of 75. The order-up-to level is 400 and the lead time is 3 periods. What is the expected on-order inventory?

A) 1,200 B) 750 C) 225 D) 200

36) A product’s demand in each period follows a normal distribution with mean of 120 and standard deviation of 60. The order-up-to level is 732 and the lead time is 3 periods. What is the expected on-hand inventory? Use Table 14.1.

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A) 24 B) 118 C) 176 D) 253

37) A product’s demand in each period follows a normal distribution with mean of 120 and standard deviation of 60. The order-up-to level is 732 and the lead time is 3 periods. What is its stockout probability? Use Table 14.1.

A) 0.36% B) 1.79% C) 2.11% D) 98.21%

38) A product’s demand per period follows a Poisson distribution with mean of 0.76. The lead time is 4 periods and the order-up-to level is 7. What is its expected on-hand inventory? Use Table 14A.2.

A) 0.9599 B) 3.26 C) 6.24 D) 16.30

39) A product’s demand per period follows a Poisson distribution with mean of 0.76. The lead time is 4 periods and the order-up-to level is 7. What is its stockout probability? Use Table 14A.2.

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A) 3.26% B) 4.01% C) 10.38% D) 95.99%

40)

Expected on-order inventory is also known as _________ inventory.

A) in-stock B) seasonal C) pipeline D) target

41) A product’s demand per period follows a Poisson distribution with mean of 0.5. The lead time is 3 periods. What order-up-to level should be used to achieve at least a 95% in-stock probability? Use Table 14A.2.

A) 2 B) 3 C) 4 D) 5

42) Firm A’s demand for its product per period follows a Poisson distribution with mean of 0.8. The lead time is 2 periods. Firm A wants at least a 0.97 in-stock probability. What is its order-up-to level? Use Table 14A.2.

A) 2 B) 3 C) 4 D) 6

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43) Firm B’s demand for its product per period follows a Poisson distribution. The lead time is 2 periods. Firm B wants at least a 0.95 in-stock probability. What is its order-up-to level if average demand is 0.4 unit per period? Use Table 14A.2.

A) 5 B) 3 C) 2 D) 1

44) A product’s demand per period follows a normal distribution with mean of 60 and standard deviation of 10. The lead time is 2 periods. What order-up-to level should be used to achieve at least a 95% in-stock probability? Use Table 14.1.

A) 77 B) 137 C) 149 D) 209

45) A product’s demand per period follows a normal distribution with mean of 60 and standard deviation of 10. The lead time is 2 periods. What will happen to its order-up-to level if the in-stock probability is increased from 95% to 99%?

A) It will increase.

B) It will decrease.

C) It will remain the same.

D) It may be increased or decreased.

46) A product’s demand per period follows a normal distribution with mean of 60 and standard deviation of 10. Its in-stock probability is 95%. What will happen to its order-up-to level if the lead time is increased from two to four periods?

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A) It will increase.

B) It will decrease.

C) It will remain the same.

D) It may be increased or decreased.

47) Firm C’s demand for its product per period follows a Poisson distribution. The lead time is 2 periods. Firm C wants at least a 0.95 in-stock probability. What is its order-up-to level if average demand is 0.8 unit per period? Use Table 14A.2.

A) 5 B) 3 C) 2 D) 1

48) A product’s demand per period follows a Poisson distribution with mean of 0.76. The lead time is 4 periods. What order-up-to level should be used to achieve at least a 97% in-stock probability? Use Table 14A.2.

A) 6 B) 7 C) 8 D) 9

49) A product’s demand over (L + 1) periods is normally distributed with a mean of 100 and standard deviation of 10. Lead time is 2 periods. The order-up-to model is used to manage inventories. Which of the following shows the relationship between expected on-hand inventory (y-axis) and in-stock probability (x-axis)?

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A)

B)

C)

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D)

50) A product’s demand over (L + 1) periods is normally distributed with a mean of 200 and standard deviation of 25. Lead time is 2 periods. The order-up-to model is used to manage inventories. If in-stock probability stays at 99%, what will happen to expected on-hand inventory when expected demand increases to 300?

A) It will increase.

B) It will decrease.

C) It may either increase or decrease.

D) It will stay the same.

51) A product’s demand over (L + 1) periods is normally distributed with a mean of 200 and standard deviation of 25. Lead time is 2 periods. The order-up-to model is used to manage inventories. What will happen to expected on-hand inventory when in-stock probability increases?

A) It will stay the same.

B) It may either increase or decrease.

C) It will increase.

D) It will decrease.

52) Suppose the order-up-to model is used to manage inventories. The required amount of inventory _________ at a(n) _________ rate as the target in-stock probability approaches one.

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A) decreases, decreasing B) decreases, increasing C) increases, increasing D) increases, decreasing

53) A product’s demand over (L + 1) periods is normally distributed with a mean of 200 and standard deviation of 25. The in-stock probability is 99%. The order-up-to model is used to manage inventories. Which of the following shows the relationship between expected on-hand inventory (x-axis) and lead time (y-axis)?

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A)

B)

C)

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D)

54) A product’s demand per period is normally distributed with a mean of 200 and standard deviation of 25. The in-stock probability is 99%. The order-up-to model is used to manage inventories. What will happen to expected on-hand inventory if its lead time increases from two to four periods?

A) It will increase.

B) It will decrease.

C) It will stay the same.

D) It may either increase or decrease.

55) In the order-up-to model, when in-stock probability is _________ and lead time is _________, most of the inventory in the supply chain will be on order.

A) high, short B) high, long C) low, short D) low, long

56)

On-hand inventory is directly dependent on all of the following EXCEPT _________.

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A) length of lead time B) in-stock probability C) coefficient of variation of demand D) on-order inventory

57) Which of the following order-up-to strategies will reduce inventory without changing where inventory is sold to customers?

A) Combine inventory locations so that there are more locations to hold inventory.

B) Combine inventory locations so that there are fewer locations to hold inventory.

C) Move final assembly to a point earlier in the supply chain.

D) Move final assembly to a point later in the supply chain.

58) Which of the following is a strategic decision in the context of an order-up-to environment?

A) Determining a desired in-stock probability B) Determining a desired order-up-to level C) Determining a desired location where inventories should be held D) Determining a desired stockout probability

59)

Which of the following questions is addressed by location pooling?

A) Should we change where variety is added to a product?

B) Should we change where to hold inventory to serve customer demand?

C) Should we change which product should be discounted?

D) Should we hold inventory in an intermediate step in the supply chain process?

60)

Which of the following questions is addressed by lead-time pooling?

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A) Should we change where variety is added to a product?

B) Should we change where to hold inventory to serve customer demand?

C) Should we change which product should be discounted?

D) Should we hold inventory in an intermediate step in the supply chain process?

61)

Which of the following questions is addressed by delayed differentiation?

A) Should we change where variety is added to a product?

B) Should we change where to hold inventory to serve customer demand?

C) Should we change which product should be discounted?

D) Should we hold inventory in an intermediate step in the supply chain process?

62)

Which of the following is a key impact of the location-pooling strategy?

A) Reducing the in-stock probability B) Increasing demand variability C) Reducing on-order inventory D) Reducing days of supply

63) Which of the following graphs correctly portrays the shift in the trade-off curve between in-stock probability (x-axis) and expected on-hand inventory (y-axis) due to location pooling?

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A)

B)

C)

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D)

64)

Which of the following is a disadvantage of location pooling?

A) It increases in-stock probability.

B) It decreases on-hand inventory.

C) It decreases demand variability.

D) It increases delivery cost.

65) Which of the following order-up-to strategies reduces demand uncertainty in a supply chain while keeping inventory reasonably close to customers?

A) Location pooling B) Lead-time pooling C) Make-to-stock D) Batching

66)

Which of the following is a benefit of lead-time pooling?

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A) Decreases in-stock probability B) Reduces number of locations with a long lead time C) Reduces the lead time from the supplier to each location D) Increases demand uncertainty

67) A major difference between lead-time pooling and location pooling strategies is that _________.

A) lead-time pooling keeps inventory close to customers whereas location pooling moves inventory away from customers B) lead-time pooling moves inventory away from customers whereas location pooling keeps inventory close to customers C) lead-time pooling is a direct-from-factory strategy whereas location pooling is a direct-to-factory strategy D) lead-time pooling is a direct-to-customer strategy whereas location pooling is a directfrom-factory strategy

68) A major difference between lead-time pooling and delayed differentiation strategies is that _________.

A) lead-time pooling adds an intermediate point early in a supply chain to customize products whereas delayed differentiation adds an intermediate point late in a supply chain to customize products B) lead-time pooling adds an intermediate point in a supply chain to hold inventory whereas delayed differentiation adds an intermediate point early in a supply chain to customize products C) lead-time pooling adds an intermediate point in a supply chain to hold inventory whereas delayed differentiation adds an intermediate point late in a supply chain to customize products D) lead-time pooling adds an intermediate point late in a supply chain to customize products whereas delayed differentiation adds an intermediate point early in a supply chain to customize products

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69)

The actual demand for an order-up-to product is the same in every period. ⊚ true ⊚ false

70)

Inventory position cannot drop below the order-up-to level. ⊚ true ⊚ false

71)

The expected on-order inventory depends on expected demand during the lead time only. ⊚ true ⊚ false

72) The relationship between in-stock probability and the expected number of periods before the first period with a stockout is linear. ⊚ true ⊚ false

73) A firm with a high in-stock probability for its product is considering paying for air shipments rather than ground shipments. The higher shipping costs could be justified if the firm is able to compensate for the increased shipping cost with reduced inventory holding costs. ⊚ true ⊚ false

74)

Demand variability does not affect on-order inventory. ⊚ true ⊚ false

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Answer Key Test name: Chap 14_3e_Cachon 1) B 2) B 3) D 4) C 5) C 6) D 7) C 8) B 9) A 10) D 11) D 12) C 13) D 14) C 15) A 16) B 17) C 18) C 19) C 20) B 21) B 22) D 23) D 24) C 25) B 26) C Version 1

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27) C 28) D 29) C 30) D 31) A 32) B 33) A 34) C 35) B 36) D 37) B 38) B 39) B 40) C 41) D 42) D 43) B 44) D 45) A 46) A 47) A 48) C 49) B 50) D 51) C 52) C 53) A 54) A 55) D 56) D Version 1

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57) D 58) C 59) B 60) D 61) A 62) D 63) A 64) D 65) B 66) B 67) A 68) C 69) FALSE 70) FALSE 71) TRUE 72) FALSE 73) TRUE 74) TRUE

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CHAPTER 15 1) Demand forecasting is the process of creating statements about _________ of demand that are _________.

A) future realizations, currently uncertain B) current uncertainties, future realized C) current realizations, future realized D) future uncertainties, currently realized

2)

Which of the following is not an input to the forecasting process?

A) Old realizations of demand B) Old realizations of other variables C) New techniques of optimization D) Subjective opinions about the future

3)

Which of the following is an input to a time series-based forecast?

A) Old realizations of demand B) Old realizations of other variables C) Subjective opinions about the future D) All of these are inputs

4)

Which of the following is an example of a time series-based forecast?

A) To determine how many hamburgers to sell tomorrow based on yesterday’s weather B) To determine how many hamburgers to sell tomorrow based on next year’s budget

limit C) To determine how many hamburgers to sell tomorrow based on one’s gut feeling D) To determine how many hamburgers to sell tomorrow based on today’s sales figure

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5) _________ analysis is the statistical process of estimating the relationship between dependent and _________ variables.

A) Regression, independent B) Time series, outcome C) Regression, outcome D) Time series, latent

6)

Which of the following is an example of a regression analysis forecast?

A) To determine how many hamburgers to sell tomorrow based on yesterday’s weather B) To determine how many hamburgers to sell tomorrow based on next year’s budget

limit C) To determine how many hamburgers to sell tomorrow based on one’s gut feeling D) To determine how many hamburgers to sell tomorrow based on next year’s sales figure

7)

Which of the following is NOT a forecasting method?

A) Machine learning B) Expert panel C) Big data D) Linear programming

8)

The term “expert panel” refers to ___________.

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A) A group of managers sharing their objective opinions based on hard data to reach a demand forecast.

B) A group of managers sharing their subjective opinions to try to reach a consensus about a demand forecast.

C) A forecasting approach based on machine learning and Big Data.

D) A set of automated forecasting techniques.

9) The forecast error for period t is the _________ the actual value and the forecast value in period t.

A) sum of B) difference between C) product of D) quotient of

10)

Which of the following is FALSE regarding evaluating forecasting errors?

A) Mean squared error aggregates forecast errors without canceling out positive and negative forecast errors.

B) Mean squared error squares the errors and then averages them.

C) Mean squared error can be heavily influenced by one single large forecast error.

D) Mean squared error and mean absolute error always agree on which forecast is better.

11) Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the bigger forecast bias?

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A) The first method B) The second method C) Both are biased D) Both are not biased

12) Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the smaller mean squared error (MSE)?

A) The first method B) The second method C) Both methods have the same MSE D) Cannot be determined

13) Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the smaller mean absolute error (MAE)?

A) The first method B) The second method C) Both methods have the same MAE D) Cannot be determined

14)

A(n) _____________ forecast is one that is on average correct.

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A) unbiased B) biased C) aggregated D) absolute

15)

Which of the following is TRUE regarding evaluating the quality of a forecast?

A) If both forecasters have an unbiased forecast, then they are equally good at forecasting.

B) A biased forecast has a zero forecast error.

C) The mean squared error is always lower than the mean absolute error when evaluating the same forecaster.

D) In the mean squared error evaluation, one single observation can make a very large difference.

16) Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the smaller mean absolute percentage error (MAPE)?

A) The first method B) The second method C) Both methods have the same MAPE D) Cannot be determined

17)

Which of the following is FALSE regarding the measures of forecast errors?

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A) The mean absolute percentage error aggregates forecast errors in relative terms.

B) The mean absolute error is also known as the mean absolute deviation.

C) The mean squared error is always bigger than the mean absolute error for the same forecast.

D) A forecast is unbiased if and only if its mean absolute percentage error is zero.

18) What is the forecast error if the forecast value in a particular period is 75 and the actual (realized) demand is 55?

A) −65 B) 65 C) −20 D) 20

19)

Given the following three periods of data, what is the MAE? Period

Actual Demand

Demand Forecast

1

93

92

2

94

91

3

91

93

A) 1.33 B) 2.00 C) 3.00 D) 3.25

20)

Given the following three periods of data, what is the MSE? Period

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Actual Demand

Demand Forecast

6

1

93

92

2

94

91

3

91

93

A) 4.67 B) 44.75 C) 124 D) 372

21)

Given the following three periods of data, what is the MAPE? Period

Actual Demand

Demand Forecast

1

93

92

2

94

91

3

91

93

A) 0.02% B) 0.72% C) 1.28% D) 2.15%

22) The _________ forecasting method creates a forecast for the next period by using the _________ value of the last period.

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A) moving average, predicted B) moving average, forecast C) naïve, actual D) naïve, forecast

23)

A store has the following sales figures: Year 1 2 3 4

Sales (in millions of dollars) 10 5 8 15

What would the sales forecast for year 2 have been using the naïve method?

A) 10 B) 5 C) 8 D) 15

24) Statistical noise in the demand of a process is defined as the amount of demand that is purely a result of ______ and could not have been ______ with the best forecasting method.

A) inefficiency, biased B) inefficiency, forecasted C) randomness, biased D) randomness, forecasted

25)

Which of the following statements is FALSE regarding the moving average forecast?

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A) It reduces the effect of statistical noise by taking averages.

B) It assigns a heavier weight to the most recent observation in the forecast window.

C) It assigns a zero weight to all observations outside the forecast window.

D) It is based on the average of observations in the forecast window.

26)

A store has the following demand figures for the last four years: Year

Demand

1

100

2

150

3

98

4

112

With a three-year moving average, what is the demand forecast for year 4?

A) 124 B) 120 C) 116 D) 105

27)

A store has the following demand figures for the last four years: Year

Demand

1

100

2

150

3

98

4

112

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With a two-year moving average, what is the demand forecast for year 2?

A) 125 B) 124 C) 105 D) Cannot be determined

28) The moving average forecast corresponds to the naïve forecast when the forecast window is ______ time period(s).

A) one B) two C) three D) zero

29) Which of the following statements is TRUE regarding the exponential smoothing forecasting method?

A) It takes an average of all observations.

B) It assigns an equal weight to all observations.

C) It assigns a zero weight to all observations outside the forecast window.

D) It corresponds to the naïve method when the smoothing parameter equals one.

30)

A store has the following demand figures for the last four years: Year

Demand

1

100

2

150

3

98

4

112

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What is the exponential smoothing forecast for year 5? Use alpha = 0.3 and a forecast for year 2 of 100.

A) 103.6 B) 109.9 C) 110.5 D) 111.1

31) Which of the following statements is FALSE regarding the naïve, moving average, and exponential smoothing methods?

A) They fail to detect long-term trends in the data.

B) They fail to detect seasonal variation in the data.

C) They create a forecast that is higher than any of the previously realized demand values.

D) They create data-driven forecasts which are only able to look backward at past values.

32) If a smoothing parameter of zero is used in an exponential smoothing forecast model, what is the practical result?

A) The exponential smoothed forecast will always be the same as thenaïve forecast.

B) The exponential smoothed forecast will never change from period to period.

C) The exponential smoothed forecast will always be the same as a 1-period moving average forecast.

D) The exponential smoothed forecast will always equal the actual demand value.

33)

Below are actual sales data (in millions) for the past six months at a large retail store.

Month May

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Sales (in millions of dollars) 40

11

June

38

July

41

August

44

September

42

October

43

What will the 3-month moving average forecast be for November (in millions of dollars)?

A) 39.67 B) 41.33 C) 42.33 D) 43.00

34)

Below are actual sales data (in millions) for the past six months at a large retail store.

Month

Sales (in millions of dollars)

May

40

June

38

July

41

August

44

September

42

October

43

In retrospect, what would the 4-month moving average forecast for September have been (in millions of dollars)?

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A) 40.75 B) 41.25 C) 41.33 D) 42.00

35)

Below are actual sales data (in millions) for the past six months at a large retail store.

Month May June July August September October

Sales (in millions of dollars) 40 38 41 44 42 43

What will the exponential smoothed forecast for November (in millions of dollars), using an October forecast of 45 and an alpha = 0.3?

A) 43.0 B) 44.4 C) 45.0 D) 45.6

36)

Below are actual sales data (in millions) for the past six months at a large retail store.

Month

Sales (in millions of dollars)

May

40

June

38

July

41

August

44

September

42

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October

43

What will the exponential smoothed forecast for November (in millions of dollars), using an August forecast of 43 and an alpha = 0.2?

A) 43.50 B) 44.40 C) 42.97 D) 44.67

37)

Which of the following data are most likely following a long-term trend trajectory?

A) Energy drink demand B) Landline phone users C) Stock prices D) Flu-related illnesses

38) A trend is a _________ or _________ in a variable that is consistent over a long period of time.

A) sudden increase, continuing decrease B) continuing increase, continuing decrease C) sudden increase, sudden decrease D) continuing increase, sudden decrease

39)

Trend-based forecasts are also known as _________-based forecasts.

A) time B) momentum C) realization D) past

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40) Which of the following statements is TRUE regarding the double exponential smoothing method?

A) It uses the same smoothing parameter for forecasting both with and without trend.

B) It is a multiplicative method.

C) It underestimates demand data without exponential growth.

D) It is not applicable for data with no trend.

41)

A store has the following demand figures for the last four years:

Year 1 2 3 4

Demand 100 150 112 200

Given a demand forecast for year 2 of 100, a trend forecast for year 2 of 10, an alpha of 0.3, and a beta of 0.2, what is the demand forecast for year 3 using the double exponential smoothing method?

A) 115 B) 120 C) 125 D) 130

42)

A store has the following demand figures for the last four years:

Year

Demand

1

100

2

150

3

112

4

200

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Given a demand forecast for year 2 of 100, a trend forecast for year 2 of 10, an alpha of 0.3, and a beta of 0.2, what is the demand forecast for year 5 using the double exponential smoothing method?

A) 125 B) 134 C) 166 D) 184

43) When the demand data has an exponential growth trend, one should forecast the _________ of demand when using the double exponential smoothing method.

A) average B) maximum C) minimum D) logarithm

44)

A store has the following demand figures for the last four years: Year

Demand

1

200

2

175

3

250

4

275

Given a demand forecast for year 3 of 225, a trend forecast for year 3 of 30, an alpha of 0.2, and a beta of 0.3, what is the demand forecast for year 4 using the double exponential smoothing method?

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A) 225 B) 230 C) 250 D) 260

45) Seasonality is a _________ demand change that constitutes a _________ fluctuation over time.

A) significant, repetitive B) continuous, gradual C) significant, gradual D) unpredictable, repetitive

46)

Which of the following demand data exhibit(s) a seasonality pattern?

A) Bread consumption over a month B) Electricity usage over a 24-hour period C) Stock prices over a year D) Number of people with access to a telephone landline over a year

47) Which of the following is FALSE regarding the set of seasonality indices across all seasons?

A) They must sum to 1.00.

B) They must average to 1.00.

C) They must sum to the number of seasons.

D) Higher seasonality indices represent seasons with higher demand, on average.

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48) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day 1

2

3

Time of day Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening

Demand (in thousands) 42 75 125 35 88 110 52 65 155

What is the seasonal index for morning?

A) 1.57 B) 1.00 C) 0.92 D) 0.52

49) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day 1

2

3

Time of day Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening

Demand (in thousands) 42 75 125 35 88 110 52 65 155

What is the seasonal index for afternoon?

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A) 1.57 B) 1.00 C) 0.92 D) 0.52

50) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day 1

2

3

Time of day Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening

Demand (in thousands) 42 75 125 35 88 110 52 65 155

What is the seasonal index for evening?

A) 1.57 B) 1.00 C) 0.92 D) 0.52

51) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day 1

2

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Time of day Morning Afternoon Evening Morning Afternoon

Demand (in thousands) 42 75 125 35 88

19

3

Evening Morning Afternoon Evening

110 52 65 155

Using a smoothing parameter of 0.25 and an initial forecast of 80, and rounding all intermediate calculations to 2 decimal places, what is the forecast demand for the morning of day 4?

Note: Round your final answer to whole number.

A) 78 B) 80 C) 51 D) 44

52) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day

Time of day

1

Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening

2

3

Demand (in thousands) 42 75 125 35 88 110 52 65 155

Using a smoothing parameter of 0.25 and an initial forecast of 80, and rounding all intermediate calculations to 2 decimal places, what is the forecast demand for the afternoon of day 4?

Note: Round your final answer to whole number.

A) 133 B) 78 C) 51 D) 44

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53) Company A is providing technical support for smartphone users. It sees most of its demand during the evening hours of the day. The demand for its support services for the last three days was as follows: Day

Time of day

1

Morning Afternoon Evening Morning Afternoon Evening Morning Afternoon Evening

2

3

Demand (in thousands) 42 75 125 35 88 110 52 65 155

Using a smoothing parameter of 0.25 and an initial forecast of 80, and rounding all intermediate calculations to 2 decimal places, what is the forecast demand for the evening of day 4?

Note: Round your final answer to whole number.

A) 155 B) 133 C) 78 D) 44

54) The advantages of analytical forecasting methods include the following EXCEPT _________.

A) they are efficient B) they can be automated C) they are objective D) they assume the future will be like the past

55)

A(n) _________ forecast allows for _________ input into the forecasting method.

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A) objective, human B) subjective, human C) objective, predictive D) subjective, predictive

56)

Which of the following is NOT a subjective forecasting method?

A) Take the average across the forecast by each individual forecaster.

B) Arrive at a consensus forecast through discussion and information exchange.

C) Put more weight on an individual’s opinion based on the idea of prediction markets.

D) Arrive at a forecast through time series extrapolation.

57) _________ is a phenomenon when all experts _________ although the outcome is fundamentally wrong or unlikely.

A) Consensus, disagree B) Consensus, agree C) Groupthink, disagree D) Groupthink, agree

58)

Which of the following is a way to counter the groupthink problem?

A) Start the discussion with the most senior expert in the group.

B) Pressure everybody to conform to the group consensus.

C) Hold a discussion prior to anyone creating a forecast to agree on what parameters to include.

D) Start the discussion after everyone creates a forecast individually and independently.

59)

The biggest strength of subjective forecasting is the use of _________.

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A) human intelligence for time series extrapolation B) human intelligence to replace forecasts done by analytical methods C) automated methods to replace human intuition D) automated methods to refute human intuition

60)

Biases in subjective forecasting include all of the following EXCEPT ______.

A) overconfidence B) anchoring C) incentive alignment D) consensus building

61)

Which of the following is a way to deal with bias in subjective forecasting?

A) Forecast errors should be measured.

B) Forecast history should not be collected.

C) Forecast is created through groupthink.

D) Forecast is created using prediction market.

62) A(n)_________ tree visualizes a set of decisions and their possible consequences, including the outcomes of random events.

A) outcome B) event C) decision D) forecasting

63)

Short-term forecasts tend to be automated forecasts.

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⊚ ⊚

true false

64) Simply averaging out the forecast errors is good enough to determine which forecast is better. ⊚ true ⊚ false

65)

The exponential smoothing forecasting method is not responsive to changes in demand. ⊚ true ⊚ false

66)

The double exponential smoothing method is not applicable to data with no trend. ⊚ true ⊚ false

67) Incentive alignment is a subjective forecasting bias committed by the forecaster without his/her awareness of it. ⊚ true ⊚ false

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Answer Key Test name: Chap 15_3e_Cachon 1) A 2) C 3) A 4) D 5) A 6) A 7) D 8) B 9) B 10) D 11) A 12) B 13) A 14) A 15) D 16) B 17) D 18) C 19) B 20) A 21) D 22) C 23) A 24) D 25) B 26) C Version 1

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27) D 28) A 29) D 30) C 31) C 32) B 33) D 34) A 35) B 36) C 37) B 38) B 39) B 40) C 41) C 42) C 43) D 44) D 45) A 46) B 47) A 48) D 49) C 50) A 51) D 52) B 53) B 54) D 55) B 56) D Version 1

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57) D 58) D 59) B 60) D 61) A 62) C 63) TRUE 64) FALSE 65) FALSE 66) FALSE 67) FALSE

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CHAPTER 16 1) During the two hours of the morning rush, 100 customers per hour arrive at the coffee shop. The coffee shop has a capacity of 80 customers per hour. At what rate does the queue of customers at the coffee shop grow during this time?

A) 100 customers per hour B) 80 customers per hour C) 40 customers per hour D) 20 customers per hour

2) During the two hours of the morning rush from 7 a.m. to 9 a.m., 100 customers per hour arrive at the coffee shop. The coffee shop has a capacity of 80 customers per hour. What is the number of customers waiting at 9 a.m.?

A) 100 B) 80 C) 40 D) 20

3) During the two hours of the morning rush from 7 a.m. to 9 a.m., 100 customers per hour arrive at the coffee shop. The coffee shop has a capacity of 80 customers per hour. How long does a customer arriving at 9 a.m. have to wait to be served?

A) 2 hours B) 1 hour C) 0.5 hour D) 0.25 hour

4) During the two hours of the morning rush from 7 a.m. to 9 a.m., 100 customers per hour arrive at a coffee shop. This coffee shop has a capacity of 80 customers per hour. On average, how long does a customer arriving during the morning rush wait to be served?

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A) 2 hours B) 1 hour C) 0.5 hour D) 0.25 hour

5)

Which of the following statements about queues is TRUE when demand exceeds supply?

A) The higher the implied utilization, the less customers need to wait to be served.

B) The higher the implied utilization, the more customers need to wait to be served.

C) The greater the implied utilization, the greater supply exceeds demand.

D) There is no relationship between implied utilization and a customer’s waiting time.

6) Which of the following statements about queues is FALSE when demand exceeds supply?

A) The queue will continue to grow as long as customers are willing to wait.

B) If demand exceeds capacity for a longer period of time, the queue grows longer.

C) The queue will shrink if customers walk away instead of waiting patiently in line.

D) The queue grows as long as the supply rate exceeds capacity.

7)

Peak-load pricing is also called ______.

A) peak-load discount B) quantity discount C) dynamic pricing D) congestion pricing

8)

One way to reduce a queue is to reduce ________ during __________ times.

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A) demand, off-peak B) demand, peak C) supply, off-peak D) supply, peak

9)

Peak-load pricing means to ______ during ______ times.

A) charge more, peak B) charge extra, off-peak C) apply a discount, peak D) apply a penalty, off-peak

10)

________ and ________ are ways to reduce a queue by adjusting demand.

A) Peak-load discount, off-peak pricing B) Peak-load pricing, off-peak pricing C) Peak-load pricing, off-peak discount D) Peak-load discount, off-peak discount

11)

Which of the following is a way to reduce a queue by adjusting capacity?

A) Peak-load pricing B) Off-peak discount C) Maximize the amount of work that needs to be done during peak time D) Minimize the amount of work that needs to be done during peak time

12)

Which of the following is NOT a way to reduce a queue by adjusting capacity?

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A) Use more workers during peak time.

B) Reduce the amount of work that needs to be done during peak time.

C) Move some work to off-peak time.

D) Encourage customers to come at off-peak times.

13) Packages arrive at a facility at a rate of 30 per hour and are processed continuously at a rate of 25 per hour. The facility is open from 8 a.m. to 4 p.m. How long does the last package wait before it is processed?

A) 1.75 hours B) 1.60 hours C) 1.33 hours D) 1.20 hours

14) Cranston Cranberry Cooperative (CCC) processes cranberries that are harvested in the local area. Barrels of cranberries arrive on trucks to CCC’s facility at a rate of 150 barrels per hour and are processed continuously at a rate of 100 barrels per hour. Trucks arrive at a uniform rate over 8 hours, from 6:00 a.m. until 2:00 p.m. What is the maximum number of barrels of cranberries that are waiting on the trucks at any given time?

A) 100 barrels B) 200 barrels C) 400 barrels D) Infinitely many barrels

15) Shipments arrive and are unloaded at a supermarket every morning between the hours of 5:30 a.m. and 9 a.m. at the rate of 45 pallets per hour. Store employees begin stocking the shelves at 5:30 a.m. at the rate of 29 pallets per hour. How long does the last pallet wait before being stocked on the shelves?

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A) 0.55 hours B) 1.67 hours C) 1.93 hours D) 2.22 hours

16) Which of the following is a reason why queues will form even if capacity exceeds demand?

A) There is no variability in average capacity.

B) Customers do not arrive in a consistent pattern.

C) Customers arrive in a consistent pattern.

D) There is no variability in the arrival of customers.

17) Given the following data at the drive-through of a bank, what is the interarrival time between the second and third customers?

Customer

Arrival Time

1 2 3 4

8:06 8:10 8:15 8:36

Service Time (minutes) 5 10 7 2

A) 4 minutes B) 5 minutes C) 10 minutes D) 20 minutes

18) Given the following data at the drive-through of a bank, what is the processing time of the second customer?

Customer 1

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Service Time (minutes) 5

5

2

8:10

10

3

8:15

7

4

8:36

2

A) 20 minutes B) 15 minutes C) 11 minutes D) 10 minutes

19) Given the following data at the drive-through of a bank, what is the average processing time from 8:06 to 8:36?

Customer

Arrival Time

Service Time (minutes)

1

8:06

5

2

8:10

10

3

8:15

7

4

8:36

2

A) 10 minutes B) 8 minutes C) 7.5 minutes D) 6 minutes

20) Given the following data at the drive-through of a bank, what is the average interarrival time from 8:06 to 8:36?

Customer

Arrival Time

Service Time (minutes)

1

8:06

5

2

8:10

10

3

8:15

7

4

8:36

2

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A) 10 minutes B) 8 minutes C) 7.5 minutes D) 6 minutes

21)

Given the following data at the drive-through of a bank:

Customer

Arrival Time

Service Time (minutes)

1

8:06

5

2

8:10

10

3

8:15

7

4

8:36

2

Which of the following statements is TRUE regarding the time from 8:06 to 8:36 for the bank?

A) The arrival rate is 4 customers per hour.

B) The average capacity is 6 customers per hour.

C) On average, there is enough capacity to serve all customers.

D) The service rate is more variable than the arrival rate because service rate has a higher standard deviation.

22) Which of the following is the best measure to compare the variability of two arrival processes?

A) Standard deviation B) Range C) Mean D) Coefficient of variation

23)

A coefficient of variation for a service process is less than one if the service rate ______.

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A) is uncertain B) is dependent on each customer C) is somewhat consistent D) has high variability

24) The average time to serve a customer at a fast-food restaurant is 4 minutes. The standard deviation of the service time is 3 minutes. What is the coefficient of variation of the service time?

A) 4 B) 3 C) 1.33 D) 0.75

25)

What is the key assumption for the single-server queue model?

A) The average interarrival time is greater than the average process time.

B) The average interarrival time is less than the average process time.

C) The capacity of the server is less than the demand rate.

D) The flow rate is greater than the capacity.

26)

Which of the following is NOT a performance measure of a single-server queue system?

A) The average number of customers in service B) The average number of customers waiting in the queue C) The average time a customer waits in the queue D) The average number of customers who leave the system

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27) Which of the following is TRUE regarding the utilization of the server for the one-queue, one-server model?

A) Utilization is greater than one.

B) Utilization is less than one.

C) A high service variability will lead to high utilization.

D) A low service variability will lead to high utilization.

28)

A server is idle 8% of the time. What is the server’s utilization?

A) 8% B) 92% C) 100% D) Cannot be determined

29) Consider a single-server queue system for which customers arrive at a rate of 10 per hour and the average processing time is 1.5 minutes. What is the server utilization?

A) 0.60 B) 0.25 C) 0.15 D) 0.10

30) A server operates with 80% utilization. The coefficient of variation for the service process is 0.5 and the coefficient of variation of the arrival process is 1. The average processing time is 3 minutes. What is the average time a customer waits in the queue according to the single-server queue model?

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A) 10.5 minutes B) 7.5 minutes C) 3.75 minutes D) 3 minutes

31) A server operates with 80% utilization. The coefficient of variation for the service process is 0.5 and the coefficient of variation of the arrival process is 1. The average processing time is 3 minutes. What is the average time a customer spends in the system according to the single-server queue model?

A) 10.5 minutes B) 7.5 minutes C) 3.75 minutes D) 3 minutes

32) On average, a customer waits 8 minutes in a queue and customers arrive at a rate of 15 per hour. What is the average number of customers waiting according to the single-server queue model?

A) 8 B) 4 C) 2 D) 0.5

33) Which of the following statements is FALSE regarding the waiting time in a singleserver queue model?

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A) When capacity decreases, the average waiting time increases.

B) When the processing time decreases, the average waiting time decreases.

C) When variability in the arrival or service process increases, the average waiting time increases.

D) When utilization increases, the average waiting time decreases.

34) The drivers of waiting time in a single-server queue system include all of the following EXCEPT ______.

A) utilization B) capacity C) variability D) learning

35) Five customers arrive at a small post office between 10:00 a.m. and 10:30 a.m. Given the following arrival and processing data, what is the average processing time during this timeframe?

Customer

Arrival Time

1 2 3 4 5

10:00 10:08 10:14 10:23 10:30

Service Time (minutes) 4 7 6 3 5

A) 3 minutes B) 5 minutes C) 7 minutes D) 25 minutes

36) Five customers arrive at a small post office between 10:00 a.m. and 10:30 a.m. Given the following arrival and processing data, what is the average interarrival time during this timeframe?

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Customer

Arrival Time

1 2 3 4 5

10:00 10:08 10:14 10:23 10:30

Service Time (minutes) 4 7 6 3 5

A) 4.5 minutes B) 5 minutes C) 6 minutes D) 7.5 minutes

37) The average time to cut a customer’s hair at a barber shop is 20 minutes. The standard deviation of the service time is 6 minutes. What is the coefficient of variation of the service time?

A) 0.3 B) 3.33 C) 6 D) 20

38) A post office clerk operates with 75% utilization. The coefficient of variation for the service process is 0.6 and the coefficient of variation of the arrival process is 0.9. The average processing time is 4 minutes. What is the average time a customer waits in the queue according to the single-server queue model?

A) 3.51 minutes B) 4 minutes C) 7.02 minutes D) 11.02 minutes

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39) A post office clerk operates with 75% utilization. The coefficient of variation for the service process is 0.6 and the coefficient of variation of the arrival process is 0.9. The average processing time is 4 minutes. What is the average time a customer spends in the system according to the single-server queue model?

A) 3.51 minutes B) 4 minutes C) 7.02 minutes D) 11.02 minutes

40) On average, a customer waits 5 minutes in a queue and customers arrive at a rate of 12 per hour. What is the average number of customers waiting according to the single-server queue model?

A) 0.5 B) 1 C) 2 D) 5

41) There are 4 servers in the checkout area. The interarrival time of customers is 2 minutes.

The processing time is 5 minutes. What is the utilization of the servers?

A) 2.500 B) 0.625 C) 0.400 D) 0.100

42) The assumptions of the stable multiple-server queue model include the following EXCEPT ______.

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A) the capacity of the system is less than the flow rate B) the customers will wait for their turn to complete the service C) each customer is served by one agent D) the capacity of the system is greater than demand

43) The interarrival time of customers is 2 minutes. The processing time is 5 minutes. What is the minimum number of servers needed?

A) 2 B) 2.5 C) 3 D) 4

44)

Which of the following statements is true regarding a stable queue?

A) The utilization is greater than 100%.

B) The utilization is less than 100%.

C) The utilization exceeds capacity.

D) The utilization exceeds demand.

45) Consider queues when the demand and service rates are variable with multiple servers.

The graphs below display the total number of customers in the system (y-axis) in relation to time (x-axis). Which graph displays a stable queue?

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A)

B)

C) D) Cannot be determined

46) There are 4 servers in the checkout area. The interarrival time of customers is 2 minutes.

The processing time is 5 minutes. The coefficients of variation for the arrival process and the service process are 1 and 0.85 respectively. What is the average time in queue (rounded to the nearest whole number)?

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A) 1 minute B) 2 minutes C) 3 minutes D) 4 minutes

47) There are 3 servers in the checkout area. The interarrival time of customers is 2 minutes.

The processing time is 5 minutes. The coefficients of variation for the arrival process and the service process are 1 and 0.85 respectively. What is the average number of customers that are waiting (rounded to the nearest whole number)?

A) 1 B) 2 C) 3 D) 4

48) There are 3 servers in the checkout area. The interarrival time of customers is 2 minutes.

The processing time is 5 minutes. The coefficients of variation for the arrival process and the service process are 1 and 0.85 respectively. What is the average number of customers in service?

A) 0.83 B) 1.00 C) 1.67 D) 2.5

49) Which of the following statements is TRUE when more servers are added to a multipleserver queue?

A) The average time in queue increases.

B) The utilization increases.

C) The average number of customers in service increases.

D) The average number of customers in service remains the same.

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50) There are 3 servers in the checkout area. The interarrival time of customers is 2 minutes.

The processing time is 5 minutes. The coefficients of variation for the arrival process and the service process are 1 and 0.85 respectively. What will be the impact on the average number of customers in service if one more server is added?

A) Increases from 1.25 to 2.5 B) Decreases from 2.5 to 1.25 C) Remains the same at 2.5 D) Remains the same at 1.25

51) Which of the following statements is typically TRUE regarding a self-service queue (e.g., customers do their own service) relative to a queue in which the servers are employees?

A) The processing time of a self-service queue is longer.

B) The processing time of a self-service queue is shorter.

C) The processing time of a self-service queue is the same.

D) The processing time of a self-service queue can be longer or shorter.

52) Camille owns Crunch Code, a company that provides quick programming solutions.

Clients send projects to Crunch via their web page and a programmer develops the necessary code as quickly as possible. Camille has five programmers who do all of the coding. On average, a project arrives once every 4.8 hours with a standard deviation of 6.00 hours. Each project is assigned to one programmer and that programmer takes on average 19.2 hours to complete each project with a standard deviation of 19.2 hours.

How many uncompleted projects does Crunch Code have in the system on average at any given time? (Include projects waiting for a programmer as well as those being programmed.)

A) 3.45 projects B) 6.96 projects C) 12.56 projects D) 98.72 projects

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53) Find a Doctor (FaD) is a small startup that helps people find a physician that best meets their needs (location, insurance accepted, etc.). FaD has 7 representatives who take calls from customers. On average, one call arrives every 6 minutes (with a standard deviation of 6). On average, each representative spends 20 minutes with each customer (with a standard deviation of 30). On average, how long (in minutes) does a customer spend waiting on hold before he/she can speak to a representative?

A) 0.03 minute B) 0.50 minute C) 0.85 minute D) 0.96 minute

54) There are 3 servers in the checkout area. The interarrival time of customers is 1.5 minutes. The processing time is 2.5 minutes. What is the utilization of the servers?

A) 0.20 B) 0.56 C) 0.60 D) 1.67

55) The interarrival time of customers is 1.5 minutes. The processing time is 7 minutes. What is the minimum number of servers needed?

A) 3 B) 4 C) 4.67 D) 5

56) There are 3 servers in the checkout area. The interarrival time of customers is 2.5 minutes. The processing time is 6 minutes. The coefficients of variation for the arrival process and the service process are 0.7 and 0.6 respectively. What is the average time in the queue?

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A) 2.00 minutes B) 2.83 minutes C) 6.67 minutes D) 8.83 minutes

57) There are 3 servers in the checkout area. The interarrival time of customers is 2.5 minutes. The processing time is 6 minutes. The coefficients of variation for the arrival process and the service process are 0.7 and 0.6 respectively. What is the average time in the entire system?

A) 2.00 minutes B) 2.83 minutes C) 6.67 minutes D) 8.83 minutes

58) There are 3 servers in the checkout area. The interarrival time of customers is 2.5 minutes. The processing time is 6 minutes. The coefficients of variation for the arrival process and the service process are 0.7 and 0.6 respectively. What is the average number of customers that are waiting for service?

A) 1.13 B) 1.82 C) 2.44 D) 3.25

59) There are 4 servers in the checkout area. The interarrival time of customers is 1.5 minutes. The processing time is 6 minutes. The coefficients of variation for the arrival process and the service process are 1 and 0.85 respectively. What is the average number of customers in service?

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A) 4 B) 3.33 C) 2.67 D) 2.2

60) Consider a multiple-server system. Suppose the demand rate doubles and the number of servers doubles while all else remains the same. Which of the following statements is TRUE? A) Time in queue increases.

B) Time in queue decreases.

C) Time in queue remains unchanged.

D) Time in queue could increase or decrease depending on how utilization changes.

61) Which of the following graphs correctly portrays the relationship between time in queue ( y-axis) and utilization ( x-axis) for a single-queue, multiple-server system?

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A)

B)

C)

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D)

62) Which of the following graphs correctly portrays the trade-off between time in queue (yaxis) and utilization (x-axis) as more servers are added to a multiple-server queue system?

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A)

B)

C)

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D)

63) When a process has economies of scale in the operations of a system with queues, it means a _________ queue system can be more _________.

A) smaller, costly B) larger, efficient C) smaller, efficient D) larger, costly E) smaller, cost effective

64) If the number of servers doubles but processing times and utilization remain the same, then what change in the interarrival time must have occurred?

A) Doubles B) Halves C) Triples D) Remains the same

65)

A ______ queue system is one in which each customer is served by a ________ server.

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A) separate, pooled B) separate, designated C) shared, pooled D) shared, designated

66)

A ________ queue system is one in which _______ is shared across all servers.

A) separate, supply B) separate, demand C) pooled, supply D) pooled, demand

67) A pooled queue system can operate more effectively than a separate queue system by ___________.

A) making servers work more B) making servers work faster C) taking advantage of economies of scale D) taking advantage of economies of scope

68)

An indicator of inefficiency in a separate queue system is ______.

A) having idle servers B) having waiting customers C) having idle servers and waiting customers at the same time D) having idle servers or waiting customers

69)

A pooled queue system increases the _________ of the __________ process.

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A) processing time, supply B) processing time, demand C) flexibility, supply D) flexibility, demand

70) Which of the following statements is TRUE about economies of scale in queuing systems?

A) A large system is more sensitive to utilization than a smaller system.

B) A large system is more efficient than a small system.

C) A large system is more inflexible than a small system.

D) Cost per customer in a large system is higher than in a small system.

71) A supermarket has eight checkout lanes, each with a cashier and line of customers. This is an example of a ______ queue system.

A) pooled B) separate C) single-server D) shared

72) A post office has three clerks at the service counter and a single waiting line. Whenever a clerk becomes free, he/she waits on the customer at the front of the waiting line. This is an example of a(an) ______ queue system.

A) pooled B) separate C) single-server D) inflexible

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73) A queue of customers will form if the demand rate is greater than the process capacity and customers are willing to wait. ⊚ true ⊚ false

74)

A good way to improve waiting time is to simply turn customers away. ⊚ true ⊚ false

75)

A queue will not form if capacity exceeds demand. ⊚ true ⊚ false

76) The coefficient of variation of the arrival process is close to one if the arrivals are independent of each other. ⊚ ⊚

true false

77) The number of servers has no influence on the number of customers in service (assuming the queue is stable). ⊚ true ⊚ false

78)

A pooled queue system improves system performance by having more servers. ⊚ true ⊚ false

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Answer Key Test name: Chap 16_3e_Cachon 1) D 2) C 3) C 4) D 5) B 6) D 7) D 8) B 9) A 10) C 11) D 12) D 13) B 14) C 15) C 16) B 17) B 18) D 19) D 20) A 21) C 22) D 23) C 24) D 25) A 26) D Version 1

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27) B 28) B 29) B 30) B 31) A 32) C 33) D 34) D 35) B 36) D 37) A 38) C 39) D 40) B 41) B 42) A 43) C 44) B 45) A 46) A 47) C 48) D 49) D 50) C 51) A 52) B 53) D 54) B 55) D 56) B Version 1

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57) D 58) A 59) A 60) B 61) C 62) A 63) B 64) B 65) B 66) D 67) C 68) C 69) C 70) B 71) B 72) A 73) TRUE 74) FALSE 75) FALSE 76) TRUE 77) TRUE 78) FALSE

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CHAPTER 17 1) Consider a queuing system where customers are unwilling or unable to wait for service; the average interarrival time is the average time between the ______.

A) processing of two successive customers B) arrival of two successive customers C) departure of two successive customers D) service of two successive customers

2) A queuing model that applies to a queuing system where customers are unwilling or unable to wait for service is called the ______.

A) Copenhagen model B) Krarup model C) Little model D) Erlang loss model

3)

The Erlang loss model has the following assumptions EXCEPT ______.

A) there may be many servers B) customers do not wait C) the coefficient of variation of the interarrival time is one D) the coefficient of variation of the processing time is one

4) Consider an Erlang loss system. The average processing time is 5 minutes. The average interarrival time is 2 minutes. The number of servers is 6. What is the capacity of the system?

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A) 2.4 customers per minute B) 1.2 customers per minute C) 0.8 customers per minute D) 0.4 customers per minute

5) Consider an Erlang loss system. The average processing time is 5 minutes. The average interarrival time is 2 minutes. The number of servers is 6. What is the implied utilization of the system?

A) 2.402 B) 1.231 C) 0.812 D) 0.417

6) Consider an Erlang loss system. The average processing time is 5 minutes. The average interarrival time is 2 minutes. The number of servers is 6. Which of the following statements regarding this system is TRUE? A) Demand exceeds capacity.

B) There is no lost demand.

C) Variability in processing time reduces lost demand.

D) There is never a queue.

7) The performance measures of an Erlang loss system include all the following EXCEPT ______.

A) the probability that a customer is denied service B) the percentage of time the system is unable to serve demand C) the interarrival time D) the average utilization of the system

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8)

Which of the following statements regarding an Erlang loss system is TRUE?

A) The percentage of time the system is unable to serve demand is independent of the volume of lost demand.

B) The volume of lost demand is related to the flow rate through the system.

C) The flow rate of customers is directly related to cost.

D) The average utilization of the system is directly related to revenue.

9) Which of the following performance measures of an Erlang loss system is directly related to the cost of idle servers?

A) Amount of lost demand B) Flow rate C) Average utilization D) Denial of service probability

10)

The denial of service probability is the probability that all ________ are ________.

A) servers, idle B) servers, busy C) customers, idle D) customers, busy

11)

________ is the ratio of demand to the capacity of one server.

A) Accepted load B) Offered load C) Demand load D) Capacity load

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12)

Which of the following statements about offered load is TRUE? A) Offered load is the same as implied utilization.

B) Offered load accounts for the actual number of servers.

C) The higher the value of offered load, the greater the denial of service probability.

D) The higher the value of offered load, the smaller the denial of service probability.

13) The Erlang Loss Table for Denial of Service Probability has inputs of the ________ and _________.

A) processing time, interarrival time B) processing time, number of servers C) number of servers, interarrival time D) number of servers, offered load

14) Consider an Erlang loss system. The average processing time is 3 minutes. The average interarrival time is 2 minutes. The number of servers is 4. What is the offered load?

A) 2.00 B) 1.50 C) 1.33 D) 0.33

15) Consider an Erlang loss system. The average processing time is 3 minutes. The average interarrival time is 2 minutes. The number of servers is 4. What is the probability that all servers are busy? Use Table 17.1.

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A) 0.0004 B) 0.0016 C) 0.0042 D) 0.0480

16) Consider an Erlang loss system. The average processing time is 3 minutes. The average interarrival time is 4 minutes. The number of servers is 2. What is the rate of lost demand in customers per hour (rounded to the nearest whole number)?

A) 4 B) 3 C) 2 D) 1

17) Consider an Erlang loss system. The average processing time is 3 minutes. The average interarrival time is 5 minutes. The number of servers is 4. What is the flow rate in customers per hour (rounded to the nearest whole number)?

A) 13 B) 12 C) 8 D) 6

18) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 4 minutes. The number of servers is 4. What is the utilization of the servers?

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A) 0.238 B) 0.323 C) 0.357 D) 0.375

19) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 8 minutes. The number of servers is 3. What is the average number of occupied servers?

A) 0.242 B) 0.725 C) 0.969 D) 1.450

20) Consider an Erlang loss system. The average processing time is 3 minutes. The average interarrival time is 4 minutes. The number of servers is 2. What is the average number of idle servers?

A) 1.000 B) 1.031 C) 1.354 D) 0.646

21) Consider an Erlang loss system. The average processing time is 4 minutes. The average interarrival time is 3 minutes. How many servers does the system need to achieve a denial of service probability of no more than 0.01? Use Table 17.1.

A) 3 B) 4 C) 5 D) 6

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22) Consider an Erlang loss system. The average processing time is 4 minutes. A denial of service probability of no more than 0.01 is desired. The average interarrival time is 10 minutes.

How many servers does the system need? Use Table 17.1.

A) 2 B) 3 C) 4 D) 5

23) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 4 minutes. The number of servers is 3. What is the capacity of the system?

A) 0.5 customers per minute B) 0.75 customers per minute C) 1.33 customers per minute D) 2.0 customers per minute

24) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 4 minutes. The number of servers is 3. What is the implied utilization of the system?

A) 33.3% B) 50% C) 66.7% D) 100%

25) Consider an Erlang loss system. The average processing time is 5 minutes. The average interarrival time is 3 minutes. The number of servers is 2. What is the offered load?

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A) 0.60 B) 1.00 C) 1.33 D) 1.67

26) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 4 minutes. The number of servers is 3. What is the probability that all servers are busy? UseTable 17.1.

A) 2.55% B) 4.80% C) 13.43% D) 31.03%

27) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 5 minutes. The number of servers is 3. What is the rate of lost demand in customers per hour?

A) 0.018 B) 0.0898 C) 1.08 D) 5.39

28) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 5 minutes. The number of servers is 3. What is the flow rate in customers per hour?

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A) 1.08 B) 10.92 C) 26.72 D) 30

29) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 5 minutes. The number of servers is 3. What is the utilization of the servers?

A) 36.4% B) 44.8% C) 62.1% D) 72.4%

30) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 5 minutes. The number of servers is 3. What is the average number of occupied servers?

A) 2.54 B) 2.18 C) 1.91 D) 1.09

31) Consider an Erlang loss system. The average processing time is 6 minutes. The average interarrival time is 5 minutes. The number of servers is 3. What is the average number of idle servers?

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A) 2.54 B) 2.18 C) 1.91 D) 1.09

32) Consider an Erlang loss system. The average processing time is 5 minutes. The average interarrival time is 4 minutes. How many servers does the system need to achieve a denial of service probability of no more than 0.03? UseTable 17.1.

A) 3 B) 4 C) 5 D) 6

33) Consider an Erlang loss system. The average processing time is 9 minutes. The average interarrival time is 6 minutes. How many servers does the system need to achieve a denial of service probability of no more than 0.01? UseTable 17.1.

A) 3 B) 4 C) 5 D) 6

34) A hardware store rents 1 wood chipper. A request to rent the chipper arrives every 3 days with a standard deviation of 2 days. On average, clients rent the chipper for 1 day. If a request arrives and the chipper is not available, customers rent from another company. What percentage of demand is lost? UseTable 17.1.

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A) 0% B) 33% C) 25% D) 75%

35) A hardware store rents 1 wood chipper. A request to rent the chipper arrives every 3 days with a standard deviation of 2 days. On average, clients rent the chipper for 1 day. If a request arrives and the chipper is not available, customers rent from another company. What is the utilization of the wood chipper?

A) 0% B) 25% C) 33% D) 75%

36) Consider an Erlang loss system. Which of the following graphs shows the effect of increasing system sizes on the relationship between denial of service probability ( y-axis) and implied utilization ( x-axis)?

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A)

B)

C)

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D)

37) For an Erlang loss system, the higher the ________, the higher the ____________, holding everything else constant.

A) implied utilization, probability that all servers are idle B) implied utilization, denial of service probability C) interarrival time, number of servers D) interarrival time, processing time

38) Which of the following statements is TRUE regarding economies of scale in Erlang loss systems?

A) Holding implied utilization constant, systems with more servers can cope with demand much better than systems with fewer servers.

B) Holding implied utilization constant, systems with fewer servers can cope with demand much better than systems with more servers.

C) The number of servers decreases as fast as the demand rate.

D) The number of servers increases at the same rate as the processing time.

39)

Which of the following is a way to create large Erlang loss systems?

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A) Create separate smaller systems.

B) Combine separate smaller systems into a larger system.

C) Reduce interarrival time.

D) Increase interarrival time.

40) The interarrival time of a pooled Erlang loss system can be computed as the ________ of the _________ of the separate systems.

A) reciprocal, combined interarrival times B) average, combined interarrival times C) average, combined demand D) reciprocal, combined demand

41) There are ___________ marginal returns to pooling because the incremental benefits of pooling _______ as you do more pooling.

A) declining, decrease B) declining, increase C) increasing, decrease D) increasing, increase

42)

Which of the following is NOT a benefit of pooling?

A) Lower denial of service probability B) Higher utilization C) Reduced distance to customers D) Higher implied utilization

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43) Consider two Erlang loss systems. System A has an interarrival time of 15 minutes.

System B has an interarrival time of 10 minutes. What is the interarrival time of the combined system if the demand of the combined system is the sum of the demands of the separate systems?

A) 0.04 minute B) 0.08 minute C) 6 minutes D) 12.5 minutes

44) Inventory within a process is also called a _________ as it helps a process mitigate the negative consequences of ____________.

A) storage, incapability B) storage, variability C) buffer, incapability D) buffer, variability

45) Which of the following graphs illustrates the relationship between probability of a full system ( y-axis) and buffer size ( x-axis) in the case of one server at a fixed implied utilization?

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A)

B)

C)

D)

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46) Which of the following graphs demonstrates the effect of a higher implied utilization on the relationship between percentage of demand served (y-axis) and buffer size (x-axis) in the case of one server?

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A)

B)

C)

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D)

47) The "add buffers" strategy improves the performance of an Erlang loss system by ______.

A) having customers abandon the queue B) having customers balk from the queue C) increasing the probability of a full system D) reducing the probability of a full system

48) A customer chooses not to enter the queue when he/she arrives at the queue; this is called _______.

A) balking B) abandoning C) reneging D) engaging

49)

A customer leaves a queue that he/she has joined; this is called ________.

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A) postponing B) repositioning C) balking D) abandoning

50) Which of the following graphs shows the relationship between average waiting time ( xaxis) and the fraction of customers who renege ( y-axis)?

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A)

B)

C)

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D)

51)

Consider a buffer with K spots in an Erlang loss system; demand is lost only if ______.

A) all of the servers are occupied B) there are fewer than K customers waiting C) the offered load is greater than 1 D) all the servers are occupied and there are K customers waiting

52) For the same implied utilization, an Erlang loss system with _______ servers has all of its servers occupied _________ than a system with _______ servers.

A) more, more often, fewer B) more, less often, fewer C) faster, more often, slower D) slower, less often, faster

53) Which of the following process flow diagrams portrays an Erlang loss system with a buffer that could help to prevent starving?

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A)

B)

C)

D)

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54) Consider two Erlang loss systems. System A has an interarrival time of 4 minutes.

System B has an interarrival time of 8 minutes. What is the interarrival time of the combined system if the demand of the combined system is the sum of the demands of the separate systems?

A) 0.125 minute B) 2.67 minutes C) 6.00 minutes D) 12.00 minutes

55)

Another term for abandoning is ________.

A) reneging B) repositioning C) balking D) postponing

56)

Which of the following is NOT a negative consequence of variability?

A) Increases the implied utilization B) Creates queues of waiting customers C) Causes a process to lose demand D) Causes a process to lose capacity

57) With a _______ queue, the ________ of one queue becomes the ______ to another queue in a sequential process.

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A) tandem, input, output B) tandem, output, input C) buffer, output, input D) buffer, input, output

58) Which of the following is a problem in a tandem queue when there is variability in processing times?

A) Bypassing B) Batching C) Blocking D) Buffering

59) A resource is ________ when it would like to begin working on a unit but there is no unit available to work on.

A) balked B) blocked C) satisfied D) starved

60)

___________ is a way to predict the performance of a tandem queue.

A) A simple mathematical equation B) Regression analysis C) Discrete event simulation D) Structured equation modeling

61)

Which of the following is a way to reduce variability in processing time?

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A) Use standard working procedures B) Reduce buffer size C) Switch to separate queues D) Adopt sequential processes

62) Which of the following is NOT a way to mitigate the negative consequences of variability?

A) Avoid sequential processes B) Increase buffer size C) Decrease buffer size D) Use standard working procedures

63)

________ are guidelines and instructions that detail how a task is to be completed.

A) Fishbone charts B) Flow charts C) Process flow diagrams D) Standard working procedures

64) Which of the following statements is TRUE regarding a strategy to add buffers to a process?

A) It is generally more expensive to add buffer space than capacity.

B) Larger buffers decrease the implied utilization of a process.

C) A buffer helps to reduce processing time variability.

D) A buffer helps to reduce blocking and starving.

65)

Avoiding sequential servers is one way to ______.

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A) increase processing times B) reduce blocking and starving C) accelerate the interarrival time D) increase reneging

66) Which of the following statements is TRUE regarding the following process flow diagram:

A) Station 1 is blocked if the buffer between stations 1 and 2 is full.

B) Station 1 is starved if the buffer between stations 1 and 2 is full.

C) Station 2 is starved if the buffer between stations 1 and 2 is full.

D) Station 2 is blocked if the buffer in front of station 1 is full.

67)

Which of the following process flow diagrams has no blocking or starving?

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A)

B)

C)

D)

68)

The consequence of blocking and starving is ______.

A) a loss in flow rate B) a gain in flow rate C) a gain in processing time D) a loss in processing time

69) ________ is a principle that states that a system’s _______ decreases if it does not have sufficient ________.

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A) Blocking or starving, output, resources B) Blocking or starving, capacity, buffers C) Buffer or suffer, output, resources D) Buffer or suffer, capacity, buffers

70) Which of the following most directly expresses the motivation behind the expression "Buffer or Suffer"?

A) To increase capacity, it is important to pool queues; otherwise, the system will experience longer waiting times.

B) Sufficient buffers between the resources can help to ensure inventory exists at each resource so that flow rate will not be reduced by blocking or starving.

C) Variability in the service process reduces capacity more than variability in the arrival process.

D) It is important that machines are endowed with systems that avoid breakdowns (security buffers) to minimize down time.

71) Which of the following statements is TRUE regarding the following process flow diagram:

A) Station 1 is blocked if the buffer between stations 1 and 2 is empty.

B) Station 1 is starved if the buffer between stations 1 and 2 is empty.

C) Station 2 is starved if the buffer between stations 1 and 2 is empty.

D) Station 2 is blocked if the buffer between stations 1 and 2 is full.

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72)

Which of the following is NOT a benefit associated with increasing buffer size?

A) It helps to reduce blocking and starving.

B) It makes problems in the process more obvious.

C) It helps to mitigate the effects of variability in processing times.

D) It tends to be inexpensive as compared to adding capacity.

73) There is never a queue in a system if customers are unwilling or unable to wait for service. ⊚ ⊚

true false

74) The implied utilization of a system where customers are unwilling or unable to wait cannot be greater than 100%. ⊚ ⊚

true false

75) Economies of scale are demonstrated in an Erlang loss system because the number of servers required increases faster than the demand rate to maintain a particular level of denial of service probability. ⊚ ⊚

true false

76) The interarrival time of a pooled Erlang loss system is always the sum of the interarrival times of the separate systems. ⊚ true ⊚ false

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77) Buffering allows a process to generate more output by adding capacity at a particular step in the process. ⊚ ⊚

78)

true false

The flow rate of a system is reduced when blocking and/or starving occur. ⊚ ⊚

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31

Answer Key Test name: Chap 17_3e_Cachon 1) B 2) D 3) D 4) B 5) D 6) D 7) C 8) B 9) C 10) B 11) B 12) C 13) D 14) B 15) D 16) C 17) B 18) C 19) B 20) C 21) C 22) B 23) A 24) B 25) D 26) C Version 1

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27) C 28) B 29) A 30) D 31) C 32) B 33) D 34) C 35) B 36) B 37) B 38) A 39) B 40) D 41) A 42) C 43) C 44) D 45) D 46) A 47) D 48) A 49) D 50) D 51) D 52) B 53) A 54) B 55) A 56) A Version 1

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57) B 58) C 59) D 60) C 61) A 62) C 63) D 64) D 65) B 66) A 67) C 68) A 69) D 70) B 71) C 72) B 73) TRUE 74) FALSE 75) FALSE 76) FALSE 77) FALSE 78) TRUE

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CHAPTER 18 1)

An example of a scheduling decision includes all of the following EXCEPT __________.

A) who is working which shift for next week B) which machine should receive preventive maintenance next C) which countries a rock band should visit over the next two years D) what is the demand for our product to break even

2) A __________ system plans the delivery of components required for a manufacturing process so that components are available when needed but not so early as to create excess inventory.

A) bill of materials B) production schedule C) material requirements planning D) project management

3)

__________ provides a list of components that are needed for the assembly of an item.

A) A bill of materials B) A production schedule C) Material requirements planning D) Project management

4)

Which of the following occupations performs scheduling often on a week-to-week basis?

A) Professional sports league B) Flight controller C) Emergency medical dispatcher D) Airline crew

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5)

Which of the following is NOT a performance measure for scheduling?

A) Inventory B) Flow rate C) Profit D) Flow time

6)

Which of the following performance measures is dependent on a specific schedule?

A) Flow rate B) Flow time C) Average processing time D) Total processing time

7)

The __________ rule imposes the __________ on the other jobs.

A) first-come-first-served, most delay B) first-come-first-served, least delay C) shortest processing time, most delay D) shortest processing time, least delay

8) Which of the following is TRUE when comparing the shortest processing time (SPT) rule with the first-come-first-served (FCFS) rule for job sequencing?

A) Jobs spend more time in the system with SPT than with FCFS. B) The system has more capacity with SPT than with FCFS. C) Jobs spend less time in the system with SPT than with FCFS. D) The system has less capacity with SPT than with FCFS.

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9)

The processing times of five jobs are given as follows: Job

Processing time (minutes)

1

25

2

70

3

30

4

95

5

20

Assume the jobs arrived in numeric order of the job name and no other jobs arrive in the next 190 minutes. In what order would the jobs be processed according to the shortest processing time rule?

A) 1, 2, 3, 4, 5 B) 5, 4, 3, 2, 1 C) 5, 1, 3, 2, 4 D) 4, 2, 3, 1, 5

10)

The processing times of five jobs are given as follows:

Job

Processing time (minutes)

A

12

B

22

C

14

D

18

E

34

Assume the jobs arrived in alphabetical order of the job name and no other jobs arrive in the next 100 minutes. What is the average flow rate in jobs per minute?

A) 0.050 B) 0.020 C) 0.013 D) 0.010

11)

The processing times of four jobs are given as follows:

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Job A B C D

Processing time (minutes) 10 24 16 20

Assume the jobs arrived in alphabetical order of the job name and no other jobs arrive in the next 70 minutes. What is the average flow time in minutes if the jobs are processed in shortest processing time order?

A) 152 B) 70 C) 38 D) 18

12)

The processing times of five jobs are given as follows:

Job A B C D E

Processing time (minutes) 15 60 20 85 10

Assume the jobs arrived in alphabetical order of the job name and no other jobs arrive in the next 190 minutes. What is the average inventory if the jobs are processed in shortest processing time order?

A) 5.00 B) 2.92 C) 1.97 D) 1.00

13) Which of the following performance measures is better with the shortest processing time rule than the first-come-first-served rule?

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A) Average inventory (only) B) Average flow time and average flow rate C) Average flow rate (only) D) Average inventory and average flow time

14) The advantages of a shortest processing time (SPT) rule over a first-come-first-served (FCFS) rule include all of the following EXCEPT that __________.

A) SPT always gives a lower average flow time than FCFS B) the gap between SPT and FCFS is largest when there are many jobs waiting for service C) SPT always gives a lower average inventory than FCFS D) SPT treats all jobs equally

15)

All of the following information can be found in Gantt charts EXCEPT __________.

A) the job sequence B) the number of jobs C) the completion time of each job D) the variability of processing time

16) The limitations of the shortest processing time rule include all of the following EXCEPT __________.

A) shortest processing time rule is often perceived as less fair B) the average flow time for jobs is longer C) the waiting time for large jobs is longer than for small jobs D) jobs have an incentive to misrepresent their processing times

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17)

The __________ rule arranges jobs in a descending order of processing time.

A) first-come-first-served B) shortest processing time C) longest processing time D) weighted shortest processing time

18)

The __________ rule always arranges jobs in an ascending order of processing time.

A) first-come-first-served B) shortest processing time C) longest processing time D) weighted shortest processing time

19)

An IT help desk has the following six help requests waiting to be processed.

Job

A

B

C

D

E

F

Processing time (mins)

5

11

8

2

1

9

The help desk has one operator on staff. If the help desk has the objective to minimize the average flow time of its customers, which job would be the fourth to be processed?

A) E B) A C) F D) B E) C F) D

20) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has five jobs to complete today. Below are their processing times: Job

Processing time (hours)

A

1.2

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B

0.7

C

2.5

D

1.5

E

2.1

Assuming no other jobs arrive today, in what order would the jobs be processed using to the shortest processing time rule?

A) A, B, C, D, E B) B, A, D, E, C C) C, E, D, A, B D) E, D, C, B, A

21) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has five jobs to complete today. Below are their processing times: Job

Processing time (hours)

A

1.2

B

0.7

C

2.5

D

1.5

E

2.1

Assuming no other jobs arrive today, what is the average flow rate in jobs per hour if the jobs are processed using the shortest processing time rule?

A) 0.625 B) 0.960 C) 1.250 D) 1.600

22) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has five jobs to complete today Below are their processing times: Job

Processing time (hours)

A

1.2

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B

0.7

C

2.5

D

1.5

E

2.1

Assuming no other jobs arrive today, what is the average flow time in hours if the jobs are processed using the shortest processing time rule?

A) 1.58 B) 3.90 C) 8.00 D) 19.50

23) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has five jobs to complete today. Below are their processing times: Job

Processing time (hours)

A

1.2

B

0.7

C

2.5

D

1.5

E

2.1

Assuming no other jobs arrive today, what is the average inventory if the jobs are processed using the shortest processing time rule?

A) 5.00 B) 3.24 C) 2.50 D) 2.44

24) Which of the following is NOT a situation that illustrates that some jobs cost more than others?

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A) Not all customers have the same urgent needs B) Some customers are more patient than others C) Some customers are more profitable than others D) Not all customers arrive at the same time

25) The ___________ rule sequences jobs in decreasing order of the ratio of the job's cost per unit of time in the system to its processing time.

A) first-come-first-served B) shortest processing time C) longest processing time D) weighted shortest processing time

26) The weighted shortest processing time sequence is the same as the shortest processing time sequence if __________.

A) all jobs have different weights B) all jobs have the same weight C) the weights sum up to one D) the weights do not sum up to one

27) A(n) __________ weight can be assigned to the ________ consumers so that customers who are more sensitive to delays will be served first in resource scheduling with priorities.

A) lower, more impatient B) equal, less impatient C) higher, more impatient D) higher, less impatient

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28)

Consider the processing times and priorities for four jobs:

Job A B C D

Processing time (minutes) 8 20 5 40

Weight/Priority (cost per minute) 2 7 10 2

In what order should the jobs be processed if the weighted shortest processing time rule is used?

A) D, B, A, C B) C, A, B, D C) D, A, B, C D) C, B, A, D

29) In which situation is the weighted shortest processing time rule preferred to shortest processing time?

A) The weights of jobs are similar.

B) The weights of jobs are significantly different.

C) The weights of jobs are the same.

D) The weights of jobs sum up to one.

30) jobs:

Which of the following statements is FALSE regarding the given information of three

Job A B C

Processing time (minutes) 6 10 20

Weight/Priority (cost per minute) 100 1 5

Assume jobs arrive in alphabetical order of their names.

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A) The job sequence should be A, B, C if the objective is to minimize average flow time across all jobs.

B) The job sequence should be B, C, A if the objective is to minimize total weighted cost of processing the jobs.

C) The weighted shortest processing time rule is reduced to a simple priority rule.

D) The shortest processing time rule is reduced to the first-come-first-served rule.

31)

Consider the processing times and priorities for four jobs:

Job A B C D

Processing time (minutes) 10 2 50 16

Weight/Priority (cost per minute) 6 1 2 10

Assume the WSPT rule is used. Which job should be processed second?

A) A B) B C) C D) D

32)

Consider the processing times and priorities for four jobs:

Job A B C D

Processing time (minutes) 10 2 50 16

Weight/Priority (cost per minute) 6 1 2 10

Assume the WSPT rule is used. What is the average flow time in minutes?

A) 0.05 B) 1.90 C) 3.7 D) 37

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33)

Consider the processing times and priorities for four jobs:

Job A B C D

Processing time (minutes) 10 2 50 16

Weight/Priority (cost per minute) 6 1 2 10

Assume the WSPT rule is used. What is the average inventory of the jobs?

A) 0.05 B) 1.90 C) 3.7 D) 37

34) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and costs (weights): Job

Processing time (hours)

Weight/Priority (cost per hour)

A

7

7

B

5

10

C

6

8

D

2

3

In what order should the jobs be processed if the weighted shortest processing time rule is used?

A) A, C, D, B B) B, D, A, C C) B, D, C, A D) B, C, D, A

35) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and costs (weights): Job

Version 1

Processing time (hours)

Weight/Priority (cost per hour)

12

A

4

4

B

5

8

C

4

7

D

6

5

Assume the WSPT rule is used. Which job should be processed last?

A) A B) B C) C D) D

36) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and costs (weights): Job

Processing time (hours) Weight/Priority (cost per hour)

A

7

7

B

5

10

C

6

8

D

2

3

Assume the WSPT rule is used. What is the average flow time in hours?

A) 5.00 B) 11.25 C) 20.00 D) 45.00

37) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and costs (weights): Job

Processing time (hours) Weight/Priority (cost per hour)

A

7

7

B

5

10

C

6

8

D

2

3

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Assume the WSPT rule is used. What is the average inventory?

A) 0.20 B) 1.75 C) 2.25 D) 11.25

38) Which of the following performance metrics is LEAST appropriate when scheduling jobs with due dates?

A) Percent on time B) Maximum tardiness C) Minimum tardiness D) Average lateness

39) Percent on time is a measure of the fraction of jobs that are completed __________ the due date.

A) before B) after C) on or before D) on or after

40)

The __________ of a job is the difference between its __________ and due date.

A) lateness, completion time B) complexity, completion time C) lateness, arrival time D) complexity, starting time

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41)

Which of the following statements about tardiness is TRUE? A) A negative tardiness means the job is completed early.

B) A positive tardiness means the job is completed early.

C) A negative tardiness means the job is completed late.

D) A positive tardiness means the job is completed late.

42)

The __________ rule processes jobs in __________ order of their due dates.

A) shortest processing time, ascending B) earliest due date, ascending C) earliest due date, descending D) shortest processing time, descending

43) Which of the following rules is the best approach to minimize maximum lateness or tardiness?

A) Shortest processing time B) First-come-first-served C) Weighted shortest processing time D) Earliest due date

44)

Which of the following rules is the best approach to minimize average lateness?

A) Shortest processing time B) First-come-first-served C) Weighted shortest processing time D) Earliest due date

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45) Which of the following performance measure comparisons between the shortest processing time (SPT) and earliest due date (EDD) is FALSE? A) SPT is always better than EDD in minimizing average flow time.

B) SPT is always better than EDD in minimizing average lateness.

C) EDD is always better than SPT in minimizing maximum tardiness.

D) EDD is always better than SPT in maximizing percent on time.

46)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

In what order will the jobs be processed according to the earliest due date rule?

A) 4, 3, 2, 1 B) 4, 2, 1, 3 C) 3, 1, 2, 4 D) 1, 2, 3, 4

47)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

What is the lateness of job 1 if the earliest due date rule is used to sequence the jobs?

A) −32 B) −12 C) −5 D) 5

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48)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

What is the tardiness of job 4 if the earliest due date rule is used to sequence the jobs?

A) −12 B) −5 C) 0 D) 12

49)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

What is the maximum lateness if the earliest due date rule is used to sequence the jobs?

A) 29.75 B) 24.50 C) 14.00 D) −0.25

50)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

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Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

17

What is the percent on time if the earliest due date rule is used to sequence the jobs?

A) 100% B) 75% C) 50% D) 25%

51)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

What is the average tardiness if the earliest due date rule is used to sequence the jobs?

A) 0.75 B) 1.25 C) 4.25 D) 5.67

52)

Consider the processing times and due dates of the following jobs:

Job 1 2 3 4

Processing time (days) 3 19 24 8

Due date (day) 35 25 40 20

What is the average flow time if the earliest due date rule is used to sequence the jobs?

A) 54.00 B) 29.75 C) 24.50 D) 14.00

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53) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

In what order should the jobs be processed using the earliest due date rule?

A) C, B, A, D B) D, A, B, C C) B, C, A, D D) A, B, D, C

54) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

What is the lateness of job D (in hours) if jobs are processed using the earliest due date rule?

A) −15 B) −25 C) 15 D) 25

55) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job A

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Processing time (hours) Due date (hour) 20

50

19

B

10

40

C

15

35

D

55

75

What is the maximum tardiness (in hours) if jobs are processed using the earliest due date rule?

A) 0 B) 5 C) 15 D) 25

56) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

What is the percent on time if jobs are processed using the earliest due date rule?

A) 25% B) 50% C) 75% D) 100%

57) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

What is the average tardiness (in hours) if jobs are processed using the earliest due date rule?

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A) 2.50 B) 6.25 C) 10.00 D) 12.50

58) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

What is the average flow time (in hours) if jobs are processed using the earliest due date rule?

A) 46.25 B) 32.75 C) 25.00 D) 16.25

59) Jack’s Refrigeration Repair Service repairs and reconditions commercial icemakers at restaurants. Jack has four jobs to complete. Below are their processing times and due dates: Job

Processing time (hours) Due date (hour)

A

20

50

B

10

40

C

15

35

D

55

75

What is the average inventory if jobs are processed using the earliest due date rule?

A) 0.10 B) 0.45 C) 1.85 D) 2.50

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60) The theory of constraints states that the __________ of a process is primarily dictated by the __________ through the __________ resource.

A) flow time, flow rate, bottleneck B) flow time, flow rate, nonbottleneck C) flow rate, flow rate, bottleneck D) flow rate, flow time, bottleneck

61)

The first step in the application of the theory of constraints is to identify the __________.

A) purpose B) destination C) source D) bottleneck

62)

The bottleneck is the resource with the __________.

A) highest capacity B) lowest capacity C) highest implied utilization D) lowest implied utilization

63) Which of the following is an indication that the flow rate is not maximized at the bottleneck?

A) The buffer before the bottleneck is nearly full.

B) The buffer before the nonbottleneck is empty.

C) The nonbottleneck is idle.

D) The buffer after the bottleneck is nearly full.

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64) If the buffer __________ the bottleneck is nearly __________, the bottleneck is at risk of starving.

A) before, empty B) before, full C) after, empty D) after, full

65) If the buffer __________ the bottleneck is nearly __________, the bottleneck is at risk of being blocked.

A) before, empty B) before, full C) after, empty D) after, full

66)

Which of the following is NOT a challenge to an appointment system?

A) No-shows B) Uncertainty in processing times C) Uncertainty in demand D) Uncertainty in performance measures

67) In evaluating the performance of an appointment system, __________ should be high and __________ should be low.

A) flow time, utilization B) flow time, capacity C) utilization, flow time D) utilization, capacity

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68)

__________ is the total time required to process a set of jobs.

A) Makespan B) Capacity C) Demand D) Utilization

69) __________ refers to the practice of intentionally assigning __________ work to the resource than the resource can process.

A) Scheduling, more B) Scheduling, less C) Overbooking, more D) Overbooking, less

70)

Which of the following is a way to mitigate no-shows?

A) Overbooking B) Underbooking C) Underutilization D) Overutilization

71) Scheduling is the process of deciding what work to assign to which resources and when to assign the work. ⊚ true ⊚ false

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72) Jobs flow at the same rate in a system with either the shortest processing time or the firstcome-first-served sequencing. ⊚ true ⊚ false

73) The weighted shortest processing time rule sequences jobs in ascending order of the ratio of the job’s weight to its processing time. ⊚ true ⊚ false

74)

If a job is completed before its due date, then its tardiness is zero. ⊚ true ⊚ false

75) The longest processing time rule should be used to schedule jobs at the bottleneck resource if the buffer after the bottleneck is nearly empty. ⊚ true ⊚ false

76)

Using an appointment system increases the capacity of a system. ⊚ true ⊚ false

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Answer Key Test name: Chap 18_3e_Cachon 1) D 2) C 3) A 4) D 5) C 6) B 7) D 8) C 9) C 10) A 11) C 12) C 13) D 14) D 15) D 16) B 17) C 18) B 19) E 20) B 21) A 22) B 23) D 24) D 25) D 26) B Version 1

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27) C 28) D 29) B 30) B 31) A 32) D 33) B 34) C 35) D 36) B 37) C 38) C 39) C 40) A 41) D 42) B 43) D 44) A 45) D 46) B 47) C 48) C 49) C 50) D 51) C 52) B 53) A 54) D 55) D 56) C Version 1

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57) B 58) A 59) C 60) C 61) D 62) C 63) D 64) A 65) D 66) D 67) C 68) A 69) C 70) A 71) TRUE 72) TRUE 73) FALSE 74) TRUE 75) FALSE 76) FALSE

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CHAPTER 19 1) A _________ matrix captures which activities need to be _________ before other activities can start.

A) network, scheduled B) network, completed C) dependency, scheduled D) dependency, completed

2) If a _________ relationship exists between two activities, the upstream activity is called the _________ activity and the downstream activity is called the _________ activity.

A) linear, predecessor, successor B) linear, successor, predecessor C) precedence, predecessor, successor D) precedence, successor, predecessor

3) All _________ activities must be _________ before a new activity can be started in a project.

A) successor, started B) successor, completed C) predecessor, started D) predecessor, completed

4)

Given the following dependency matrix, which of the following statements is FALSE? Predecessor activity A1

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A2

A3

1

Successor activity

A1 A2 A3

X X X

A) A3 is an independent activity.

B) A1 and A2 are interdependent.

C) A2 is the predecessor of A3.

D) A1 is the successor of A2.

5)

Which of the following is NOT a possible relationship between activities in a project?

A) Independent B) Sequentially dependent C) Interdependent D) Inverse

6)

Concurrent engineering is an example of _________ of _________ activities.

A) dynamic coordination, interdependent B) dynamic coordination, independent C) static coordination, interdependent D) static coordination, independent

7) Dependencies from a dependency matrix can be visualized in a _________ that uses a collection of _________ connected by _________.

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A) graph, nodes, links B) node, graphs, links C) node, links, graphs D) link, graphs, nodes

8) In an _________ graph, _________ correspond to project activities and _________ correspond to precedence relationships.

A) arrow-on-activity, nodes, arrows B) activity-on-node, nodes, arrows C) arrow-on-activity, arrows, nodes D) activity-on-node, arrows, nodes

9) If interdependencies exist in a dependency matrix, the resultant activity network will contain _________.

A) a single path B) multiple paths C) loops D) linear flow

10) Which of the following is the activity-on-node graph for the following dependency matrix?

Predecessor activity A1 Successor activity

A3

A1 A2 A3

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A2

X X

3

A)

B)

C)

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D)

11) Which of the following is the activity-on-node graph for the following dependency matrix?

Predecessor activity A1 Successor activity

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A2

A3

A1 A2

X

A3

X

5

A)

B)

C)

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D)

12) Which of the following is the activity-on-node graph for the following dependency matrix?

Predecessor activity A1 Successor activity

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A2

A3

A1 A2

X

A3

X

X

7

A)

B)

C)

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D)

13)

Which of the following statements is TRUE about the completion time of a project?

A) It can never be equal to the sum of the activity times.

B) It is constrained by the activity with the longest activity time.

C) It must be less than the sum of the activity times.

D) It is equal to the sum of the activity times on the critical path.

14) The path through the activity network with the _________ duration is called the _________ path.

A) longest, bottleneck B) longest, critical C) shortest, critical D) shortest, bottleneck

15)

The earliest start time of the first activity is _________.

A) the minimum of the earliest completion times of all activities providing input to it B) one C) zero D) the maximum of the earliest completion times of all activities providing input to it

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16)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the project completion time?

A) 15 weeks B) 13 weeks C) 10 weeks D) 7 weeks

17)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the earliest start time of A3?

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A) 15 weeks B) 13 weeks C) 10 weeks D) 7 weeks

18)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the earliest completion time of A3?

A) 15 weeks B) 13 weeks C) 10 weeks D) 7 weeks

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19)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the earliest start time of A2?

A) 15 weeks B) 13 weeks C) 10 weeks D) 5 weeks

20)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the earliest completion time of A2?

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A) 15 weeks B) 13 weeks C) 10 weeks D) 7 weeks

21)

Below is an activity network with times (in weeks) shown above each node:

What is the project completion time?

A) 24 weeks B) 25 weeks C) 27 weeks D) 28 weeks

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22)

Below is an activity network with times (in weeks) shown above each node:

What is the critical path?

A) A-B-D-F-H B) A-B-E-F-H C) A-B-E-G-H D) A-C-G-H

23)

Below is an activity network with times (in weeks) shown above each node:

What is the earliest start time for Activity B?

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A) 5 weeks B) 7 weeks C) 12 weeks D) 28 weeks

24)

Below is an activity network with times (in weeks) shown above each node:

What is the earliest completion time for Activity C? A) 5 weeks B) 7 weeks C) 12 weeks D) 28 weeks

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25)

Below is an activity network with times (in weeks) shown above each node:

What is the earliest start time for Activity F? A) 15 weeks B) 18 weeks C) 22 weeks D) 28 weeks

26)

Below is an activity network with times (in weeks) shown above each node:

What is the earliest start time for Activity G?

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A) 15 weeks B) 18 weeks C) 23 weeks D) 28 weeks

27) _________ time is the amount of time an activity can be _________ without affecting the overall completion time of the project.

A) Earliest start, reduced B) Earliest start, delayed C) Slack, reduced D) Slack, delayed

28)

Slack time is computed by _________.

A) adding the latest start time to the earliest start time B) subtracting the earliest start time from the latest start time C) adding the latest completion time to the earliest start time D) subtracting the earliest start time from the latest completion time

29)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the critical path?

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A) A1, A2 B) A1, A3 C) A1, A2, A3 D) A2, A3

30)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the slack time for A1?

A) 8 B) 2 C) 5 D) 0

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31)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the latest completion time of A3?

A) 15 weeks B) 13 weeks C) 10 weeks D) 7 weeks

32)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the latest start time of A3?

A) 13 weeks B) 11 weeks C) 7 weeks D) 5 weeks

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33)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 8 weeks, and A3 takes 2 weeks. What is the slack of A3?

A) 8 weeks B) 6 weeks C) 4 weeks D) 0 weeks

34)

Below is an activity network with times (in weeks) shown above each node:

What is the slack time for Activity H? Hint: no calculations are necessary.

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A) 0 weeks B) 2 weeks C) 4 weeks D) 5 weeks

35)

Below is an activity network with times (in weeks) shown above each node:

What is the latest start time for Activity H? A) 19 weeks B) 23 weeks C) 24 weeks D) 28 weeks

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36)

Below is an activity network with times (in weeks) shown above each node:

What is the latest start time for Activity F? A) 19 weeks B) 23 weeks C) 24 weeks D) 28 weeks

37)

Below is an activity network with times (in weeks) shown above each node:

What is the latest start time for Activity G?

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A) 13 weeks B) 15 weeks C) 18 weeks D) 23 weeks

38)

Below is an activity network with times (in weeks) shown above each node:

What is the slack time for Activity F? A) 0 week B) 1 week C) 2 weeks D) 4 weeks

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39)

Below is an activity network with times (in weeks) shown above each node:

What is the slack time for Activity G? A) 0 week B) 1 week C) 2 weeks D) 4 weeks

40)

Below is an activity network with times (in weeks) shown above each node:

Which of the following statements is FALSE?

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A) The earliest start time for Activity A is zero since it is the first activity.

B) The project completion time is 21 weeks.

C) The slack times for activities G and H are both zero since they are the final two activities.

D) The latest start time of Activity H is 17 weeks.

41)

Below is an activity network with times (in weeks) shown above each node:

Which of the following statements is FALSE? A) The critical path is A-C-E-H. B) The earliest start time for Activity A is zero since it is the first activity.

C) The slack time Activity H is zero.

D) The latest start time of Activity H is 21 weeks.

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42)

Below is an activity network with times (in weeks) shown above each node:

Which of the following statements is FALSE? A) The project completion time is 21 weeks.

B) The earliest completion time for Activity A is zero since it is the first activity.

C) The slack time Activity H is zero.

D) The latest start time of Activity H is 17 weeks.

43)

_________ are commonly used to visualize the_________.

A) Gantt charts, resource utilization B) Gantt charts, project time line C) Flow charts, resource utilization D) Flow charts, project time line

44)

Which of the following information is NOT included in Gantt charts?

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A) The critical path B) The slack time C) The budget for the project D) The expected completion time of the project

45) The latest start time and latest completion time of an activity are computed by _________.

A) working forward through the AON graph B) working from start to end through the AON graph C) working backward through the AON graph D) working out resource dependencies through the AON graph

46) Which of the following formulas is used to compute the latest completion time of an activity, Ay? A) Min{Latest start time(Ax)} where Ax is all activities receiving input from Ay. B) Max{Latest start time(Ax)} where Ax is all activities receiving input from Ay. C) Min{Latest completion time(Ax)} where Ax is all activities receiving input from Ay. D) Max{Latest completion time(Ax)} where Ax is all activities receiving input from Ay.

47) Ay?

Which of the following formulas is used to compute the earliest start time of an activity,

A) Min{Earliest start time( Ax)} where Ax is all activities providing input to Ay. B) Max{Earliest start time( Ax)} where Ax is all activities providing input to Ay. C) Min{Earliest completion time( Ax)} where Ax is all activities providing input to Ay. D) Max{Earliest completion time( Ax)} where Ax is all activities providing input to Ay.

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48)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 7 weeks, and A3 takes 4 weeks with a 50% probability and 10 weeks with a 50% probability. What is the project completion time under the worst-case scenario, that is, A3 takes 10 weeks?

A) 9 B) 10 C) 12 D) 15

49)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 7 weeks, and A3 takes 4 weeks with a 50% probability and 10 weeks with a 50% probability. What is the project completion time under the best-case scenario, that is, A3 takes 4 weeks?

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A) 9 B) 10 C) 12 D) 15

50)

Given the following activity network:

Activity A1 takes 5 weeks, A2 takes 7 weeks, and A3 takes 3 weeks with a 50% probability and 9 weeks with a 50% probability. What is the expected project completion time?

A) 8 B) 12 C) 13 D) 14

51) Which of the following statements is FALSE regarding the impact of uncertain activity time?

A) There may be a shift in the critical path.

B) There may be a delay in the actual project completion time.

C) There may be a delay in the expected project completion time.

D) The critical path is always independent of the outcome of uncertain activity times.

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52)

A shift in critical path can occur when _________.

A) a non-critical path activity is running unexpectedly longer B) a critical path activity is running unexpectedly longer C) a non-critical path activity is running unexpectedly faster D) a critical path activity is delayed in starting

53) _________ activity time refers to forecasting activity time that is _________ than the actual amount of time required.

A) Padding, shorter B) Padding, longer C) Shifting, shorter D) Shifting, longer

54)

The following are objectives of project management EXCEPT _________.

A) completing the project on time B) completing the project within budget C) completing the project within quality specifications D) completing the project with maximum resources

55)

Which of the following is NOT part of the project management triangle?

A) Scale B) Scope C) Time D) Budget

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56) Project _________ defines a set of _________ specifications that the project needs to achieve.

A) scale, budget B) scope, quality C) scale, quality D) scope, budget

57) The _________ between project scope, time, and budget is called the project management _________.

A) competition, objectives B) competition, triangle C) conflict, triangle D) conflict, objectives

58) Which of the following is NOT a way for project managers to accelerate the completion time of a project?

A) Overlapping critical path activities B) Starting the project early C) Finalizing the project scope early D) Crashing an activity off the critical path

59) _________ an activity refers to an increase in spending with the hope of reducing the project completion time.

A) Overlapping B) Budgeting C) Crashing D) Cashing

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60)

A _________ organization is one with _________ of reporting relationships.

A) dedicated, multiple lines B) dedicated, a single line C) matrix, multiple lines D) matrix, a single line

61)

Which of the following work happens during the actual execution of a project?

A) Defining the project B) Controlling the project C) Planning the project D) Documenting project assumptions

62)

Organizing a project involves which of the following activities?

A) Planning the project B) Controlling the project C) All of these are correct D) Defining the project

63)

Which of the following is NOT involved in defining a project?

A) Defining milestones B) Defining project scope C) Defining planning assumptions D) Defining work breakdown structure

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64)

The project _________ defines what the project needs to accomplish.

A) scope B) assumption C) work breakdown structure D) resource

65)

A(n) _________ translates the project scope into specific activities.

A) team B) assumption C) work breakdown structure D) resource

66)

Which of the following is NOT a project management tool for project planning?

A) Dependency matrix B) Activity network C) Gantt chart D) Flow chart

67)

The project completion time for a project is equal to the sum of its activity times. ⊚ true ⊚ false

68) The completion time of a project is not always constrained by the activity with the longest activity time. ⊚ true ⊚ false

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69)

The slack of an activity on the critical path is zero. ⊚ true ⊚ false

70)

Variation in activity times should cancel each other out and will not cause project delays. ⊚ true ⊚ false

71)

To complete a project on time is the only objective of project management. ⊚ true ⊚ false

72)

Crashing an activity always shortens the project completion time. ⊚ true ⊚ false

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Answer Key Test name: Chap 19_3e_Cachon 1) D 2) C 3) D 4) A 5) D 6) A 7) A 8) B 9) C 10) C 11) A 12) B 13) D 14) B 15) C 16) A 17) B 18) A 19) D 20) B 21) D 22) C 23) A 24) C 25) B 26) A Version 1

35

27) D 28) B 29) A 30) D 31) B 32) B 33) B 34) A 35) B 36) A 37) B 38) B 39) A 40) C 41) D 42) B 43) B 44) C 45) C 46) A 47) D 48) D 49) C 50) C 51) D 52) A 53) B 54) D 55) A 56) B Version 1

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57) C 58) D 59) C 60) C 61) B 62) C 63) A 64) A 65) C 66) D 67) FALSE 68) TRUE 69) TRUE 70) FALSE 71) FALSE 72) FALSE

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CHAPTER 20 1) An innovation is a/an _________ between customer needs and solutions in the form of physical goods or services.

A) novel match B) existing match C) unoriginal mismatch D) novel mismatch

2)

Twitter as a new social media platform provided a novel ________ to an _________.

A) solution, existing user need B) need, existing product C) solution, unmet user need D) need, unmet product

3) Besides being a novel match between a __________ and a solution, an innovation should also create _________.

A) cost, a fad B) cost, value C) need, a fad D) need, value

4) A new product or service creates a ________ value if it costs ______ to supply the new product or service than customers are willing to pay.

A) social, more B) social, less C) financial, more D) financial, less

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5) A key function for a business development or R&D unit in an organization is to identify a/an ___________.

A) opportunity B) problem C) operation D) purpose

6)

Which of the following statements about innovations is TRUE? A) The novelty associated with an innovation can only come from the demand side.

B) The novelty associated with an innovation can only come from the supply side.

C) All innovations are incremental.

D) Innovations can be refinements of existing solutions.

7)

_________ innovations tend to serve _________ customers.

A) Incremental, new B) Incremental, existing C) Internal, new D) Internal, existing

8)

Which of the following is TRUE concerning a horizon 3 innovation?

A) It is incremental with a lot of novelty.

B) It is incremental with little novelty.

C) It is radical with a lot of novelty.

D) It is radical with little novelty.

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9)

A firm can innovate in many ways EXCEPT ______.

A) creating new production processes B) creating new products or services C) creating new markets D) creating new problems

10)

An opportunity is a new product or service at the _________ state.

A) completion B) embryonic C) advanced D) stable

11)

Which of the following is TRUE concerning a horizon 1 innovation?

A) It is incremental with a lot of novelty.

B) It is incremental with little novelty.

C) It is radical with a lot of novelty.

D) It is radical with little novelty.

12)

A product development process involves all of the following activities EXCEPT ______.

A) opportunity identification B) sales forecasting C) needs identification D) concepts generation

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13)

Which of the following is an input to a product development process?

A) Opportunity identification B) Sales forecasting C) Needs identification D) Concepts generation

14)

___________ from the product development process is the ____________.

A) Upstream, actual product production B) Downstream, actual product production C) Upstream, demand forecasting D) Downstream, demand forecasting

15)

Which of the following statements about product development is TRUE? A) It is an iterative process.

B) It is a linear sequential process.

C) It is not a process.

D) It is not manageable.

16)

All of the following are user needs described in the Kano model EXCEPT ______.

A) future needs B) performance needs C) delighters D) must-haves

17) ___________ are those needs that will lead to customer satisfaction when fulfilled but will not lead to dissatisfaction when not fulfilled.

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A) Future needs B) Performance needs C) Delighters D) Must-haves

18) ____________ are those needs that will lead to customer satisfaction when fulfilled and dissatisfaction when not fulfilled.

A) Future needs B) Performance needs C) Delighters D) Must-haves

19) __________ are those needs that will not drive customer satisfaction upwards when fulfilled but will drive satisfaction substantially downwards when not fulfilled.

A) Future needs B) Performance needs C) Delighters D) Must-haves

20) Which of the following graphs represents the utility function of performance needs according to the Kano model?

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A)

B)

C)

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D)

21) Which of the following graphs represents the utility function of must-haves according to the Kano model?

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A)

B)

C)

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D)

22) Which of the following graphs represents the utility function of delighters according to the Kano model?

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A)

B)

C)

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D)

23)

________ needs are categorized as delighters in the Kano model.

A) Performance B) Must-have C) Latent D) Future

24)

Methods of gathering customer needs include all of the following EXCEPT ______.

A) focus groups B) interviews C) meta-analyses D) contextual observations

25)

Which of the following statements about the Kano model is TRUE? A) It classifies product solutions into three categories.

B) It is an exact mathematical science.

C) It classifies user needs into three categories.

D) It is a tool for opportunity identification.

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26)

An innovation, once diffused, can go from a _________ to a _________.

A) delighter, must-have B) must-have, delighter C) delighter, nonlinear satisfier D) must-have, nonlinear satisfier

27)

Needs which customers are not aware that they have are called ________ needs.

A) Performance B) Must-have C) Latent D) Future

28)

Performance needs are also referred to as ________.

A) Delighters B) Must-haves C) Latent needs D) Linear satisfiers

29)

Which of the following questions is addressed in concept generation?

A) What are the needs of customers?

B) Why do customers have needs?

C) How can customers’ needs be fulfilled?

D) When can customers’ needs be fulfilled?

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30)

The output of concept generation is ______.

A) a set of preliminary solutions for a given set of user needs B) a finalized product specification C) a hierarchy of user needs D) a network diagram of project activities

31) A __________ is a ___________ of the final product or service that allows the product development team to predict how well a particular product concept might fulfill customers’ needs.

A) process flow diagram, representation B) process flow diagram, caricature C) prototype, representation D) prototype, caricature

32) __________ is the extent to which a prototype approximates the _________ user experience.

A) Decomposition, actual B) Decomposition, imagery C) Fidelity, imagery D) Fidelity, actual

33)

Which of the following is FALSE about high-fidelity prototypes?

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A) They are near-perfect representations of the final solution.

B) They are used primarily at the beginning of the product development process.

C) They provide accurate predictions about real customer responses.

D) They are expensive to make.

34)

Decomposing a problem means breaking it up into ________ and ________subproblems.

A) large, complex B) large, manageable C) small, complex D) small, manageable

35) The two ways to decompose a concept development problem for a new product or service are __________ and ___________.

A) variable-based, user interaction-based B) attribute-based, user interaction-based C) variable-based, attribute-based D) need-based, performance-based

36) A customer _________ curve is a graphic depiction of a new product’s relative performance across key attributes comparing it with existing offerings in the market.

A) value B) blueprint C) trade-off D) satisfaction

37)

User interaction-based decomposition breaks down a product into the ______.

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A) attributes users value when using the product B) activities users go through when using the product C) activities involved in making the product D) attributes involved in profiling the product

38)

A question that is asked in attribute-based decomposition is ______.

A) How might some attributes be eliminated?

B) How might some activities be eliminated?

C) How might new activities be introduced?

D) How might new attributes be introduced?

39)

A question that is asked in user interaction-based decomposition is ______.

A) How might some attributes be eliminated?

B) How might some activities be eliminated?

C) How might new activities be introduced?

D) How might new attributes be introduced?

40)

Which of the following tools is useful in user interaction-based decomposition?

A) Service layout diagram B) Process layout diagram C) Service blueprint D) Process blueprint

41)

A(n) ________ activity is one performed __________.

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A) backstage, during interactions with a customer B) onstage, during interactions with a customer C) backstage, by the customer alone D) onstage, by the customer alone

42)

All of the following should be considered in concept selection EXCEPT ______.

A) wow factor B) feasibility C) profit margin D) need fulfillment

43)

Which of the following is FALSE about low-fidelity prototypes?

A) They are rough representations of the final solution.

B) They are used primarily at the beginning of the product development process.

C) They provide an imperfect and noisy predictor of how well the customer need will be fulfilled.

D) They are expensive to make.

44)

Attribute-based decomposition focuses on ______.

A) a subset of attributes associated with a new product or service B) a subset of activities that users go through when using the product C) a subset of activities needed to produce the product D) a subset of attributes associated with customer purchasing traits

45)

The final activity in the concept generation stage of product development is ________.

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A) customer needs identification B) decomposition C) opportunity identification D) concept selection

46) Uncertainties associated with the novelty of an innovation include _______ uncertainty and _________ uncertainty.

A) failure, market B) failure, technical C) market, technical D) market, success

47) A technique that rapidly iterates with real customers using very simple and inexpensive prototypes is called ______.

A) high-fidelity prototyping B) post-prototyping C) decomposition D) pretotyping

48) A prototype of a new product that allows the team to collect the maximum amount of learning about customer preferences with the least amount of effort is called a ______.

A) maximum viable product B) minimum viable product C) maximum valued product D) minimum valued product

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49) A(n) ________ is a prototype that is created using mostly parts or system elements from an existing product or service.

A) fake door B) fake back-end C) one-night stand D) impersonator

50)

A(n) ______ tests a minimum viable product for a very limited time only.

A) fake door B) fake back-end C) one-night stand D) impersonator

51) A(n) ______ is a type of minimum viable product which involves offering something that you don’t yet have.

A) fake door B) fake back-end C) one-night stand D) impersonator

52) A(n) ______ is a type of minimum viable product in which the seller fulfils customer orders by acquiring the item elsewhere and pretending it was shipped from the seller’s facility.

A) fake door B) fake back-end C) one-night stand D) impersonator

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53)

Another term for lean startup is ________.

A) just-in-time production B) pretotyping C) concept selection D) minimum viable product

54) A _________ is used to measure customers’ willingness to purchase a new product or service.

A) purchase order form B) purchase intent survey C) product order form D) product awareness survey

55)

Two hundred customers filled out a purchase intent survey with the following responses:

Definitely would buy: Probably would buy: Might or might not buy: Probably would not buy: Definitely would not buy:

10 20 38 55 77

What is the purchase probability if Cdefinite = 0.4; and Cprobably = 0.2?

A) 0.01 B) 0.04 C) 0.15 D) 0.33

56)

Which of the following is the way to forecast sales of a new product or service?

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A) Market size × Fraction "definitely buy" × Fraction "probably buy" B) Market size × Awareness probability C) Market size × Purchase probability D) Market size × Purchase probability × Awareness probability

57) Given a purchase probability of 0.04 and an awareness probability of 0.1, what is the sales forecast if there are 20,000 potential customers in the target market?

A) 80 B) 800 C) 2,000 D) 2,800

58) What is the awareness probability if 1,000 of 25,000 potential customers in a target market are aware of a new product?

A) 0.004 B) 0.04 C) 25 D) 0.25

59) Given a purchase probability of 0.05, what is the sales forecast if 2,000 of 10,000 potential customers are aware of a new product?

A) 100 B) 500 C) 2,000 D) 2,500

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60)

Two hundred customers filled out a purchase intent survey with the following responses:

Definitely would buy: Probably would buy: Might or might not buy: Probably would not buy: Definitely would not buy:

28 40 55 42 35

What is the purchase probability if Cdefinite = 0.35; and Cprobably = 0.15?

A) 0.079 B) 0.085 C) 0.175 D) 0.250

61)

Two hundred customers filled out a purchase intent survey with the following responses:

Definitely would buy: Probably would buy: Might or might not buy: Probably would not buy: Definitely would not buy:

28 40 65 37 30

What is the purchase probability if Cdefinite = 0.45; and Cprobably = 0.2?

A) 0.052 B) 0.103 C) 0.221 D) 0.325

62) Given a purchase probability of 0.16 and an awareness probability of 0.2, what is the sales forecast if there are 50,000 potential customers in the target market?

A) 18,000 B) 10,000 C) 2,000 D) 1,600

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63) Given a purchase probability of 0.2 and an awareness probability of 0.3, what is the sales forecast if there are 30,000 potential customers in the target market?

A) 1,800 B) 6,000 C) 9,000 D) 15,000

64) Given a purchase probability of 0.12, what is the sales forecast if 6,000 of 40,000 potential customers are aware of a new product?

A) 720 B) 4,800 C) 6,000 D) 10,800

65)

Innovations only create financial value. ⊚ true ⊚ false

66)

A product development process translates an opportunity into a new product or service. ⊚ true ⊚ false

67)

The primary needs of a product or service are the most important needs of the consumer. ⊚ true ⊚ false

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68)

The fidelity of prototypes tends to increase as the product development process unfolds. ⊚ true ⊚ false

69)

Avoiding failure should be the main focus in new product development. ⊚ true ⊚ false

70) The actual probability of purchase of a new product is often lower than the percentage of customers who respond positively to the purchase intent survey. ⊚ true ⊚ false

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Answer Key Test name: Chap 20_3e_Cachon 1) A 2) C 3) D 4) D 5) A 6) D 7) B 8) C 9) D 10) B 11) B 12) A 13) A 14) B 15) A 16) A 17) C 18) B 19) D 20) A 21) C 22) B 23) C 24) C 25) C 26) A Version 1

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27) C 28) D 29) C 30) A 31) C 32) D 33) B 34) D 35) B 36) A 37) B 38) D 39) B 40) C 41) B 42) C 43) D 44) A 45) D 46) C 47) D 48) B 49) D 50) C 51) A 52) B 53) B 54) B 55) B 56) D Version 1

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57) A 58) B 59) A 60) A 61) B 62) D 63) A 64) A 65) FALSE 66) TRUE 67) FALSE 68) TRUE 69) FALSE 70) TRUE

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