Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley Chapter 1 Introduction to Managing Operations Across the Supply Chain 1) Which of the following is NOT one of the processes included in operations management?

A) Design B) Finance C) Produce D) Deliver Answer: B Explanation: Design, supply, produce, and deliver are operations management processes.

Finance is not.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) A supply chain is a global network of organizations and activities involved in: A) Producing, buying, servicing, and disposing of goods and services.

B) Designing, transforming, consuming, and disposing of goods and services.

C) Financing, producing, and marketing of goods and services.

D) Designing, financing, selling, and disposing of goods and services.

Answer: B Explanation: The organizations and activities in a supply chain are involved in designing, transforming, consuming, and disposing of goods and services.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) Operations managers answer questions of what, how, when, where, and who by defining both the and aspects of the operations management system.

A) Financing and capacity B) Marketing and delivery C) Structural and infrastructural D) Production and accounting Answer: C Explanation: Structural and infrastructural aspects of operations management must be defined to answer questions of what, how, when, where, and who.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Structural operations management decisions include: A) Workforce, capacity, and facilities.

B) Workforce, production planning, and materials controls.

C) Capacity, facilities, and technology.

D) Materials controls, supply chain, and value definition.

Answer: C Explanation: Structural decisions include capacity, facilities, technology, and the supply chain network. The other decisions are infrastructural decisions.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) Joe Jones was asked to undertake a project to determine the resources and capacity his firm would need in the next three to 10 years. These types of decisions are considered to be: A) Infrastructural aspects of operations management.

B) Positional aspects of operations management.

C) Assessment aspects of operations management.

D) Structural aspects of operations management.

Answer: D Explanation: Resources and capacity are among the structural decisions.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Physical goods can be differentiated from services in the operations management process by: A) Longer lead times and they can be inventoried.

B) More capital-intensive and shorter lead times.

C) More labor-intensive and longer lead times.

D) More expensive and easier to control.

Answer: A Explanation: Physical goods typically have longer lead times than services and can be inventoried (services typically cannot). See Table 1-1.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) Which of the following functions would NOT have to think about "processes"?

A) Logistics management B) Production management C) Supply management D) Accounting E) All of these have to think about "processes."

Answer: E Explanation: All functions must think about processes.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-03 Explain the role of processes and "process thinking" in operations management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Which of the following statements about operations management processes is NOT true?

A) Inputs to operations management processes can be materials, people, and/or information.

B) Outputs of operations management processes are always tangible goods.

C) Operations management processes involve transformation of inputs into valuable outputs.

D) Design of operations processes should reflect what customers want.

Answer: B Explanation: Outputs of operations management processes can be services.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-03 Explain the role of processes and "process thinking" in operations management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

9) Growth of the supply chain management perspective in operations management results from the advent of: A) Technology and infrastructure advances.

B) Collaborative networks.

C) A focus on core capabilities.

D) All of these.

Answer: D Explanation: In addition to the three listed alternatives, reduction in trade barriers also contributed to growth of the supply chain perspective.

Difficulty: 1 Easy Topic: Operations Management Yesterday and Today Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) During the "mass production" era, operations management focused primarily on: A) Production and design.

B) Internal production.

C) The global supply chain.

D) Sales, production, and design.

Answer: B Explanation: In the mass production era, the operations focus was on internal production.

Difficulty: 2 Medium Topic: Operations Management Yesterday and Today Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

11) While there is overlap between operations management and supply chain management, the two are different in that: A) Operations management focuses on production, supply chain management focuses on supply and logistics.

B) Operations management focuses on tangible goods, supply chain management focuses on services.

C) Operations management focuses on processes, supply chain management focuses on relationships and flows.

D) All of these.

Answer: C Explanation: The key distinction is that supply chain management focuses on relationships and flows, whereas operations management focuses on processes.

Difficulty: 1 Easy Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) Johnson Company makes widgets, which it then sends to Smith Company. Smith Company puts the widgets in packages. Smith Company is considered by Johnson to be a: A) Key customer.

B) Upstream product supplier.

C) Aftermarket supplier.

D) Downstream product supplier.

Answer: D Explanation: Companies that enhance finished goods are considered downstream product suppliers.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

13) To an operations manager, the "key customer" is: A) The person who buys a product.

B) The person who has the greatest impact on design, sales, and growth opportunities for the product.

C) The Echelon 1 customer.

D) The person who uses the product.

Answer: B Explanation: The key customer is one who has the greatest impact on design, sales, and growth opportunities.

Difficulty: 1 Easy Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Which functional activities are the most closely related to operations managers' attempts to manage the flow of materials and information in a firm?

A) Finance, accounting, and supply management B) Logistics, finance, and supply management C) Logistics, supply, and customer management D) Customer, finance, and logistics management Answer: C Explanation: Supply management, logistics management, and customer management are the functions most directly related to the flows of both materials and information. Finance and accounting are primarily about managing capital and reporting information.

Difficulty: 1 Easy Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

15) Jones Manufacturing sells a part to Lear Corporation. Lear puts this part into a radio, which Lear then sells to Ford. From Ford's point of view, Jones Manufacturing is a(n) supplier.

A) Echelon 1 B) Echelon 2 C) Tier 1 D) Tier 2 Answer: D Explanation: A supplier's supplier is known as a Tier 2 supplier.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Operations management is: A) The management of production.

B) The management of services.

C) The management of processes.

D) The management of physicians.

Answer: C Explanation: "Processes" comprehends all of the aspects of operations management. The other answers are just possible components of operations management.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

17) Which of the following statements is a reason why operations management is important?

A) Efficient and productive operations drive the economic well-being of nations.

B) Operations management is responsible for much of the value created by organizations.

C) Operations management is a key source of competitive differentiation among firms.

D) All of these are reasons why operations management is important.

Answer: D Explanation: Operations management affects both macroeconomic and individual firm outcomes.

Difficulty: 1 Easy Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) A process is: A) A set of planned steps used to achieve an objective.

B) A system of activities that transforms inputs into valuable outputs.

C) A system of decisions.

D) A combined effort by people who want to get something done.

Answer: B Explanation: Processes involve transformation, and they may or may not involve people.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-03 Explain the role of processes and "process thinking" in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

19) Which of the following statements is NOT true regarding supply chain management?

A) Globalization has slowed the growth of supply chain management.

B) Supply chain management is a way of viewing operations management.

C) Supply chain management has grown as a result of a focus on core capabilities.

D) Supply chain management is about making the most of relationships with suppliers.

Answer: A Explanation: Globalization has increased the growth of supply chain management. SCM involves relationships with customers and partners, not just suppliers.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) Every organization operates which of the following types of supply chains?

A) Product and tangible goods supply chains.

B) Information and personnel supply chains.

C) Direct and indirect supply chains.

D) Product and resource/technology supply chains.

Answer: D Explanation: Product supply chains manage flows of goods and services. Resource/technology supply chains manage acquisitions and flows of equipment, facilities, workers, product designs, and so on.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

21) Which of the following factors is NOT a major change driver that supply chain managers are concerned about?

A) Technology changes B) Regulatory changes C) Global political changes D) Supply chain managers are concerned about all of these changes.

Answer: D Explanation: Supply chain managers also track market changes, including social issues such as sustainability.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Different levels of planning in supply chain operations management include: A) General and detailed planning.

B) Strategic, tactical, and operational planning.

C) Long-term and short-term planning.

D) Logistical, operational, and procurement planning.

Answer: B Explanation: Strategic, tactical, and operational planning address different time frames and levels of detail.

Difficulty: 1 Easy Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

23) An example of strategic planning is: A) Deciding where to locate a new manufacturing plant.

B) Forecasting next week's demand of a given product item.

C) Targeting customer demand for aggregate product families.

D) Setting inventory levels for a given product.

Answer: A Explanation: Strategic planning addresses long-term decisions involving large amounts of money.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Which of the following decisions would NOT be under the direct control of operations managers?

A) What resources will be used to satisfy customer demand?

B) What customers should be targeted with greatest priority?

C) What suppliers should provide needed inputs?

D) What mode of transportation should be used to ship products?

Answer: B Explanation: Customer targeting is primarily the responsibility of the marketing function.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

25) Customer service management connects what functional groups?

A) Supply management, marketing, and finance.

B) Logistics management, sales and distribution, and product engineering.

C) Marketing, logistics management, and sales and distribution.

D) Human resources management, marketing, and finance.

Answer: C Explanation: These groups work together to identify and fulfill customers' needs.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Supply chain management has grown as a prevalent perspective on operations management because: A) Purchasing managers now have stronger roles in companies.

B) Firms have become more vertically integrated.

C) Technology has facilitated globalization.

D) Governments have become less open to trade.

Answer: C Explanation: Communications and transportation technologies have made global outsourcing easier, thus raising the need to focus on supply chains.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

27) Fundamental areas of management in supply chain operations management include: A) Quality, Inventories, and Processes.

B) People, Equipment, and Money.

C) Markets, Processes, and Sales.

D) Lean Systems, Quality, and Flexibility.

Answer: A Explanation: These groups work together to identify and fulfill customers' needs.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) Which of the following statements best describes "process thinking"?

A) It is a way to manage thought processes to make better decisions.

B) It is a way to view business as a system of interrelated activities.

C) It is a way to approach work systematically.

D) It is a way to categorize elements of work activities.

Answer: B Explanation: Process thinking looks at all operations as systems of activities that are related by material, information, and people flows, and by shared resources.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-03 Explain the role of processes and "process thinking" in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

29) Operations management is important because: A) It affects the quality of life of workers and consumers B) It is a major cost for firms that needs to be minimized C) Managers need to continually find ways to automate processes D) It is more important than finance or marketing Answer: A Explanation: The ways that operations are managed affect the health, enjoyment, and mobility of workers, as well as the productivity and wealth of nations.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) Which of the following challenges is most likely to be faced by service operations managers, rather than manufacturing operations managers?

A) Operations is typically less financially important in service businesses B) Pure service operations need to be separated from pure goods-producing operations C) The "total product experience" is more important in services D) Customers are more directly involved in service processes, so their perceptions need to be considered Answer: D Explanation: Customers are often intimately a part of the operations process. The process is the product, and customers directly and immediately observe the process.

Difficulty: 2 Medium Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-01 Explain what operations management is and why it is important.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

31) Up until the latter parts of the 20th century, operations management mainly focused on: A) Design B) Internal production C) External outsourcing D) Globalization Answer: B Explanation: Over the last 50 years, globalization and outsourcing have caused a shift in operations management from an internal focus to a combined internal and external focus.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) How is "supply chain management" different than "operations management"?

A) They are exactly the same thing B) Supply chain management focuses mainly on supplier relationships, while operations management focuses mainly on production C) Supply chain management is about relationships and flows, while operations management is about processes D) Supply chain management is external, while operations management is internal Answer: C Explanation: Supply chain management is a way of viewing operations that focuses on connections and flows of materials and information, whereas operations traditionally has more of a process orientation. These are not mutually exclusive differences, they simply represent differences in perspectives and functional scope.

Difficulty: 3 Hard Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

33) In working with downstream processes, internal operations managers typically work closely with: A) Marketing and sales managers B) Information technology managers C) Human resource managers D) Government regulators Answer: A Explanation: Operations managers working in "customer-facing" processes (e.g., order processing, fulfillment) will work closely with marketing and sales managers, who are also customer-oriented.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) Internal operations managers work with what function to coordinate inbound and outbound flows of materials and information?

A) Finance B) Purchasing C) Marketing D) Logistics Answer: D Explanation: Logistics operations managers focus on managing orders and inventories into and out of a company's facilities.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

35) A supplier of materials used in manufactured goods is a member of: A) A union B) The product supply chain C) The resource/technology supply chain D) The tier 2 supply chain Answer: B Explanation: Material suppliers provide items that go into finished products.

Resource/technology suppliers provide knowledge or physical assets (e.g., equipment) that are used to accomplish product transformations.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-04 Explain what the supply chain is and what it means to view operations management using a "supply chain perspective."

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) Which of the following groups is NOT likely to be stakeholders for operations in a local bank?

A) Customers B) Regulators C) Employees D) All of these are likely to be stakeholders Answer: D Explanation: A bank must consider the needs of its customers and employees, while also complying with government and other regulators.

Difficulty: 2 Medium Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-05 Identify the partners and functional groups that work together in operations management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

37) What kinds of questions does an operations manager who is responsible for tactical-level planning address?

A) What new technologies should the company buy?

B) What new customers should the company pursue?

C) How many workers should we hire or fire?

D) Which customer order should we work on first today?

Answer: C Explanation: Tactical planning deals with medium-term issues (months) usually regarding capacity (e.g., labor, machines, space).

Difficulty: 3 Hard Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 38) What kinds of questions does an operations manager who is responsible for operational-level planning address?

A) How many units of inventory for product X should I order?

B) Where should we locate a new distribution center?

C) What new information system should we install?

D) What technical training program should we purchase?

Answer: A Explanation: Operational-level planning deals with short-term issues (hours or days), typically addressing order processing, labor allocations, and inventory management.

Difficulty: 3 Hard Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

39) What kinds of questions does an operations manager who is responsible for strategic-level planning address?

A) Which employees should work the day shift tomorrow?

B) How should this process be organized?

C) How many manufacturing plants should the company operate?

D) Should we make this part or buy it?

Answer: C Explanation: Strategic planning deals with long-term issues (years) at a business level, including making changes to a physical network of facilities.

Difficulty: 3 Hard Topic: Viewing Operations Management from a Supply Chain Management Perspective Learning Objective: 01-06 Define the planning activities associated with managing operations across the supply chain.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 40) Suppose that you are the general manager of a hotel. For which of the following issues would you first seek help from an operations manager in your firm?

A) Our prices seem to be too high.

B) Customers' complaints are rising.

C) We need a new insurance policy.

D) We are running out of cash.

Answer: B Explanation: Although operations managers might be asked to get involved with any of these issues, customer complaints are probably due to ineffective processes, a primary operations management responsibility.

Difficulty: 3 Hard Topic: A Broad Definition of Supply Chain Operations Management Learning Objective: 01-02 Describe the major decisions that operations managers typically make.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 2 Operations and Supply Chain Strategy 1) Corporate strategic planning involves decisions related to: A) What businesses should we be in?

B) What specific product- and market-based initiatives and goals should we establish?

C) What measures should we use to control strategic initiatives?

D) All of these.

Answer: A Explanation: Corporate strategic planning is very broad and relates to what businesses the company should be involved in.

Difficulty: 1 Easy Topic: Levels of Strategic Planning Learning Objective: 02-01 Describe how operations strategy fits within a firm s overall strategic planning process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Functional strategic planning involves decisions related to: A) What businesses should we be in?

B) Specific product- and market-based initiatives and goals.

C) What metrics should be used to ensure progress in operations management?

D) All of these.

Answer: C Explanation: Functional planning includes decisions regarding appropriate metrics for the specific functions in a business unit.

Difficulty: 1 Easy Topic: Levels of Strategic Planning Learning Objective: 02-01 Describe how operations strategy fits within a firm s overall strategic planning process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

1 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) A well-designed value proposition possesses four characteristics. Which of the following is NOT one of those characteristics?

A) It offers the highest product quality in each quality dimension.

B) It differentiates the firm from its competition in a way that is difficult to imitate.

C) It satisfies the financial and strategic objectives of the firm.

D) It can be reliably delivered given the operational capabilities of the firm and its supporting supply chain.

Answer: A Explanation: Providing value does not require the highest quality in each dimension of quality.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-02 Describe the need for fit between the key customers, value propositions, and operations capabilities-the essential elements that define an operations strategy.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Which of the following is the most appropriate definition of an "order winner"?

A) A product characteristic that causes customers to choose the product over that of a competitor.

B) A product characteristic that permits the product to compete in a market.

C) A product that has the highest profit margin.

D) A product that generates the highest dollar sales volume.

Answer: A Explanation: Order winners are traits that cause customers to actually choose a specific product.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

2 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) Which of the following is NOT true about "order qualifiers"?

A) These are product traits that must meet a certain level in order for the product to even be considered by customers.

B) The firm must perform acceptably on these traits, usually at least as well as competitors' offerings.

C) Order qualifier traits may include availability, price, and conformance quality.

D) All of the items are true.

Answer: D Explanation: "Order qualifiers" are traits a product must meet at a certain threshold level to be considered; the product must perform acceptably on traits including availability, price, or conformance quality.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Xanadu makes HD televisions. It claims that its HD televisions have the clearest picture clarity in the industry. Xanadu is emphasizing which dimension of quality?

A) Reliability B) Performance C) Features D) Conformance Answer: B Explanation: Picture clarity is a basic performance dimension of HD televisions.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

3 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) Scantron Inc. claims that its competitors have to recall 10 percent of their products to fix defects, while it only has to recall 5 percent. Scantron is emphasizing which dimension of quality?

A) Durability B) Reliability C) Performance D) Conformance Answer: D Explanation: Defects are an indication of lack of conformance.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Which of the following is considered a "process-related" competitive priority?

A) Flexibility B) Quality C) Cost D) All of these Answer: A Explanation: Quality and cost are product-related. Flexibility is process related.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

9) Xanadu Inc. claims that its manufacturing processes result in fewer greenhouse gases than those of its primary competitors. This suggests that Xanadu has a focus on: A) Risk management.

B) Sustainability.

C) Flexibility.

D) Profitability.

Answer: B Explanation: Maintaining operations that are profitable and nondamaging to the environment is sustainability.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Remember AACSB: Ethics Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Which of the following is NOT considered a key characteristic of a core capability: A) It is based on factors that are rare or unique to the firm.

B) It is hard to imitate.

C) It does not need to be extendable to many market opportunities.

D) There are few substitutes for it.

Answer: C Explanation: Core capabilities should be extendable to many market opportunities.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

11) "When operational capabilities are consistent with and supportive of the value proposition and the outcomes desired by key customers" - this statement best describes the concept of: A) Execution.

B) Flexibility.

C) Strategic planning.

D) Fit. Answer: D Explanation: Fit exists when operational capabilities are consistent with and supportive of the value proposition and the outcomes desired by key customers.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) A vice president of operations wants to evaluate the impact of reducing manufacturing expenses on the firm's return on assets. Which measurement should be examined?

A) Cost of goods sold B) Asset turnover C) Net profit margin D) None of these Answer: A Explanation: In the Strategic Profit Model, cost of goods sold includes manufacturing expenses.

Difficulty: 1 Easy Topic: Deploying Operations Strategy: Creating Value through Execution Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

13) You are an upper-level manager in a firm. You believe that corporate objectives are not effectively disseminated throughout the organization and that line-level managers do not take them into account in their decision making. Which of the following would best help you to try to correct this problem?

A) Hold a series of supervisory manager meetings.

B) Establish metric-based performance measures.

C) Evaluate personality indicators to ensure inter-departmental worker compatibility.

D) Evaluate and increase manager salaries and benefits.

Answer: B Explanation: Performance measures communicate strategic intentions to operations personnel.

Difficulty: 2 Medium Topic: Deploying Operations Strategy: Creating Value through Execution Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Which of the following is the most appropriate definition of a core capability?

A) A set of products unique to a firm.

B) Technical capabilities of a firm.

C) Reputation.

D) Production/design processes unique to the firm.

Answer: D Explanation: Core capabilities are skills, processes, and systems that are unique to the firm and desired by the customer.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

15) Which of the following is NOT a component of the business model?

A) Key customer B) Value proposition C) Desired outcome statement D) System capabilities Answer: C Explanation: This is based on the discussion of the business model.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-02 Describe the need for fit between the key customers, value propositions, and operations capabilities-the essential elements that define an operations strategy.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

16) A company with a number of physically separate plants has a centralized tool room. This tool room in the past has been responsible for emergency repairs. Whenever equipment (e.g., a spindle, boring machine, transfer line) in one of these separate plants breaks down, the affected items are brought to the tool room, where they are repaired. In some cases, the breakdowns affect production schedules. In other cases, the breakdowns are more annoying but do not adversely affect schedules. Complicating the operations in the tool room is the fact that many of the plans for the equipment are incomplete or out-of-date, thus resulting in "make from sample"; requests (the broken part is provided and the tool room is asked to make the replacement piece just like the broken part). It is difficult to predict what equipment will break down and when.

Furthermore, the company owns a wide variety of equipment. What are the order winners and order qualifiers in this scenario?

A. B. C. D.

Order Winners Cost,Quality Flexibility,Quality Speed,Cost Speed,Flexibility

Order Qualifiers Speed,Flexibility Speed,Cost Flexibility,Quality Quality,Cost

A) Option A B) Option B C) Option C D) Option D Answer: D Explanation: This situation demands speed and flexibility. Quality and cost are also important, but should not be exchanged for less speed or inflexibility.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

17) Currently, our system is characterized by a lack of fit between what the customer wants and what the SCM system is best able to provide. As a result, which of the following would apply?

1. The only way to restore fit is for the firm to change the market segment it is going after.

2. Unless something is done, our firm will not be the most effective and efficient long-term supplier.

3. Any firm can successfully counter such inconsistencies through the use of patents and aggressive advertising.

A) 1 only.

B) 2 only.

C) 3 only.

D) 1 and 2 only.

E) 1, 2, and 3.

Answer: B Explanation: Only solution 2 addresses this situation directly. Solution 1 "blames the customer" for the firm's shortcomings and solution 3 does not address the issues at all, providing symptomatic relief at best.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-02 Describe the need for fit between the key customers, value propositions, and operations capabilities-the essential elements that define an operations strategy.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Which three elements make up the triple bottom line?

A) Planet, Pollution, Profit.

B) Pollution, Equality, People.

C) Profit, Equality, Pollution.

D) People, Profit, Planet.

Answer: D Explanation: The term "triple bottom line" refers to three different measures of profit and loss: People, Profit, and Planet.

Difficulty: 1 Easy Topic: Deploying Operations Strategy: Creating Value through Execution Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

19) Which of the following attributes is directly related to fitness for consumption by a customer?

A) Transaction Price B) Timeliness C) Performance D) Availability Answer: C Explanation: A product's performance is an aspect of its quality, which is its fitness for consumption by the consumer who bought it.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) Under which component of the business model would people and culture fall?

A) Key customer B) Value proposition C) Environment D) System capabilities Answer: D Explanation: People and culture are a key component of an organization's systemic capabilities.

Difficulty: 1 Easy Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-04 Explain what product-related and process-related operational competitive priorities are and how they are related to competitive advantage.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

21) Within the supply chain and operations management system, the value proposition is most effectively communicated to the rest of the organization through which of the following mechanisms?

A) Performance measures B) Mission statements C) Management mandates D) Corporate slogans and promotional materials.

Answer: A Explanation: Performance measures communicate strategic intentions to operational personnel.

Difficulty: 2 Medium Topic: Deploying Operations Strategy: Creating Value through Execution Learning Objective: 02-05 Explain how strategic performance can be assessed both operationally and financially by using the strategic profit model.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) An electronics firm produces smart phones for sale to the worldwide market. One of the most crucial process-related competitive operational priorities for this firm is: A) Aesthetics B) Cyber security C) Flexibility D) Durability Answer: C Explanation: Flexibility is important because of the short life cycle of a current model and the rapid progression of technology. Cyber security is handled by the ultimate customer's network vendor. Aesthetics and Durability are product-related characteristics, not process-related characteristics.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

23) A manufacturer of generic prescription drugs must excel at delivering which of the following product traits?

A) Product performance B) Features (unique attributes) C) Durability D) Low cost Answer: D Explanation: Since generic products seek to mimic brand-name products, their central appeal is lower purchase price.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Decision making regarding customers and products is often led by the: A) CEO B) Board of Directors C) Marketing Management D) Financial Managers Answer: C Explanation: Marketing managers often lead decisions regarding customers and products.

Difficulty: 2 Medium Topic: Developing Operations Strategy: Creating Value through Strategic Choices Learning Objective: 02-03 Describe customer-desired outcomes in terms of order winners, order qualifiers, and order losers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

25) Internal questions that may be addressed in a SWOT analysis include: A) What obstacles do we face?

B) What trends are we well positioned to take advantage of?

C) What do we do better than anyone else?

D) What changes in technology will affect us?

Answer: C Explanation: "What do we do better than anyone else?" is a question that helps identify strengths in the SWOT analysis.

Difficulty: 1 Easy Topic: Levels of Strategic Planning Learning Objective: 02-01 Describe how operations strategy fits within a firm s overall strategic planning process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) The three elements of Value Proposition, Key Customers, and Capabilities operate within an environment. Which of the following is NOT part of that environment?

A) Competition B) Regulation C) Technology D) Founder's ideology Answer: D Explanation: The environment consists of conditions such as competition, regulations, and technology that influence how managers develop an operations strategy.

Difficulty: 2 Medium Topic: Levels of Strategic Planning Learning Objective: 02-01 Describe how operations strategy fits within a firm s overall strategic planning process.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 3S Supplement: Process Mapping and Analysis 1) You, as a supply chain analyst, have been approached by the vice president of supply chain operations to come up with a recommendation for improving the throughput time for the manufacture of Widget A. You quickly realize that you need a process map before you proceed.

What is the first step you should undertake to map the process?

A) Draw a detailed schematic of the inputs and outputs of the process in question.

B) Identify the desired outcomes of the process.

C) Analyse the process and prioritize opportunities for improvement.

D) Document the existing process (the "current state" map).

Answer: B Explanation: The first step in process mapping is to determine the desired outputs of the process.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) After you have drawn the "current state" process map, you decide that you need a tool for showing the actual moves of material (and their locations) that take place in the manufacture of Widget A. Which of the following tools would be most appropriate?

A) A "future state" map B) A process flow table C) An assembly process chart D) A physical layout diagram Answer: D Explanation: A physical layout diagram will show the actual moves of materials and their locations.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) You realize that you need a tool for recording all the move distances, process flow symbols, people involved, value add designations, and time required for each step to get an overall grasp for where waste exists in the process. The best tool for this would be: A) A value stream map B) A process flow table C) An assembly process chart D) A physical layout diagram Answer: B Explanation: A process flow table records process activities, their attributes, and their sequence.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) "Bounding" a process is necessary because: A) It determines which activity is the bottleneck.

B) If the project is "shelved" during your analysis, someone else may have to pick up where you left off.

C) Bounding determines if a process is a core competency.

D) Without bounding, it is difficult to determine the beginning and ending points for the analysis.

Answer: D Explanation: It is important to clearly identify the limits of the process that is to be improved.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) The process of "stapling yourself to an order" refers to: A) Pretending you are the workpiece moving through a process.

B) Observing a process through multiple iterations to eliminate possible biases from observing "random" events.

C) Stapling documents in your process maps to other applicable documents in order not to confuse the "flow."

D) Imagining a workpiece in a process and following it through a process map you have developed.

Answer: A Explanation: Stapling yourself to an order means following the path an order would take through the process and documenting each activity.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) The symbol ⇒ indicates what type of activity in a process?

A) Operation B) Transportation C) Delay D) Storage Answer: B Explanation: Transportation activity is indicated by a small arrow on the process map.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) The symbol ∇ indicates what type of activity in a process?

A) Operation B) Transportation C) Delay D) Storage Answer: D Explanation: Storage activity is indicated by an inverted isosceles triangle.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) A process activity identified by a "?" is typically a(n): A) Value-adding activity.

B) Necessary activity.

C) Waste-generating activity.

D) None of these.

Answer: D Explanation: The question (?) symbol does not signify any type of process activity. In value analysis it indicates a process whose value is uncertain.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

9) You observe three different people doing the same task using three different approaches (with differing levels of quality, output, and lead time). Which of the following disposition options is most appropriate for this situation?

A) Keep B) Rethink C) Combine D) Eliminate Answer: B Explanation: Rethink: evaluate the three approaches to determine which is most efficient and/or appropriate and standardize the approach to this task.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Which of the following is NOT a principle of process improvement?

A) Produce at the rate of customer demand.

B) Sequence activities to minimize setups, distance, or other transition costs.

C) Change process design to facilitate product improvements.

D) All of these are principles of process improvement.

Answer: C Explanation: Changing product (not process) design to facilitate process (not product) improvement is a principle of process improvement.

Difficulty: 3 Hard Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-05 Change a process to make it more effective and efficient by either refining the current process or designing a new replacement process.

Bloom's: Analyze AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

11) A tool used to quickly communicate proposed process changes effectively is called a: A) Process summary table.

B) New physical layout diagram.

C) Work process flowchart.

D) Process flow diagram.

Answer: A Explanation: A process summary table can be developed to communicate proposed process changes effectively Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) The principles of process improvement suggest that an effective, efficient process: A) Maximizes the number of sequential activities and minimizes the number of parallel ones.

B) Eliminates all ? steps.

C) Minimizes the number of entry points of a workpiece into the process.

D) Minimizes reliance on departments outside of manufacturing.

Answer: C Explanation: A principle of process improvement is to try to limit the number of entry points of workpieces into the process.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-05 Change a process to make it more effective and efficient by either refining the current process or designing a new replacement process.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

13) The principles of process improvement suggest that an ineffective, inefficient process: A) Produces at the rate of customer demand.

B) Produces products in large batch sizes.

C) Processes workpieces on a FIFO basis.

D) Keeps non-value-adding activities off the critical path.

Answer: B Explanation: A principle of process improvement is to develop the ability to economically make every part every day by making setup times as short as possible.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-05 Change a process to make it more effective and efficient by either refining the current process or designing a new replacement process.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Value stream mapping: A) Is a simplified version of process mapping.

B) Uses the same terminology and symbols used in typical process mapping.

C) Is another name for a future state map.

D) Relies on computer-assisted flowcharting.

E) Is more comprehensive than typical process mapping.

Answer: E Explanation: Value stream mapping is more comprehensive and complex than the process mapping described in the text.

Difficulty: 1 Easy Topic: Other Process Mapping Tools Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

15) Joe's Quick Oil Change shop is interested in improving its ability to satisfy customers. The most appropriate mapping tool for a company such as this is called: A) Service architecture.

B) Service blueprinting.

C) Service diagramming.

D) Service mapping.

Answer: B Explanation: Service blueprinting focuses on understanding the interfaces between customers, technology, and the service process.

Difficulty: 1 Easy Topic: Other Process Mapping Tools Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) When should the metrics used in evaluating a process be developed?

A) As soon as we have identified the value proposition.

B) After we have identified the critical process.

C) When we have done the "as is" analysis of the process.

D) After we have completed the future state analysis of the process.

Answer: A Explanation: It is important to first clarify what the process should achieve. This is largely defined by the product's value proposition. The initial step in the resulting process design and analysis is to determine the desired outcome of the process and the associated metrics needed to evaluate its performance.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

17) Which of the following conditions does a "critical" process satisfy?

A) Process with the most steps (thus consuming the most time).

B) The one that people complain about the most.

C) A process that is visible to the key customers.

D) The first process that we encounter in the system.

Answer: C Explanation: One of the attributes of a process deemed critical is that it is visible to the key customer.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Value in a process flow analysis is most often associated with which of the following activities?

A) Operations B) Inspections C) Storages D) Transportation Answer: A Explanation: Most of the value-added processes involve operations. Valus is seldom added in storage, inspection, or transportation.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

19) Production planning and scheduling is most likely to be associated with which of the following activities?

A) Operations B) Inspections C) Storages D) Transportation Answer: A Explanation: Production planning and scheduling is closely associated with operations.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-03 Determine to what type of activity each step in a process belongs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) Which of the following identifies the most appropriate time to set the metrics when doing a process flow analysis?

A) During the analysis stage B) At the start of the process of process analysis C) When bounding the critical process D) When recommending the appropriate changes to the process (i.e., the "future state" map) Answer: B Explanation: Before making any change to the process, it is important to clarify what the process should achieve.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

21) Which of the following mapping techniques identifies and integrates functional responsibilities into the process mapping process?

A) Process flow diagram B) Value stream mapping C) Service blueprinting D) Swim lanes Answer: D Explanation: The major attraction of swim lanes is that this technique helps organize processes into functional or organizational blocks and responsibilities.

Difficulty: 1 Easy Topic: Other Process Mapping Tools Learning Objective: 03S-05 Change a process to make it more effective and efficient by either refining the current process or designing a new replacement process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Which of the following activities is most likely to be overlooked when doing a process flow analysis?

A) Operations B) Inspections C) Delays D) Storages Answer: C Explanation: It is often easy to overlook certain steps in a process, especially delays.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-02 Assess a process to determine how effective it is in achieving its desired outcome(s).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

23) Why are processes that are visible to the customer considered to be critical?

A) They often exhibit the greatest variance (thus affecting customer waiting times).

B) They are often bottlenecks (thus causing customer delays).

C) They are often shared processes.

D) They affect the customer perceptions of value delivered by the firm.

Answer: D Explanation: Processes that are visible to the customer are critical because they can directly affect the customer's perception of value.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-02 Assess a process to determine how effective it is in achieving its desired outcome(s).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Which of the following identifies the ultimate goal of process mapping?

A) Reduce steps in the process.

B) Reduce costs created by the process.

C) Improve the value a process delivers to its customers.

D) Facilitate the identification and reduction of system complexity.

Answer: C Explanation: Whether minor or radical process changes are anticipated, it is a good idea to keep in mind that the goal of any process analysis is to continually improve the value that a process delivers to its customers.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-02 Assess a process to determine how effective it is in achieving its desired outcome(s).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

25) Which of the following is an example of an activity that is "necessary but not value-adding"?

A) Scheduling B) Processing C) Inspections D) Setups Answer: D Explanation: A process setup prepares equipment for a task, but no value is added in setting up the equipment.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Which of these sets of two activities are most likely to be "value-adding"?

A) Operations and storages B) Storages and delays C) Delays and transportations D) Transportations and operations Answer: D Explanation: In general, transportation and operations activities tend to most often contribute to value.

Difficulty: 1 Easy Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

27) When the Marriott, an international hotel chain, designs a new facility, which of the following process tools is it most likely to use?

A) Swim lanes B) Process Flow Diagram C) Service blueprinting D) Physical Layout Diagram Answer: C Explanation: Service blueprints are particularly useful for improving service offerings.

Difficulty: 1 Easy Topic: Other Process Mapping Tools Learning Objective: 03S-05 Change a process to make it more effective and efficient by either refining the current process or designing a new replacement process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) If our goal is to reduce lead times, which of the following process measures is most appropriate?

A) Number of steps B) Actual elapsed lead time C) Percentage reduction in lead time D) Actual lead time versus standard or target lead time Answer: A Explanation: The more steps in a process, the longer the lead time.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-02 Assess a process to determine how effective it is in achieving its desired outcome(s).

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

29) Which of the following traits is not associated with a critical process?

A) It is a bottleneck operation.

B) It has been identified by management as critical.

C) It is visible to the customer.

D) It is associated with a core competency.

Answer: B Explanation: The traits of a critical process are identified by analysis, not proclamation.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-02 Assess a process to determine how effective it is in achieving its desired outcome(s).

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) A process measure related to availability is: A) Average setup time B) Number of defect-free shipments C) Number of interdepartmental handoffs D) Percentage reduction in lead time Answer: C Explanation: More hand-offs usually indicate more delays and lower availability.

Difficulty: 1 Easy Topic: Other Process Mapping Tools Learning Objective: 03S-04 Understand when and how to apply the various tools of process mapping.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

31) In the process of process mapping, the first step is always: A) Identify and bound the critical process.

B) Staple yourself to an order.

C) Determine the desired outcome of the process.

D) Document the existing process.

Answer: C Explanation: The first step in process mapping is to determine the desired outcome of the process and the associated metrics to evaluate its performance.

Difficulty: 2 Medium Topic: The "Process" of Process Mapping and Analysis Learning Objective: 03S-01 Work through the various steps in process mapping and analysis.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 3 Managing Processes and Capacity 1) Process thinking causes managers to address critical process elements, including: A) If you don't like the outcome, focus on the people.

B) Processes are guidelines to thinking about to best staff activities.

C) Processes drive measurement.

D) If you don't like the outcome, change the process.

Answer: D Explanation: Outputs become viewed as the result of the process; if you don't like the outcome, change the process.

Difficulty: 1 Easy Topic: Processes and Process Thinking Learning Objective: 03-01 Understand the importance of processes and process thinking to operations and supply chain management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Which of the following is NOT a basic activity type in processes?

A) Delay B) Operation C) Reporting D) Storage Answer: C Explanation: Operation, transportation, inspection, delay, and storage are the basic activity types in a process.

Difficulty: 1 Easy Topic: Anatomy of a Process Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) You walk into a hair stylist shop. All stylists are busy and you sit in the waiting area. You are in which of the following basic activity types in a process?

A) Operation B) Delay C) Storage D) You are not in a process activity.

Answer: B Explanation: Operation, transportation, inspection, delay, and storage are the basic activity types in a process.

Difficulty: 2 Medium Topic: Anatomy of a Process Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Most processes involve two basic types of flows: A) Information flows and material flows.

B) Product flows and decision flows.

C) Information flows and operator flows.

D) Physical flows and security flows.

Answer: A Explanation: Most processes involved two types of flows: information flows and material flows.

Difficulty: 1 Easy Topic: Anatomy of a Process Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) A manager is currently unhappy with the capabilities of a particular process and wants to improve its capabilities. To accomplish this, the manager needs to focus on the process: A) Inputs, outputs, and flows.

B) Activities.

C) Management metrics.

D) Structure.

Answer: D Explanation: The structure limits the process capabilities.

Difficulty: 2 Medium Topic: Anatomy of a Process Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Joe Jones, plant manager at Waco Industries, told a friend that if it was necessary, his plant could produce 1,000 items a day if all conditions were just right. Joe is describing his plant's: A) Effective capacity.

B) Yield rate.

C) Utilization.

D) Maximum capacity.

Answer: D Explanation: Maximum capacity is the highest output a process can achieve under ideal conditions.

Difficulty: 2 Medium Topic: Process Capacity and Utilization Learning Objective: 03-03 Distinguish between operational, tactical, and strategic capacity planning.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) Adam Smith described his company's process as follows: "Under ideal conditions we can produce 10,000 units a day. However, our normal production is 6,000 units a day. Today, we actually produced 8,000 units." Which of the following is true?

A) Utilization is 60 percent of maximum capacity.

B) Yield is 133 percent of effective capacity.

C) Utilization was 133 percent of effective capacity.

D) All of these are true.

Answer: C Explanation: 8,000 ÷ 6,000 = 133% Difficulty: 2 Medium Topic: Process Capacity and Utilization Learning Objective: 03-03 Distinguish between operational, tactical, and strategic capacity planning.

Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) The following sequence shows four operations for a computer chip assembly process and the effective capacity of each. Which step is the bottleneck?

Step 1: 500 chips/hour Step 2: 250 chips/hour Step 3: 200 chips/hour Step 4: 550 chips/hour A) Step 1 B) Step 2 C) Step 3 D) Step 4 Answer: C Explanation: 200 chips per hour is the smallest capacity listed and is therefore the process bottleneck.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-04 Estimate the capacity and utilization of a process.

Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

9) The following sequence shows four operations for a computer chip assembly process and the effective capacity of each.

Step 1: 500 chips/hour Step 2: 250 chips/hour Step 3: 200 chips/hour Step 4: 550 chips/hour Suppose the utilization is 70 percent of effective capacity. What is the actual output of the process?

A) 140 chips/hour B) 350 chips/hour C) 175 chips/hour D) 200 chips/hour Answer: A Explanation: 200 × 0.70 = 140 chips/hour Difficulty: 2 Medium Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-04 Estimate the capacity and utilization of a process.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) A bottleneck activity in a process is generally the activity with: A) The smallest number of resources devoted to it.

B) The least capacity.

C) No delays in front of it.

D) The highest cost.

Answer: B Explanation: The bottleneck in a process is the activity with the least capacity per unit of time.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-04 Estimate the capacity and utilization of a process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

11) Little's Law suggests that the key to increased throughput is: A) Shorter flow times.

B) Fewer defects.

C) Eliminating waste.

D) Increased inspection.

Answer: A Explanation: Flow time = inventory divided by throughput rate Difficulty: 2 Medium Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-04 Estimate the capacity and utilization of a process.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) Suppose you learn that a process has a very long waiting time. Which of the following would decrease the waiting time?

A) Decrease utilization.

B) Increase the coefficient of variation of job arrival times.

C) Increase the coefficient of variation of job processing times.

D) None of these would decrease waiting time.

Answer: A Explanation: Increasing the variability increases waiting times. The only option presented that decreases waiting times is decreasing utilization.

Difficulty: 3 Hard Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Evaluate AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

13) One implication of increased utilization in a process is that: A) Process cost typically will go up.

B) Waiting time typically will go up.

C) Variance typically will be reduced.

D) All of these.

Answer: B Explanation: The formula for wait time includes the factor (Utilization / 1 – utilization) as a multiplier. Hence, as utilization increases, waiting time will increase Difficulty: 3 Hard Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Analyze AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) If a company can eliminate all sources of variance in a process: A) It will be able to operate at maximum capacity at all times.

B) There will be no constraints in the process.

C) Continuous improvement will not be necessary.

D) None of these are true.

Answer: D Explanation: Eliminating variability does not remove constraints or eliminate the need for improvement. Maximum capacity cannot be achieved over long periods of time.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

15) An example of a short-term capacity increase decision is: A) Adding specialized labor.

B) Installing new equipment.

C) Adding new facilities.

D) Adding low-skilled labor.

Answer: D Explanation: Of these options, adding low-skilled labor is the easiest to implement and to reverse.

Difficulty: 1 Easy Topic: Process Capacity and Utilization Learning Objective: 03-03 Distinguish between operational, tactical, and strategic capacity planning.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Which of the following statements about economies of scale is NOT true?

A) One reason economies of scale occur is because fixed costs can be spread over more units of production as output increases.

B) One reason economies of scale occur is because employees become more efficient as volume increases.

C) Economies of scale refers to the fact that as volume increases, total cost of production decreases.

D) Economies of scale may not exist at all levels of production.

Answer: C Explanation: While unit costs may decrease as volume increases, total costs will continue to rise.

Difficulty: 1 Easy Topic: Process Capacity and Utilization Learning Objective: 03-03 Distinguish between operational, tactical, and strategic capacity planning.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

17) Floor space used to store items to be inspected belongs to which of the following elements of a process?

A) Activities B) Inputs/outputs/flows C) Process structure D) Management policies Answer: B Explanation: An inspection activity requires floor space to store the items being inspected and is thus an input to the process.

Difficulty: 1 Easy Topic: Anatomy of a Process Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Under Juran's Law, whenever a problem occurs, what percentage of the time is the problem the result of a system/process error?

A) 15 percent B) 50 percent C) 85 percent D) 100 percent Answer: C Explanation: 85% of operational problems are the result of a system or process error, not human error.

Difficulty: 1 Easy Topic: Processes and Process Thinking Learning Objective: 03-01 Understand the importance of processes and process thinking to operations and supply chain management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

19) Subcontracting is typically considered at what time horizon when doing capacity planning?

A) Short-term B) Medium-term C) Long-term D) It is not part of the capacity planning process.

Answer: B Explanation: Subcontracting is thought of as a medium-term capacity decision.

Difficulty: 1 Easy Topic: Process Capacity and Utilization Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) Which of the following actions will NOT increase output?

A) Increasing capacity through physical additions.

B) Outsourcing.

C) Managing the flow of work into the system.

D) Changing the processes to eliminate unnecessary steps.

Answer: C Explanation: The flow of work into the system is unrelated to output.

Difficulty: 2 Medium Topic: Process Capacity and Utilization Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

21) Which of the following statements best differentiates a delay from storage?

A) There is no difference – they both refer to the same concept.

B) Delays are planned activities; storages are not.

C) Delays are uncontrolled; storage is a planned part of a process.

D) Delays require control; storages does not.

Answer: C Explanation: Storage is a planned part of a process.

Difficulty: 1 Easy Topic: Processes and Process Thinking Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Which of the following elements of a process most directly impacts or affects process capabilities?

A) Activities B) Inputs/Outputs/Flows C) Process Structure D) Management Policies.

Answer: C Explanation: The process structure limits process capabilities.

Difficulty: 1 Easy Topic: Processes and Process Thinking Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

23) Space on the shop floor, bins, carts, or racks are capacity-limiting resources most frequently associated with which of the following process activities?

A) Delays B) Transportation C) Inspections D) Operations.

Answer: A Explanation: Delays utilize limited resources including space on the shop floor, carts, and racks holding the materials delayed by a malfunction, for example.

Difficulty: 1 Easy Topic: Processes and Process Thinking Learning Objective: 03-02 Define the various components that make up processes, including types of inputs and outputs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Which two of the following effects directly result from bottlenecks?

A) Increase in costs and increase in defects.

B) Increase in output and increase in lead-times.

C) Decrease in inspections and increase in costs.

D) Decrease in output and increase in lead-times.

Answer: D Explanation: Bottlenecks limit output and extend lead times.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

25) A process having the same activity being performed by two or more resources simultaneously is said to have what kind of structure?

A) Serial B) Parallel C) Helping D) Flexible Answer: B Explanation: In a Parallel structure, an activity is done by two or more resources simultaneously.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) The total time that it takes to get one unit through a process is called: A) Flow time B) Cycle time C) Throughput time D) Wait time Answer: A Explanation: Flow time is the total time it takes to get one unit through a process.

Difficulty: 2 Medium Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

27) Inventory held due to bottlenecks in a process causes: A) Increased storage requirements B) Quality issues C) Increased labor costs D) All of these Answer: D Explanation: Inventory due to bottlenecks creates requirements for more space to store inventoried items, labor to track and manage that inventory, and leads to increased damage from handling and delays in diagnosing the causes of quality problems.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-05 Explain the impacts of bottlenecks, variance, and other factors on process performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) Continual improvement of processes is important because: A) Competitors are improving their processes.

B) Customer preferences change over time.

C) Technology is constantly changing.

D) All of these.

Answer: D Explanation: Operations managers do not work in a static world.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-06 Describe process improvement methodologies such as business process reengineering.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

29) In process improvement projects, why should we focus our efforts on those processes that consume the most resources (e.g., labor, space, capital, etc.)?

A) Because those are the processes most visible to the customer B) Because those are the processes that use our firm's core capabilities C) Because that is where we get "the most bang for our buck."

D) All of these Answer: C Explanation: We focus on the processes that consume the most resources because that is where improvements can have the greatest return.

Difficulty: 1 Easy Topic: Principles of Process Performance: The Theory of Constraints Learning Objective: 03-06 Describe process improvement methodologies such as business process reengineering.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 4 Product/Process Innovation 1) transform product specifications and new process technology into a new or revised production system.

A) New process design and development projects B) New product design and development projects C) Concurrent engineering projects D) Operations management projects Answer: A Explanation: This is the definition of new process design and development projects.

Difficulty: 1 Easy Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Fast innovators typically gain which advantages?

A) They produce a more continuous stream of new product introductions that create a greater and more constant market awareness of their brands.

B) They have fewer problems in launching new products and fewer failures in the marketplace.

C) They can sell at lower prices or lower the total sales needed for a new product to pay back its initial development costs.

D) All of these.

Answer: A Explanation: High-quality innovators have fewer problems in launching new products and fewer failures in the marketplace. Efficient innovators can sell at lower prices or lower the total sales needed for a new product to pay back its initial development costs. Fast innovators produce a more continuous stream of new product introductions that create a greater and more constant market awareness of their brands.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) High-quality innovators typically gain which advantages?

A) They can fund more new design and development projects than other firms.

B) They satisfy customers more effectively, building strong brand image and customer loyalty.

C) They can sell at lower prices or lower the total sales needed for a new product to pay back its initial development costs.

D) None of these.

Answer: B Explanation: Efficient innovators can both fund more new design and development projects than other firms and sell at lower prices or lower the total sales needed for a new product to pay back its initial development costs. High-quality innovators can satisfy customers more effectively, building strong brand image and customer loyalty.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Acton Corporation has identified a way to combine several existing technologies into a new product. This is most likely to have occurred in a: A) Research and advanced development project.

B) Radical breakthrough development project.

C) Next generation or platform development project.

D) Enhancement development project.

Answer: C Explanation: Using existing technologies to develop new products is a next generation development project.

Difficulty: 2 Medium Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-02 Contrast different types of innovation strategies and projects.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) An advantage of "early supplier involvement" is that it: A) Generally leads to higher-quality products.

B) Decreases time to launch new products.

C) Avoids supply problems once the product is launched.

D) All of these.

Answer: D Explanation: ESI helps suppliers and buyers identify improvements and avoid problems early in product design phases.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) The stage of a product/process innovation in which managers determine the target values of product attributes, volume, and price is: A) Product and market testing.

B) Product and process planning.

C) Detailed design and development.

D) Concept development.

Answer: D Explanation: In concept development, product attributes, expected volumes, and prices are determined.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) "Concurrent engineering" is best described as: A) The simultaneous implementation of engineering projects critical to the manufacture of new products.

B) Assigning multiple engineers to a project to ensure the accuracy of the work.

C) The simultaneous design and development of all the processes and information needed to manufacture a product, to sell it, to distribute it, and to service it.

D) Engineering techniques that seek to capture leading-edge knowledge and technology in the design phase of a new product.

Answer: C Explanation: Concurrent engineering extends beyond product development to include development of processes for sales, distribution, and servicing.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-04 Explain why cross-functional integration is needed in product and process design.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Sequential product development projects are likely to have development costs and development times than concurrent engineering product development projects.

A) Higher; longer B) Higher; shorter C) Lower; longer D) Lower; shorter Answer: C Explanation: Sequential development lowers development costs because each function focuses only on its concerns, but it generally takes longer to complete.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-04 Explain why cross-functional integration is needed in product and process design.

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9) The main purpose of quality function deployment (QFD) is: A) To base product and process design decisions more directly on what the customer thinks is important.

B) To clearly identify the functional groups within the organization that have a direct influence on quality.

C) To expand the quality function and eliminate the need for statistical process control.

D) To set up a plan for the deployment of statistical quality control tools throughout the organization.

Answer: A Explanation: QFD is a tool used in design for the customer.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) The "house of quality" is best described as: A) An approach in which customers use product prototypes and provide feedback to developers.

B) A template that guides the translation of product features into technical product specifications.

C) Research efforts that gather detailed data describing customers' wishes, needs, likes, and dislikes regarding specific product features and functionalities.

D) A template that guides identification and translation of customer requirements into product specifications.

Answer: D Explanation: The house of quality (also known as customer requirements planning matrix) is an aspect of QFD that guides the identification and translation of requirements into product specifications.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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11) In conducting a failure modes and effects analysis, the following data were developed for three modes Mode 1: Severity = 5, Occurrence = 2, and Undetectability = 7 Mode 2: Severity = 3, Occurrence = 6, and Undetectability = 5 Mode 3: Severity = 7, Occurrence = 2, and Undetectability = 4 Which has the highest risk?

A) Mode 1 B) Mode 2 C) Mode 3 D) Mode 1 and Mode 2 are equal in having highest risk Answer: B Explanation: Mode 1: 5 × 2 × 7 = 70. Mode 2: 3 × 6 × 5 = 90. Mode 3: 7 × 2 × 4 = 56 Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) A project team interested in identifying and correcting potential quality problems in a product design would find which one of the following tools most useful?

A) QFD B) FMEA C) Value analysis D) DFM Answer: B Explanation: Failure mode and effects analysis is a procedure for accomplishing this purpose.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

13) Xanadu Inc. has a project team interested in reducing the projected production cost of a new product. The team would find which one of the following tools most useful?

A) QFD B) FMEA C) DFM D) CAD/CAE Answer: C Explanation: Design for manufacture (DFM) is specifically oriented toward reducing production cost.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Apply AACSB: Technology Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Overall, it is clear that well-managed innovation projects: A) Apply only to manufacturing firms.

B) Increasingly involve input from multiple functions in a company.

C) Should always be executed sequentially.

D) All of these.

Answer: B Explanation: This question actually covers several parts of the chapter. Innovation projects apply to all types of organizations, and integrated or simultaneous execution has many benefits.

The chapter emphasizes multifunctional input.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-04 Explain why cross-functional integration is needed in product and process design.

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15) A disadvantage of "component standardization" is that it: A) Increases development time.

B) Increases development cost.

C) Increases the difficulty of inventory management.

D) None of these are disadvantages.

Answer: D Explanation: Component standardization actually decreases each of the items listed.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Which of the following statements is true regarding product/process innovation?

A) Innovation projects are operational processes.

B) Product and process development activities are usually closely linked.

C) Product/process design is a part of the resource/technology supply chain.

D) All of these statements are true.

Answer: D Explanation: Product/process innovation is critical to successful operations management.

Difficulty: 1 Easy Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

17) The stage of the product life cycle in which process innovation becomes an important way to increase efficiencies is: A) Launch B) Growth C) Maturity D) Decline Answer: C Explanation: Once the product matures, competition shifts to cost and efficiency.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) A project aimed at finding new core products or processes is called a(n): A) Research and advanced development project.

B) New platform development project.

C) Next generation development project.

D) Enhancement development project.

Answer: A Explanation: Finding new core technologies to develop new products is a research and advanced development project.

Difficulty: 1 Easy Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-02 Contrast different types of innovation strategies and projects.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

19) An emphasis on involving supply chain partners in product/process innovation is known as: A) Portfolio planning B) Launch and learn C) Codevelopment D) Design outsourcing Answer: C Explanation: Also called "open innovation," codevelopment focuses on using partnerships to jointly develop new products and processes.

Difficulty: 1 Easy Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-02 Contrast different types of innovation strategies and projects.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) Companies usually first build working product prototypes in which stage of product/process innovation?

A) Concept development B) Detailed design and development C) Market testing D) Commercialization Answer: B Explanation: Prototypes are used to flesh out the detailed design.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

21) Cross-functional integration is needed in innovation projects because: A) All functions have a stake in the success of a new product.

B) It is cheaper to solve problems uncovered early in development.

C) Process design decisions are dependent on product design decisions.

D) All of these are correct.

Answer: D Explanation: Cross-functional integration helps identify and solve problems earlier.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-04 Explain why cross-functional integration is needed in product and process design.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) The primary difference between integrated/concurrent engineering development and functional/sequential development is: A) Integrated development spends more money up front in order to save money in later stages.

B) Sequential development is more thorough in addressing development steps.

C) In sequential development, multiple functions comanage design and testing.

D) Integrated development usually leads to higher sustaining and warranty costs.

Answer: A Explanation: Integrated development brings multiple functions together in early development stages to identify and solve potential downstream problems.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-04 Explain why cross-functional integration is needed in product and process design.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

23) XYZ Corporation is using customer interviews and surveys to gather perceptions regarding new product concepts. This approach is known as: A) Quality function deployment.

B) Beta testing.

C) Voice of the customer.

D) Failure modes and effects analysis.

Answer: C Explanation: VOC is specifically oriented toward collecting detailed data on customers' perceptions and needs.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation; Screen Reader Compatible 24) An FMEA estimates the risk priority number (RPN) for a given failure mode to be 36. The occurrence rating is 3 and the severity rating is 3. Thus, the undetectability rating is: A) 3 B) 4 C) 5 D) 6 Answer: B Explanation: RPN = Occurrence × Severity × Undetectability.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

25) What is the first step in conducting value engineering/value analysis?

A) Estimate the value of each function in a product.

B) Identify the functional purposes of a product.

C) Compare the importance and cost of each function.

D) Ask suppliers to provide cost information.

Answer: B Explanation: Functions must be identified before they can be analyzed.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Remember AACSB: Technology Accessibility: Keyboard Navigation; Screen Reader Compatible 26) A management system that captures and shares all the information needed to define a product is: A) CAE B) PLM C) DFM D) 3D printing Answer: B Explanation: Product life cycle management systems store and organize customer preferences, design specifications, and other product data to support product development.

Difficulty: 1 Easy Topic: Enabling Technologies for Product/Process Innovation Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

27) Understanding the product life cycle is important because: A) Innovation investments need to be matched to the phase of a product's life B) All products follow the same pattern of innovation C) Major process innovations typically occur in the growth stage D) The time between product launch and decline is typically very long Answer: A Explanation: The amount and type of innovation that a firm does depends on whether the product is in a launch, growth, maturity, or decline stage.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) Why is product/process innovation an important driver of firm performance?

A) Innovative firms typically have stronger brands B) Product design decisions largely affect supply chain costs C) Strong innovators can respond to market opportunities faster D) All of these are reasons why innovation drives firm performance Answer: D Explanation: Over the long term, innovation is the engine of growth and profits for firms.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

29) What attributes are important measures of a firm's innovative prowess?

A) Speed, quality, and efficiency of innovation B) The "wow" factor of innovation C) The ability to imitate as well as innovate D) Relentless pursuit of perfection Answer: A Explanation: Innovative firms have well-defined, well-executed processes to manage innovation projects.

Difficulty: 2 Medium Topic: The Role of Product/Process Innovation in Supply Chain Operations Management Learning Objective: 04-01 Explain why product/process innovation is an important contributor to a firm's performance.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) "Crowdsourcing" is: A) A way to design products that satisfy the largest number of people B) A way to get ideas or services from a large number of sources, usually online C) Not used for process innovation, mostly only for product innovation D) A way to identify and hire the best and brightest new employees Answer: B Explanation: Crowdsourcing solicits inputs from many different sources outside the firm, efficiently. It is a type of "open innovation."

Difficulty: 2 Medium Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

31) One of the most important benefits of crowdsourcing from customers is: A) It maintains secrecy of new product ideas B) Customers almost always have the best new product ideas C) Competitors are not likely to be able to match innovations generated from customer inputs D) Customers gain a sense of engagement and ownership of new products Answer: D Explanation: Crowdsourcing involves customers directly in new product development, giving them a sense of ownership.

Difficulty: 3 Hard Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Operations managers view innovation as a "funnel" because: A) Small ideas grow to become broad new strategies B) It often takes many new ideas to yield a few really good innovations C) Good innovators invest in as many new projects as they can afford D) Innovation means launching many new products so that the market can sort out the winners and losers Answer: B Explanation: Innovation is the process of finding and developing a wide range of new ideas and opportunities, evaluating them, and pursuing the few most promising ones.

Difficulty: 2 Medium Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

33) Which of the following statements is true regarding innovation portfolio planning?

A) Each innovation project should be evaluated on its own merits, independent of other projects a firm is pursuing B) Product enhancement projects typically require greater resource investments than platform development projects do C) Operations managers play different roles on different types of innovation projects D) In order to be fair, all innovation projects should be assessed using the same metrics Answer: C Explanation: Operations managers can play leading or supporting roles in innovation, depending on the nature of the project.

Difficulty: 2 Medium Topic: Operational Product/Process Innovation Competencies Learning Objective: 04-02 Contrast different types of innovation strategies and projects.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) The main benefit of a stage-gate process for product development is that it: A) Is faster B) Helps to reduce risk C) Allows for greater parallel processing of development stages D) Reduces management overhead costs Answer: B Explanation: A stage-gate process requires management evaluation and go/no-go decisions near the end of each stage, thus imposing a disciplined scrutiny and identification of risks many times throughout the life of the innovation project.

Difficulty: 3 Hard Topic: Product/Process Design and Development Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

35) If you want to minimize up-front development costs in a new product development and launch project, which approach would you use?

A) Concurrent engineering B) Product life cycle management C) Sequential product development D) Quality function deployment Answer: C Explanation: Functional/sequential product development postpones up-front process development until product design and development are mostly complete.

Difficulty: 3 Hard Topic: Product/Process Design and Development Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) The main benefit of integrated/concurrent product development is: A) Faster product development B) Earlier problem solving C) Reduced launch and production costs D) All of these are benefits Answer: D Explanation: By overlapping and integrating product and process development, time is saved due to parallel work and lowered redesign, and production problems are identified and fixed while the product design is still malleable.

Difficulty: 3 Hard Topic: Product/Process Design and Development Learning Objective: 04-03 Describe new product/process design and development objectives and project phases.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

37) A system that enables 3D modeling and evaluation of product designs without the cost of producing physical parts is: A) 3D printing B) CAD/CAE C) QFD D) Group technology Answer: B Explanation: Computer-aided design and engineering systems enable designers to electronically model parts and simulate how they will fit and work together in product assemblies, and how they will be produced in manufacturing systems.

Difficulty: 2 Medium Topic: Enabling Technologies for Product/Process Innovation Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 38) A technology that produces prototypes quickly without the cost of production tooling is: A) 3D printing B) CAD/CAE C) VOC D) Group technology Answer: A Explanation: 3D printing (aka additive manufacturing) uses welding processes to rapidly build a physical prototype.

Difficulty: 2 Medium Topic: Enabling Technologies for Product/Process Innovation Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

39) Suppose that you want to develop a product that can easily be configured in a wide variety of ways. What design approach would be best?

A) Component standardization B) FMEA C) VOC D) Modular product design Answer: D Explanation: Modular design enables a wide range of product configurations to be built from a small number of different product platforms by switching product modules in and out.

Difficulty: 3 Hard Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 40) A FMEA analysis shows that, for a given failure mode, the severity is 5, the occurrence is 3, and the undetectability is 2. The risk priority number (RPN) for this mode is: A) 10 B) 5 C) 30 D) 16 Answer: C Explanation: RPN = severity × occurrence × undetectability Difficulty: 3 Hard Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

41) "Design for X" is: A) A short way to say "design for excellence" B) An approach that ensures that customers' needs are met C) A collection of design approaches that address specific areas of supply chain management D) The same thing as design for manufacture Answer: C Explanation: Design for X is a collection of "design for" methods that help product designers address the constraints of various supply chain operations.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 42) A product design approach that uses digital connectivity to deliver services is known as: A) Service platform B) Modular design C) Product platform D) Design for service Answer: A Explanation: A smartphone is a platform in that it is an assembly of modular components, both of hardware and software. It is also a service platform because it uses connectivity (through cellular or wi-fi or other networks) to deliver all kinds of services, many of which can be configured by the owner of the device.

Difficulty: 1 Easy Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

43) Another way to think of how virtual reality is used in product development is: A) Virtual prototyping B) Augmented design C) Customer engagement D) 3D printing Answer: A Explanation: Virtual reality tools create opportunities for designers, customers, and others to interact with virtual products in realistic ways. In this way, virtual reality tools essentially create virtual prototypes.

Difficulty: 2 Medium Topic: Product/Process Design and Development Learning Objective: 04-05 Apply tools and techniques for integrating customer needs and supply chain considerations into product/process design and development.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 5 Manufacturing and Service Process Structures 1) Which of the following process structures can produce the widest variety of products?

A) Job shop B) Repetitive process C) Continuous flow D) Batch operation Answer: A Explanation: Job shop processes produce the widest variety of process types.

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Which process type is not correctly matched with its descriptive characteristic?

A) Project—high complexity B) Repetitive process—customized products C) Job shop—high flexibility D) Continuous flow—low-skilled workers Answer: B Explanation: Repetitive processes typically produce standardized products. The other choices are correct (see Table 5-1).

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) Which of the following types of businesses would most likely use a batch process structure?

A) Company that builds cruise ships.

B) An automotive assembler such as Ford Motor Co. C) A glass beverage bottle manufacturer.

D) A company that produces automobile seats.

Answer: D Explanation: Automobile seats have moderate volumes and varieties considering such factors as differences in upholstery and thus would use a batch process (see Table 5-1).

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Wanda Corp. currently uses a job shop process. It wants to maintain the advantages of this but increase efficiency. Wanda should investigate: A) Cellular manufacturing.

B) Job shop processes.

C) Mass customization.

D) Project process.

Answer: A Explanation: Cellular manufacturing attempts to maintain flexibility of job shops but at lower costs.

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

5) Zanda Corp. wants to have a process structure that has cost advantages similar to continuous or repetitive processes, but wants to produce greater variety than those processes normally allow.

Zanda should consider: A) Cellular manufacturing.

B) Job shop processes.

C) Mass customization.

D) Project process.

Answer: C Explanation: Mass customization attempts to maintain cost advantages similar to continuous or repetitive processes, but allows a firm to produce greater variety than those processes normally allow.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Jones Company has a make to order orientation. It most likely does NOT use: A) Continuous process structure.

B) Cellular manufacturing process structure.

C) Job shop process structure.

D) Batch process structure.

Answer: A Explanation: Continuous process structures are used for make to stock orientations. The others are primarily make to order.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) Companies with a make to stock orientation are most likely to use which of the following process structures?

A) Mass customization B) Job shop C) Repetitive process D) They are likely to use any one of these process structures.

Answer: C Explanation: Of the alternatives, only repetitive process applies to make to stock. The others are make or assemble to order.

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) For which market orientation is accurately forecasting the amount of finished goods needed likely to be the most important for a firm's financial performance?

A) Engineer to order B) Make to order C) Assemble to order D) Make to stock Answer: D Explanation: In a make to stock orientation, products are made in advance of actual customer orders and held in inventory. Thus, forecasting is critical to both costs and sales. Firms using the other orientations do not produce finished goods until after a customer order is received.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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9) Which of the following products is most likely to require an assemble to order market orientation?

A) An upholstered sofa B) A mobile phone C) Shampoo D) A race car Answer: A Explanation: For an upholstered sofa requiring an assemble to order orientation, the premade frames are held in inventory but the fabric is not added until a customer order is placed. Sofas can also be make to stock.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Choose the service type that is correctly matched with one of its key characteristics.

A) Service factory—facilities and equipment represent a large proportion of total costs.

B) Service shop—there is a low degree of customer interaction.

C) Mass service—transactions are very varied from customer to customer.

D) Professional service—transactions tend to be fairly standardized.

Answer: A Explanation: A service factory requires high capital investment. The other descriptions are opposite of the reality. See Figure 5-3.

Difficulty: 1 Easy Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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11) Which of the following is NOT considered to be part of the service process matrix?

A) Customization B) Volume C) Customer interaction D) Labor intensity Answer: B Explanation: The degree of customization/customer interaction and labor/capital intensity form the axes of the service process matrix as shown in Figure 5-3.

Difficulty: 1 Easy Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) Using technology such as self-checkouts in grocery stores to enable customers to complete the service delivery and transaction themselves is most commonly used for: A) Service factories.

B) Service shops.

C) Mass services.

D) Professional services.

Answer: C Explanation: Because there is moderate to low customization/customer interaction, meaning that large groups of customers have similar requirements, mass services technology can be used to create "self-services." This helps to reduce labor costs and can increase service availability for customers.

Difficulty: 2 Medium Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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13) All of the following are potential benefits of decoupling front and back offices in service processes EXCEPT: A) Standardization across multiple locations.

B) Economies of scale.

C) Use of remotely located back-office employees.

D) Easier customization of services.

Answer: D Explanation: Decoupling allows for back-office work to be done at a remote centralized location, allowing for standardization and economies of scale. Decoupling may actually reduce the ability to customize services.

Difficulty: 2 Medium Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Ensuring that all the right people, equipment, and materials arrive on time is especially challenging when using which layout?

A) Fixed-position layout B) Functional layout C) Service factory layout D) Product layout Answer: A Explanation: In a fixed-position layout, all of the necessary resources must come to the work site.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-03 Describe how each of the operations layouts-fixed-position, functional, product, and cellular-is designed to meet the demands placed on it.

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15) A common goal when designing a functional layout is to: A) Ensure materials arrive on schedule.

B) Reduce the time and cost of moving people and materials between departments.

C) Avoid downtime at any workstation.

D) Balance the flow of materials through the process.

Answer: B Explanation: Because each product or customer takes a unique route through the process, the time and cost for movement can be very high.

Difficulty: 2 Medium Topic: Operations Layout Learning Objective: 05-03 Describe how each of the operations layouts-fixed-position, functional, product, and cellular-is designed to meet the demands placed on it.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Zanadu Corp. has dedicated equipment and workers in a regularly occurring sequence of activities. Zanadu has which type of operations layout?

A) Fixed-position layout B) Functional layout C) Service factory layout D) Product layout Answer: D Explanation: When resources are arranged in a regular sequence of activities, a product layout is being employed.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-03 Describe how each of the operations layouts-fixed-position, functional, product, and cellular-is designed to meet the demands placed on it.

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17) John Jones, CEO of Jones Corp., is unhappy because each product his company makes takes a unique route through the facility, so processing times tend to be high. His company most likely has a: A) Fixed-position layout.

B) Sequential action layout.

C) Functional layout.

D) Product layout.

Answer: C Explanation: Unique routes and high processing times are characteristics of functional layouts.

Difficulty: 2 Medium Topic: Operations Layout Learning Objective: 05-03 Describe how each of the operations layouts-fixed-position, functional, product, and cellular-is designed to meet the demands placed on it.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) What is the primary objective of line balancing?

A) To minimize the travel time between workstations B) To match output rates with actual demand C) To minimize materials handling costs D) To group similar activities together Answer: B Explanation: Lines are balanced so that each workstation does not exceed the takt time, which is the time required at each station to produce exactly what the customer demands.

Difficulty: 2 Medium Topic: Operations Layout Learning Objective: 05-04 Analyze a product layout using line balancing.

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19) A company needs to produce 400 units per day (the day is defined as 12 hours of production). There are three tasks to be completed, with a total task time for all three tasks of six minutes. The company should have: A) Three workstations.

B) Four workstations.

C) Five workstations.

D) Two workstations.

Answer: B Explanation: Theoretical number of stations (N) = (Total of all task times)/(Takt time). The takt time is the [time available]/customer demand, which is [1 shift per day × 12 hours per shift × 60 minutes per hour]/400 units = 1.8 minutes. Number of stations = (6 minutes/1.8 minutes) = 3.33, so round up to four workstations.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-04 Analyze a product layout using line balancing.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) A company needs to produce 1,000 units per day (the day is defined as eight hours of production). There are six tasks to be completed, with a total task time of 12 minutes. The company should have: A) 25 workstations.

B) 2 workstations.

C) 84 workstations.

D) 14 workstations.

Answer: A Explanation: Theoretical number of stations (N) = (Total of all task times)/(Takt time). The takt time is the [time available]/customer demand, which is [1 shift per day × 8 hours per shift × 60 minutes per hour]/1,000 units = 0.48 minutes. Number of stations = (12 minutes/0.48 minutes) = 25 workstations.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-04 Analyze a product layout using line balancing.

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21) A contemporary process layout in which product "families" with similar processing characteristics are identified and produced on a number of small assembly lines is referred to as: A) Cellular layout.

B) Fixed-position layout.

C) Flexible manufacturing systems.

D) Mass customization.

Answer: A Explanation: A cellular layout arranges workstations to form work cells to produce parts that have similar processing characteristics.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-04 Analyze a product layout using line balancing.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Compared to a functional layout, cellular layouts have: A) Less work-in-process inventory.

B) More complexity in scheduling.

C) More frequent setups.

D) Lower efficiency.

Answer: A Explanation: Compared to a functional layout, a cellular layout is less complex and has fewer setups, higher efficiency, and less work-in-process inventory.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-04 Analyze a product layout using line balancing.

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23) An example of an integrative technology is a/an: A) Transportation management system.

B) Industrial robot.

C) Radio frequency identification (RFID) system.

D) Enterprise resource planning (ERP) system.

Answer: D Explanation: See Table 5-5. An ERP system combines data management, communications, decision support, and processing capabilities.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) The use of a tablet computer, such as an iPad, for a restaurant's menu is an example of: A) Mobility.

B) Point of sale system.

C) Warehouse management system.

D) Enterprise resource management system.

Answer: A Explanation: The use of tablet computers to provide information at the source where it is needed is mobility.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

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25) When a process is automated: A) Low-wage jobs increase B) Fixed costs increase C) Quality always improves D) Less maintenance is needed.

Answer: B Explanation: Generally more investment is needed increasing an organization's fixed costs.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) The shows process structures based on output volume and product variety.

A) Back office B) Service process matrix C) Product-process matrix D) Fixed-position layout Answer: C Explanation: Process structures are categorized based on volume and variety on the productprocess matrix.

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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27) A hospital emergency room would most likely be classified as a: A) Job shop B) Batch process C) Repetitive process D) Continuous process Answer: A Explanation: Treatments at a hospital emergency room are highly customized to each patient's needs, and at most hospitals, during a specific time period, any single type of treatment is low volume. Equipment is general purpose and staff are highly skilled.

Difficulty: 3 Hard Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) One of the major challenges with a job shop process is that: A) Employees become bored from doing the same task over and over again B) Planning and scheduling are difficult C) Many activities must be outsourced to a variety of different suppliers D) It is very costly to stop production Answer: B Explanation: Because of the high variety of products and jumbled flows through the process, job shop planning and scheduling can be difficult.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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29) Which is false with respect to a process structure?

A) It is the same across an entire supply chain B) Determines how inputs, activities, flows, and outputs are organized C) Different structures have different capabilities D) The selection of a process structure should consider competitive priorities Answer: A Explanation: In a supply chain, when going from raw materials all the way to the end consumer, the process structures change. For example, raw materials are often produced using continuous process, parts in batch process, and final assembly in repetitive processes.

Difficulty: 2 Medium Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) Which process structure is most likely used by a company that makes plastic water bottles?

A) Project B) Batch C) Job shop D) Continuous process Answer: D Explanation: Water bottles are made in high volume, low variety continuous processes.

Difficulty: 3 Hard Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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31) 3D printing is most likely to be used when the process structure is: A) Cellular manufacturing B) Repetitive process C) Mass customization D) Continuous process Answer: C Explanation: 3D printing provides the flexibility to make a wide range of products quickly and at a low cost. This process flexibility is necessary for mass customization.

Difficulty: 1 Easy Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Stitch Fix, an online company that provides personal shopping services for clothing based on each customer's style and budget, is an example of: A) Cellular manufacturing B) Mass customization C) A service factory D) A continuous process Answer: B Explanation: Stitch Fix is an example of mass customization. Fashion items are assembled from standard choices but put together to match each individual's style, budget, and size.

Difficulty: 3 Hard Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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33) Which of the following products would be most likely "make to stock"?

A) A commercial passenger airplane B) A communications satellite C) A train locomotive D) An automobile Answer: D Explanation: Most cars are produced based on a forecast and sent to auto dealers as inventory to be available for sale.

Difficulty: 3 Hard Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) All of the following typically require a "make to stock" market orientation except: A) Men's jeans B) Televisions C) Coffee makers D) Wedding cake Answer: D Explanation: A wedding cake is customized for each wedding and requires a "make to order" market orientation.

Difficulty: 3 Hard Topic: Process Structures Learning Objective: 05-01 Compare and contrast the seven process structures: project, job shop, batch, repetitive process, continuous process, mass customization, and cellular manufacturing.

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35) Which of the following is the best example of a service shop?

A) A fast-food restaurant such as McDonald's B) An electrical utility company C) A computer repair shop D) A dentist Answer: C Explanation: A computer repair shop tends to have a high degree of customization and customer interaction and relatively low labor intensity since much of the diagnosis is automated, making it the best example of a service shop.

Difficulty: 3 Hard Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) A law firm is an example of a: A) Professional service B) Service factory C) Service shop D) Mass service Answer: A Explanation: A law firm has high customer interaction and customization and is very laborintensive, making it the best example of a professional service.

Difficulty: 3 Hard Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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37) A restaurant chain that assembles meals at a centralized facility is using: A) Group technology B) Back-office processes C) A service factory D) A fixed-position layout Answer: B Explanation: A centralized facility that prepares meals for a restaurant is not visible to the customer and is an example of a back-office process that is used to increase efficiency.

Difficulty: 3 Hard Topic: Unique Aspects of Service Processes Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 38) Which of the following is NOT a drawback to a product layout?

A) Lack of flexibility to change product features B) A problem at any workstation can stop the entire production line C) Work-in-process inventory is typically very high D) The potential for employee boredom Answer: C Explanation: Because of the process flows, work-in-process inventory tends to be low.

Difficulty: 2 Medium Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

39) Which product is likely to use a fixed-position layout in its production process?

A) A refrigerator B) Customized equipment C) A commercial airplane D) A mobile phone Answer: C Explanation: Because of its large size and complexity, a commercial airplane is likely to require a fixed-position layout, in which the employees, equipment, and materials are brought to the plane.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 40) A college of business building that has classrooms on the first floor, faculty offices on the second floor, and graduate assistance offices on the third floor has which type of layout?

A) Fixed-position B) Functional C) Product D) Cellular Answer: B Explanation: The college of business building is arranged by functions and departments, and thus uses a functional layout.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

41) New home construction uses which type of layout?

A) Fixed-position B) Functional C) Product D) Cellular Answer: A Explanation: In traditional home construction, the employees, materials, and equipment are brought to the work site; thus, a fixed-position layout is used.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 42) In line balancing, takt time is the time: A) Needed to change over a process between different types of products B) It takes a product to go through the entire process C) That is the maximum allowable time at each workstation based on customer demand D) Required for the entire product fulfillment process Answer: C Explanation: The takt time is the maximum time allowed at each workstation, as determined by customer demand.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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43) In line balancing, the relationships between among tasks in a process is are shown in a: A) Followers diagram B) Precedence diagram C) Service blueprint D) Product families diagram Answer: B Explanation: A precedence diagram shows the relationships among tasks in a process.

Difficulty: 1 Easy Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 44) In line balancing: A) Once determined, the balanced line should not be changed B) The time at each workstation is driven by actual customer demand C) The number of actual workstations should always equal the theoretical number of workstations D) Efficiency is not affected by the takt time Answer: B Explanation: When designing a process, the time at each workstation is what is needed to meet customer demand.

Difficulty: 2 Medium Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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45) What is the takt time in minutes if 500 units are needed per day? The company has two eight-hour shifts per day.

A) 0.5 minutes B) 62.5 minutes C) 31.3 minutes D) 1.9 minutes Answer: D Explanation: The takt time is the [time available]/customer demand. In this case [2 shifts per day × 8 hours per shift × 60 minutes per hour]/500 units = 1.9 minutes.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 46) What is the takt time in minutes if 200 units are needed per day? The company has one 12hour shift per day.

A) 3.6 minutes B) 17 minutes C) 0.3 minutes D) 1 minute Answer: A Explanation: The takt time is the [time available]/customer demand. In this case [1 shift per day × 12 hours per shift × 60 minutes per hour]/200 units = 3.6 minutes.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

47) What is the takt time in seconds if 1,000 units are needed per day? The company has one eight-hour shift per day.

A) 60 seconds B) 125 seconds C) 29 seconds D) 48 seconds Answer: C Explanation: The takt time is the [time available]/customer demand. In this case [1 shift per day × 8 hours per shift × 60 minutes per hour × 60 seconds per minute]/1,000 units =29 seconds.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 48) A company must make 30 units per hour. What is the efficiency if the total time to complete all tasks is eight minutes and the company is using five workstations?

A) 80 percent B) 75 percent C) 63 percent D) 20 percent Answer: A Explanation: The takt time is the [time available]/customer demand, which is [60 minutes/hour]/30 units per hour = 2 minutes. The efficiency is [Sum of all task times/(Actual workstations × takt time)] × 100, which is ((8 minutes)/(5 workstations × 2 minutes)) × 100 = 80%.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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49) A company must make 800 units per day. The company has two eight-hour shifts. What is the efficiency if the total time to complete all tasks is 11 minutes and the company is using 15 workstations?

A) 94 percent B) 33 percent C) 83 percent D) 61 percent Answer: D Explanation: The takt time is the [time available]/customer demand, which is [2 shifts per day × 8 hours per shift × 60 minutes per hour]/800 units = 1.2 minutes. The efficiency is [Sum of all task times/(Actual workstations × takt time)] × 100, which is [(11 minutes)/(15 workstations x 1.2 minutes)] × 100 = 61%.

Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 50) A company must make 400 units per day. The company has one 12-hour shift. What is the efficiency if the total time to complete all tasks is 23 minutes and the company is using 18 workstations?

A) 22 percent B) 71 percent C) 50 percent D) 88 percent Answer: B Explanation: The takt time is the [time available]/customer demand, which is [1 shift per day × 12 hours per shift × 60 minutes per hour]/400 units = 1.8 minutes. The efficiency is [Sum of all task times/(Actual work stations × takt time)] × 100, which is ((23 minutes)/(18 workstations × 1.8 minutes)) × 100 = 71% Difficulty: 3 Hard Topic: Operations Layout Learning Objective: 05-02 Compare and contrast the goals and challenges associated with a service factory, a mass service, a service shop, and a professional service.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

51) Which of the following would not be considered an automating technology?

A) Internet of Things (IoT) B) Drones C) Mobile apps D) CPFR Answer: D Explanation: Collaborative planning, forecasting, and replenishment (CPFR) is a process used between customers and suppliers for communication, information sharing, and decision making.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 52) The connection of products and machines for sharing data with other devices is: A) Enterprise resource planning (ERP) B) Internet of Things (IoT) C) Unmanned autonomous vehicles (UAV) D) Radio frequency identification (RFID) Answer: B Explanation: The Internet of Things (IoT) allows products and machines to connect to the Internet and share data with other devices.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

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53) Cybersecurity risks are: A) Only a concern for mobile apps B) Higher for smaller suppliers that have fewer resources C) Decreasing as more companies adopt Internet of Things (IoT) D) Leading to more offshoring Answer: B Explanation: Small suppliers often do not have the resources to invest in cybersecurity expertise and thus can become targets for cybercriminals.

Difficulty: 1 Easy Topic: Capacity Enabling Technologies Learning Objective: 05-05 Explain how technology is used in the supply chain and the benefits and challenges of process automation.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

Managing Ops Across the Supply Chain, 4e (Swink) Chapter 6S Supplement: Quality Improvement Tools 1) The two types of data involved in quality control are: A) Assignable factors and random factors.

B) Variables and attributes.

C) Random measurements and 100 percent measurements.

D) Accuracy and precision.

Answer: B Explanation: The two types of data involved in quality control are variable data and attribute data.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-02 Identify the importance of data in quality management.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 2) "Pass/ fail" and "go/no go" are both examples of: A) Attribute data.

B) Decision data.

C) Process flow data.

D) Variable data.

Answer: A Explanation: Pass/fail, go/no go, and good/bad are all attribute data.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-02 Identify the importance of data in quality management.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

3) The width of a histogram showing a distribution of data indicates the that generated the distribution.

A) Predictability B) Average C) Bias D) Central tendency

of the process

Answer: A Explanation: The wider the histogram, the less predictable it is.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Zanda Corp. has determined that it has too many products returned from customers. Zanda is interested in determining what factors or elements could contribute to the large number of returns. Which of the following quality tools would Zanda use to achieve this objective?

A) Process flowchart B) Pareto analysis C) Fishbone diagram D) Run diagram E) Scatter diagram Answer: C Explanation: The fishbone diagram displays the relationships between observed effects and their possible causes.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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5) You are involved in the implementation of a quality improvement program. Your immediate goal is to identify what problems you should focus on (ideally you want to focus on those that give you the biggest bang for the buck). Which of the following quality control procedures is the most appropriate?

A) Fishbone diagrams B) Process flow charts C) Pareto analysis D) Histograms Answer: C Explanation: Pareto analysis examines the relative intensity of problems and aids in determining where remedial action will have the greatest impact.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Suppose that you are a process manager in a manufacturing plant, and you suspect that there is a relationship between the room temperature of the plant and the weights of the plastic caps produced by an injection molding process. What quality improvement tool would you use to investigate this claim?

A) Fishbone diagram B) Check list C) Pareto analysis D) Histogram E) Scatter diagram Answer: E Explanation: A scatter diagram will graphically illustrate the relationship between two variables.

Difficulty: 2 Medium Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

7) The specifications for the diameter of a molded part are 10 mm ± 0.5 mm. The actual average and standard deviation from 250 parts sampled is 10.1 mm and 0.1 mm, respectively. What is the process capability as measured by Cp? A) 0.84 B) 1.67 C) 0.60 D) 1.00 E) 1.01 Answer: B Explanation: Cp = (10.5 − 9.5) ÷ (6 × 0.1) = 1 ÷ 0.6 = 1.67 Difficulty: 2 Medium Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 8) The specifications for the diameter of a molded part are 10 mm ± 0.5 mm. The actual average and standard deviation from 250 parts sampled is 10.1 mm and 0.1 mm, respectively. What is Cpk? A) 0.81 B) 1.01 C) 0.33 D) 1.34 E) 0.80 Answer: D Explanation: Cp = (10.5 − 9.5) ÷ (6 × 0.1) = 1 ÷ 0.6 = 1.67; K = Absolute Value ((10.5 + 9.5) ÷ 2 - 10.1) ÷ ((10.5 − 9.5) ÷ 2) = 0.2 Cpk = (1 − 0.2) × 1.67 = 1.336 Difficulty: 3 Hard Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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Test Bank Managing Operations Across the Supply Chain, Fourth Edition Swink Melnyk Hartley

9) The specifications for the diameter of a molded part are 10 mm ± 0.5 mm. The actual average and standard deviation from 250 parts sampled is 10.1 mm and 0.1 mm, respectively. The process can be characterized as: A) Capable.

B) Unreliable.

C) Just barely capable.

D) Out of control.

Answer: A Explanation: Cp = (10.5 − 9.5) ÷ (6 × 0.1) = 1 ÷ 0.6 = 1.67; K = Absolute Value ((10.5 + 9.5) ÷ 2 − 10.1) ÷ ((10.5 − 9.5) ÷ 2) = 0.2 Cpk = (1 − 0.2) × 1.67 = 1.336 Since Cpk is greater than one this indicates a capable process that can reliably meet design specifications.

Difficulty: 2 Medium Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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10) A firm has an existing process that it would like to use for producing a part it will sell to an industrial customer. The customer requires that defective (out of specification) parts be kept to 3,000 parts per million (three-tenths of 1 percent) or less. A process capability study done on the process revealed that it has a process capability index (Cpk) of 1.00 for this part. What should the firm conclude from the study?

A) The process is not capable, but with careful process control, it could be used to meet the customer's requirements.

B) The process is highly capable, and when operating in control, a very high percentage of output will meet the customer's requirements.

C) The process is not capable, and even with careful control, it will not be able to meet the customer's requirements.

D) The process is capable, but just barely, and will require careful monitoring in order to meet customer requirements.

Answer: D Explanation: A Cpk score of 1 means that this process is capable, but just barely.

Difficulty: 2 Medium Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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11) Sample means and ranges were obtained for five samples of 10 units per sample from a production process. Assume the process was considered to be in control during the period these samples were collected. The results are as follows:

Sample 1 2 3 4 5

Mean 10.58 9.97 9.99 10.23 10.23

Range 0.23 0.25 0.21 0.28 0.28

What is the central line of the X chart for this process A) 10.00 B) 10.05 C) 10.20 D) 9.45 E) 9.75 Answer: C Explanation: The central line of the X chart is the mean value of the sample means = 10.20 Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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12) Sample means and ranges were obtained for five samples of 10 units per sample from a production process. Assume the process was considered to be in control during the period these samples were collected. The results are as follows:

Sample 1 2 3 4 5

Mean 10.58 9.97 9.99 10.23 10.23

Range 0.23 0.25 0.21 0.28 0.28

LCL for the three sigma X chart for the process is approximately (for a sample size of 10, A2 = 0.31): A) 10.12.

B) 10.05.

C) 10.94.

D) 9.44.

E) 9.75.

Answer: A Explanation: Average range per sample = 0.25 × 0.31 = 0.0775 and 10.2 − 0.0775 = 10.1225 Difficulty: 3 Hard Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 13) The objective of statistical process control (SPC) is to: A) Determine whether a batch of raw materials should be accepted or rejected.

B) Determine whether a batch of finished goods should be accepted or rejected.

C) Detect assignable cause variations versus normal random variations in the process.

D) Identify variable versus attribute measures.

Answer: C Explanation: Statistical process control is used to identify variations that arise from other than normal variations in a process. The terms “statistical process control” and “process control charts” convey the same concept.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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14) Hugging in a control chart usually indicates: A) The process is out of control.

B) Systematic problems in the process that require attention.

C) The process is in control.

D) Something is occurring that is masking natural variation.

Answer: D Explanation: Hugging is a term that refers to points in a control chart showing almost no variation at all. This raises suspicion that something is happening that masks the normal variation of the process and it is impossible to tell whether the process is in control or not.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 15) The Taguchi methods link product design to: A) Customer expectations.

B) Production availability.

C) Process improvement.

D) Unexplained variance.

Answer: C Explanation: Professor Taguchi was the first to recognize the importance of linking product design to process improvement.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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16) Which of the following categories of causes would be most appropriate for a Marriott (an international hotel chain) or McDonalds (an international fast food chain) or the local hair stylist?

A) People, Machine/Equipment, Methods/Processes, Materials B) Machine, Method, Material, Manpower/Mindpower, Measurement, Mother Nature C) Product, Price, Place, Promotion, People/personnel, Process, Physical evidence D) People, Price, Machine, Materials, Mother Nature Answer: C Explanation: Marriott, McDonalds, and the stylist are all services so you would choose the 7 P’s, Product, Price, Place, Promotion, People/personnel, Process, Physical evidence Difficulty: 1 Easy Topic: Quality Improvement Tools/Cause-and-Effect Diagrams Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 17) Which of the following tools is most appropriate when we are interested in determining if a process that was generating attribute-type data (pass/fail, good/bad) was under control?

A) p control chart B) - R control chart C) Scatterplot D) Histogram Answer: A Explanation: The p control chart is useful to determine whether processes generating attribute data are under control.

Difficulty: 1 Easy Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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18) You have been given the following data: Specification information: Anything between 10 and 20 units per order is acceptable.

Process Mean: 13 Upper limit of the process: 16 Lower limit of the process: 10 Using this information, which of the following conclusions is most appropriate?

A) The process is not capable since it is not centered.

B) The process is barely capable and not centered.

C) The process is capable and centered.

D) The process is not capable and centered.

Answer: B Explanation: Cp = (20-10) ÷ (16 - 10) = 1.67 K = (15 − 13) ÷ ((20 - 10) ÷ 2) = 0.40 Cpk= (1 − 0.4) × 1.67 = 1.00 Difficulty: 2 Medium Topic: Quality Improvement Tools/Cp and Cpk charts Learning Objective: 06S-01 Apply quality management tools for problem solving.

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19) You have been given the following sample information that has been drawn from the last sample taken: Mean of the sample: 13.67 Lower control limit for the range: 0 Upper control limit for the range: 10.6 Observations: 13, 12, 8, 10, 11, 16, 17, 8, 17, 18, 20, 14 Which of the following conclusions does this data support?

A) The process is under control.

B) The process is not under control.

C) The sample is within specifications.

D) The sample is out of specification.

Answer: D Explanation: The sample is out of specification—the mean of the sample is outside the upper control limit.

Difficulty: 2 Medium Topic: Quality Improvement Tools/Process Control Charts Learning Objective: 06S-01 Apply quality management tools for problem solving.

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20) You are given the following data for taillight assemblies:

Orders 7am - 9am Insufficient plating vvvvvvvv Inability to meet heat specs vvvvvv scratched lens vvvvvvvvvv Failed leak test vv Glue on lens Cracked v body 27

9am - 11am 11am - 1pm 1pm - 3pm 3pm - 5pm sum v

vvvvvv

15

vvvvvvvvv vvvvvvvvvv vvvvvvvvv vvvvvvvv vvvvvvvvvv vv vvv vvv v

42

vv

vv v

12 7

28

5 109

vv 16

v vvv

vvv vvv

18

vv 20

28

Which of the following tools does this data represent?

A) Cp/Cpk analysis B) Histogram C) Control chart D) Check sheet Answer: D Explanation: Check sheets collect, organize, and display data to reveal patterns.

Difficulty: 1 Easy Topic: Quality Improvement Tools/Check Sheets Learning Objective: 06S-01 Apply quality management tools for problem solving.

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21) You are given the following data for taillight assemblies:

Orders 7am - 9am Insufficient plating vvvvvvvv Inability to meet heat specs vvvvvv scratched lens vvvvvvvvvv Failed leak test vv Glue on lens Cracked v body 27

9am - 11am 11am - 1pm 1pm - 3pm 3pm - 5pm sum v

vvvvvv

15

vvvvvvvvv vvvvvvvvvv vvvvvvvvv vvvvvvvv vvvvvvvvvv vv vvv vvv v

42

vv

vv v

12 7

28

5 109

vv 16

v vvv

vvv vvv

18

vv 20

28

Management has decided to carry out a Pareto analysis focusing on problem areas. Which of the following conclusions does the Pareto analysis support?

A) Management should focus attention on either the early morning or late afternoon time periods.

B) Management should focus attention on "inability to meet heat specs" and "scratched lens."

C) The Pareto analysis should not be used since it is inappropriate in this situation.

D) We are receiving faulty lenses from our suppliers.

Answer: B Explanation: Inability to meet heat specs and scratched lens problems dominate the check sheet and management should focus their attention on these areas first.

Difficulty: 1 Easy Topic: Quality Improvement Tools/Pareto Analysis Learning Objective: 06S-01 Apply quality management tools for problem solving.

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22) You are given the following data for taillight assemblies:

Orders 7am - 9am Insufficient plating vvvvvvvv Inability to meet heat specs vvvvvv scratched lens vvvvvvvvvv Failed leak test vv Glue on lens Cracked v body 27

9am - 11am 11am - 1pm 1pm - 3pm 3pm - 5pm sum v

vvvvvv

15

vvvvvvvvv vvvvvvvvvv vvvvvvvvv vvvvvvvv vvvvvvvvvv vv vvv vvv v

42

vv

vv v

12 7

28

5 109

vv 16

v vvv

vvv vvv

18

vv 20

28

Management has decided that they must do something about the inability of the taillight assemblies to meet the quality specifications. Yet currently they do not know what areas they should look at. To help management in dealing with this issue, which of the following quality control tools would be most appropriate?

A) Histogram B) Scatterplots C) Cause-and-effect diagrams D) Plan-Do-Check-Act Answer: C Explanation: Cause and effect (fishbone) diagrams help uncover the (sometimes) hidden root causes and link them to the symptoms observed.

Difficulty: 1 Easy Topic: Quality Improvement Tools/Cause-and-Effect Diagrams Learning Objective: 06S-01 Apply quality management tools for problem solving.

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23) We are experiencing a problem where the output of a process keeps shifting over time. If we were to use a histogram to collect and display the resulting data, what type of shape would it most likely display?

A) Bell (normal) distribution B) Plateau-shaped distribution C) Bimodal distribution D) Skewed distribution Answer: B Explanation: The plateau-shaped distribution often results from combining multiple data sets where the means of the data sets, themselves, are shifting over time.

Difficulty: 1 Easy Topic: Quality Improvement Tools/Histograms Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 24) A process can be said to be capable when: A) The Cp is greater than 1.5.

B) The Cpk is less than 1.0.

C) The process is perfectly centered within the specification.

D) The Cpk is greater than 1.5.

Answer: D Explanation: A process with Cpk > 1.5 is considered capable.

Difficulty: 1 Easy Topic: Quality Improvement Tools/Process Capability Analysis: Cp and Cpk Learning Objective: 06S-01 Apply quality management tools for problem solving.

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25) A packaging plant is running a filling process where packages are filled with 24 oz. +/- 0.08 oz. A capability study reveals that the process mean is 24 oz. with a standard deviation of 0.02 oz. What is the capability of the packaging line?

A) 0.67 B) 1.33 C) 0.50 D) 1.50 Answer: B Explanation: Cp = (24.08 − 23.92) ÷ (6 × .02) = 1.333 Difficulty: 2 Medium Topic: Quality Improvement Tools/Process Capability Analysis: Cp and Cpk Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Forty samples of 100 are taken, with the total number of defective units being 150. What is the upper control limit of the three sigma (z = 3) p-chart?

A) 0.0375 B) 0.0945 C) 0.165 D) 0.793 Answer: B Explanation: P=150 ÷ 4000 = 0.0375.

UCL = P + 3 × Sqrt (P × (1 − P) ÷ 100) UCL = 0.0375 + 3 × SQRT (0.0375 × (1 − 0.0375) ÷ 100) UCL = 0.0945 Difficulty: 2 Medium Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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27) Forty samples of 100 are taken, with the total number of defective units being 150. What is the lower control limit for the three sigma (z = 3) p-chart?"

A) 0.000 B) 0.0190 C) 0.0375 D) 0.0570 Answer: A Explanation: P=150 ÷ 4000 = 0.0375.

UCL = P − 3 × Sqrt (P × (1 − P) ÷ 100) UCL = 0.0375 − 3 × SQRT (0.0375 × (1 − 0.0375) ÷ 100) UCL = -0.0195 = 0 Note: (LCL cannot be negative) Difficulty: 2 Medium Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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28) Fifteen samples of size 10 are taken from a stable process. The average of the sample means is 32.8, and the average range of the samples is 1.5. What is the upper control limit for the R chart? Use the information contained in the attached chart.

n 2 3 4 5 6 7 8 9 10 11 12 13 14 15

A2 1.880 1.023 0.729 0.577 0.483 0.419 0.373 0.337 0.308 0.285 0.266 0.249 0.235 0.223

D4 3.267 2.574 2.282 2.114 2.004 1.924 1.864 1.816 1.777 1.744 1.717 1.693 1.672 1.653

A) 1.777 B) 1.653 C) 2.666 D) 2.480 Answer: C Explanation: R-Chart UCL = D4 × R-bar = 1.777 × 1.5 = 2.666 Difficulty: 2 Medium Topic: Quality Improvement Tools/Constructing an xbar-R chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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29) Twenty samples of size 8 were taken from a stable process. From past studies of the process, you know that the overall mean is 42.5 and that the average of the samples range is 2.0. What is the upper control limit for the x-bar chart? Use the information contained in the attached chart to determine your answer.

n 2 3 4 5 6 7 8 9 10 11 12 13 14 15

A2 1.880 1.023 0.729 0.577 0.483 0.419 0.373 0.337 0.308 0.285 0.266 0.249 0.235 0.223

D4 3.267 2.574 2.282 2.114 2.004 1.924 1.864 1.816 1.777 1.744 1.717 1.693 1.672 1.653

A) 43.25 B) 44.50 C) 46.22 D) 48.50 Answer: A Explanation: x-double bar UCL = x-double bar + A2 × R-bar = 42.5 + 0.373 × 2 = 43.246 Difficulty: 2 Medium Topic: Quality Improvement Tools/Constructing an xbar-R chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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30) Under what conditions would we be required to recalculate the parameters for an X-bar-R chart?

A) When the first sample mean crosses either the UCL or LCL. B) When there is hugging observed in the data.

C) When we change the production process.

D) When dealing with a two-shift operation.

Answer: C Explanation: The x-bar and R charts will need to be modified when the production process changes.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 31) Which of the following quality improvement tools is most appropriate for identifying patterns in the data?

A) Cause and effect diagrams.

B) Process flow analysis.

C) Check sheets.

D) Process capability analysis.

Answer: C Explanation: Check sheets are simple tools used to collect, organize and display data. Patterns of problems are revealed by the use of check sheets.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

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32) Which of the following types of control charts would be most appropriate if the data that we are dealing with is binary in nature (good/bad, pass/fail, accept/reject)?

A) p attribute chart.

B) Xbar-R chart.

C) Cp/Cpk. D) Histogram.

Answer: A Explanation: A p-Attribute control chart is useful when dealing with binary data.

Difficulty: 1 Easy Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

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33) Which of the following conclusions does the p data shown below support?

P = .10 UCL = 0.2022 LCL = 0.-0154 Batch number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

p 0.10 0.12 0.10 0.12 0.06 0.06 0.12 0.10 0.06 0.10 0.10 0.16 0.22 0.20 0.12 0.10 0.06 0.10 0.10 0.12 0.10 0.12 0.06 0.08 0.10

A) The process is under control B) The process is showing trending.

C) The process is showing hugging.

D) Except for batch 13, the process is under control.

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Answer: D Explanation: The average of batch 13 exceeds the upper control limit.

Difficulty: 1 Easy Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation 34) Which of the following conclusions does the p data shown below support?

P = .10 UCL = 0.2022 LCL = 0.-0154 Batch number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

p 0.10 0.12 0.10 0.12 0.06 0.06 0.12 0.10 0.06 0.10 0.10 0.16 0.22 0.20 0.12 0.10 0.06 0.10 0.10 0.12 0.10 0.12 0.06 0.08 0.10

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B) The process is showing trending.

C) The process is showing hugging.

D) Except for one batch, the process is under control.

Answer: D Explanation: The average of batch 13 exceeds the upper control limit.

Difficulty: 2 Medium Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation 35) Which of the following conclusions does the p data shown below support?

P = .10 UCL = 0.2022 LCL = 0.-0154

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Batch number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

p 0.10 0.11 0.10 0.10 0.11 0.09 0.12 0.10 0.10 0.11 0.09 0.09 0.10 0.10 0.11 0.11 0.12 0.10 0.13 0.13 0.14 0.15 0.17 0.18 0.18

A) The process is under control B) The process is showing trending.

C) The process is showing hugging.

D) Except for one point, the process is under control.

Answer: B Explanation: A plot of this data reveals a significant upward trend after batch 14.

Difficulty: 2 Medium Topic: Quality Improvement Tools/p Attribute Control Chart Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Understand AACSB: Analytical Thinking / Accessibility: Keyboard Navigation

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36) Measuring quality in brief customer interactions is particularly difficult, as each customer’s interaction with a company employee has the potential to be personal and unique. Some service firms have attempted to measure the effectiveness of these transient customer interactions using which of the following scales?

A) Excellent, Good, Indifferent, Poor B) Exceptional, Positive, Neutral, Exasperating C) Did not meet expectations, Met expectations, Exceeded expectations D) A point scale awarding one to five-stars based on the interaction E) Good, Better, Best Answer: C Explanation: These “Moment-of Truth” interactions are usually rated on a simple three-point scale, “Did not meet expectations, Met expectations, Exceeded expectations.”

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 37) To determine whether two variables are related to each other you would use: A) Scatter diagram B) Pareto analysis C) Moment of Truth analysis D) Histograms E) Capability analysis Answer: A Explanation: Scatter diagrams help determine whether two different variables are related to each other.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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38) Which of the following quality improvement tools is not a particularly good brainstorming tool?

A) Fishbone diagrams B) Ishikawa chart C) Cause-and-effect analysis D) Process capability analysis Answer: D Explanation: Fishbone diagrams, Ishikawa charts, and Cause-and-effect analysis are each used as tools to stimulate discussion in brainstorming sessions.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 39) A process has been operating very capably with all of its’ output falling between the UCL and the LCL. None-the-less, there is some level of variation in the measurements of the output of the process. What is the source of this variation?

A) Less experienced operators B) Inconsistent raw materials C) Natural variation D) Equipment wear and vibration Answer: C Explanation: Processes have natural variation Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-01 Apply quality management tools for problem solving.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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40) Effective quality management requires: A) Data B) Workers skilled in statistics and math C) Charismatic leadership D) Willingness to spend time and money measuring output Answer: A Explanation: Effective quality management is data driven.

Difficulty: 1 Easy Topic: Quality Improvement Tools Learning Objective: 06S-02 Identify the importance of data in quality management.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 6 Managing Quality 1) In its promotional material for bed linens, Scarsdale Corporation states that all sheets and pillowcases sold to customers should have and actually do have a thread count of exactly 600 threads per inch. Scarsdale is apparently emphasizing: A) Design quality.

B) Conformance quality.

C) Product quality.

D) Reliability.

E) Total quality management.

Answer: B Explanation: Conformance quality is meeting design specifications.

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 2) Which of the following statements is false?

A) Quality dimensions are easy to measure for tangible goods, while they are difficult to measure for services.

B) Many dimensions of service quality are similar to the dimensions of quality for tangible goods.

C) Some firms still have a poor understanding of quality and quality management.

D) All of these are false.

Answer: A Explanation: Both tangible goods and services have aspects of quality that are measurable and others that are subjective and difficult to assess.

Difficulty: 1 Easy Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

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3) Stu Johnson, CEO of Johnson, Inc., attended a seminar on Total Quality Management. Which of the following is NOT something he is likely to have learned at that seminar?

A) Some aspects of quality are difficult to measure because they depend on customers' judgments.

B) Quality is primarily the responsibility of operations management.

C) Quality results from design as well as operations and delivery.

D) Cross-functional teams are important in TQM decision making.

E) He is likely to have learned all of these things.

Answer: B Explanation: Quality is not only the responsibility of operations management; all functions are responsible for quality. The other statements are true (see the text).

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-02 Explain the roles that operations and other functional managers play in determining product quality.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 4) The idea that variability is the source of most quality problems was a major contribution of which quality management thought leader?

A) Juran B) Imai C) Crosby D) Deming Answer: D Explanation: The idea that variability was the source of most quality problems originated with W. Edwards Deming.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

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5) "Zero defects" is a concept of quality management of which thought leader?

A) Deming B) Juran C) Crosby D) Imai Answer: C Explanation: Phillip Crosby's quality programs were built on the concept of zero defects.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 6) Sanford Corp. bought new technological systems to inspect the quality of products as they come off the production line. The expense of operating these systems would be an example of which of the following types of quality-related costs?

A) Internal failure cost B) Appraisal cost C) External failure cost D) Prevention cost Answer: B Explanation: Inspection is an appraisal cost.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

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7) Xanadu Inc. decided to increase the training received by new employees. The expense of this training is an example of which of the following costs of quality?

A) Appraisal costs B) External failure costs C) Internal failure costs D) Prevention costs E) Quality control costs Answer: D Explanation: Training is an expense aimed at defect prevention.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 8) The TQM view of organizational structure states that: A) Employees must support management decisions.

B) Management must support employees.

C) Customers want quality products.

D) Middle management must support and enforce top management decisions.

Answer: B Explanation: The TQM view is that managers must support workers, not the other way around.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

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9) All of the following represent external failure cost EXCEPT the cost of: A) Scrapping defective raw material.

B) Repairing items covered by warranty.

C) Replacing defective items found by customers.

D) Loss of goodwill and reputation.

Answer: A Explanation: Scrapping raw material is an internal failure cost. The others are external failure costs.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation 10) "Quality at the source" suggests quality should be: A) Built into the product.

B) Inspected at multiple points.

C) Ensured by the quality control lab.

D) An inspector's function.

Answer: A Explanation: The "quality at the source" philosophy is opposed to the idea that quality comes from thorough inspection after the fact.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

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11) Phil Bord is a CEO for a large auto manufacturer and is interested in improving the product quality. Phil had overheard his friend mention Six Sigma. Considering that Phil has no idea what Six Sigma is, what are some key points to help Phil out?

A) Six sigma quality means that he would have exactly half as many quality defects as he would have with three sigma quality.

B) To achieve truly world-class quality and performance, we need to focus on individual employee job functions.

C) Six sigma quality is the result of a well-defined and structured process.

D) All of these.

Answer: C Explanation: Six Sigma is an approach that seeks to use projects to eliminate causes of defects and variation in processes.

Difficulty: 2 Medium Topic: Guiding Methodologies for Quality Management Learning Objective: 06-06 Compare and contrast various quality standards and certification programs.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 12) At the heart of the Six Sigma program is a five-step process called D-M-A-I-C. These letters denote a major activity that must be completed to achieve the objectives of Six Sigma. These activities are: A) Define, Measure, Analyze, Improve, and Control.

B) Define, Measure, Analyze, Inquire, and Compare.

C) Define, Measure, Analyze, Involve, and Cost.

D) Define, Measure, Analyze, Improve, and Compare.

Answer: A Explanation: The acronym DMAIC stands for: Define, Measure, Analyze, Improve, and Control.

Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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13) ISO 9000 defines a set of internationally accepted standards for: A) Product quality.

B) Quality control.

C) Operations management quality.

D) Business quality management.

Answer: D Explanation: ISO 9000 is a broad set of standards applied to business quality management, not just product quality, quality control, or operations management.

Difficulty: 1 Easy Topic: Certifying Progress in Quality Management Learning Objective: 06-06 Compare and contrast various quality standards and certification programs.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 14) Which of the following statements is most true regarding ISO 9000?

A) ISO 9000 was designed specifically for the electronics industry B) ISO 9000 is a quality award given by the U.S. government C) ISO 9000 tells management specifically how to ensure quality D) None of these statements is true.

Answer: D Explanation: All of these statements are false.

Difficulty: 2 Medium Topic: Certifying Progress in Quality Management Learning Objective: 06-06 Compare and contrast various quality standards and certification programs.

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15) Which of the following statements that might be made by a business executive best expresses the overall philosophy of Total Quality Management?

A) "We've achieved Six Sigma. That's good enough."

B) "There's always room for improvement."

C) "The workers need to work harder to prevent quality problems."

D) "We never sell defective products to customers."

Answer: B Explanation: Continuous process improvement should be every employee's job.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 16) If a product includes features that customers care most about, we would say that it has high: A) Conformance quality.

B) Design quality.

C) Reliability.

D) Aesthetics.

Answer: B Explanation: Design quality occurs when product features meet customers' desires and needs.

Difficulty: 1 Easy Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

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17) If a tangible good or service performs the promised function dependably, we say that it has high: A) Conformance.

B) Durability.

C) Reliability.

D) Perceived quality.

Answer: C Explanation: Reliability is the length of time (or number of instances) a product performs as planned before a failure occurs.

Difficulty: 1 Easy Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 18) Why is product quality sometimes poorly defined in a firm?

A) Managers are not clear on what characteristics customers care most about.

B) Holistic measures of quality are difficult to develop.

C) Managers in different functional areas tend to emphasize different dimensions of quality.

D) All these answers are correct.

Answer: D Explanation: There are many reasons that quality might be poorly defined in a firm. Almost all of the reasons have their root in inattentive top management.

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-02 Explain the roles that operations and other functional managers play in determining product quality.

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19) When buying from suppliers, what decisions do supply managers make that potentially impact quality?

A) Design of manufacturing and service processes B) Design of contracts and associated incentives and penalties C) Design of packaging D) Design of product prototyping procedures Answer: B Explanation: Supply managers also potentially impact quality management of and interaction with suppliers Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-02 Explain the roles that operations and other functional managers play in determining product quality.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 20) Which of the following is NOT a core value of TQM? A) Prevention is better than inspection.

B) Problem solving should occur at the lowest organizational levels possible.

C) Quality assurance managers should have the most power in the organization.

D) Product quality should be viewed holistically.

Answer: C Explanation: Workers at the lowest levels should be empowered to prevent and solve problems when they occur.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

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21) The types of costs included in a cost of quality analysis include: A) Production, delivery, and marketing.

B) Internal and external.

C) Direct and indirect.

D) Prevention, appraisal, and failure.

Answer: D Explanation: Prevention, appraisal, and failure costs are included in a cost of quality analysis.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 22) Maxmo Corporation identified the following costs for the most recent fiscal year: Vendor evaluation = $20,000 Design engineering = $100,000 Scrap = $15,000 Training = $30,000 Warranty = $40,000 What was Maxmo's total prevention cost for the year?

A) $205,000 B) $85,000 C) $55,000 D) $150,000 Answer: D Explanation: Vendor evaluation, design engineering, and training are all prevention costs. Scrap and warranty are failure costs.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

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23) If a company spends more on prevention, what would be the expected impact on other costs of quality?

A) Appraisal costs will go up.

B) Failure costs will go down.

C) Failure costs will go up.

D) Other costs will be unaffected.

Answer: B Explanation: Appraisal costs are a choice, independent of prevention costs, whereas failure costs are likely to go down with well-framed prevention efforts. Some costs need to be impacted, otherwise the investment in prevention cost is not of any value.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) The Plan-Do-Check-Act cycle is best defined as: A) A rigorous procedure for strategic planning.

B) A method used to guide problem identification and solution.

C) A method first proposed by Joseph Juran.

D) All of these statements apply to the definition.

Answer: B Explanation: PDCA is a simple problem-solving method, also called the "Deming wheel."

Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-06 Compare and contrast various quality standards and certification programs.

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25) The focus of the first step in the DMAIC process is on: A) Process variability.

B) Cost.

C) Critical-to-quality characteristics.

D) Problem solving.

Answer: C Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 26) An application of the DMAIC process to product design is known as: A) Design for Six Sigma.

B) Design for Quality.

C) Quality Function Deployment.

D) None of these answers are correct.

Answer: A Explanation: The acronym DMAIC stands for: Define, Measure, Analyze, Improve, and Control. In turn, design for six-sigma aims to develop products that fit the six-sigma processes.

DMAIC is centered on continuous improvement, which is the ultimate goal of any six-sigma process. Design for six-sigma is like DMAIC but applied to product design rather than improvement of existing products and processes.

Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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27) The managers of a production line that fills cereal boxes would like to reach a Six Sigma level of quality in terms of product weight. The desired range of output extends from 10 to 16 ounces. In order to reach Six Sigma quality, what would the maximum standard deviation of output need to be?

A) 1 ounce B) 2 ounces C) 0.5 ounces D) Not enough information is given to answer the question.

Answer: C Explanation: In order to reach Six Sigma quality, the specification range needs to be at least 12 standard deviations wide. 6 oz/12 = 0.5oz.

Difficulty: 2 Medium Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 28) A process with Six Sigma quality is expected to produce how many defects?

A) 3.4 defects per million opportunities B) 6 defects per million opportunities C) 66,807 defects per million opportunities D) Zero defects Answer: A Explanation: Six Sigma quality means 3.4 defects per million opportunities.

Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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29) XYZ distribution center receives 1,000 deliveries each day. Arrivals are on time if they are within plus or minus 10 minutes of the targeted arrival. In order to have only 3.4 late or early arrivals per million deliveries, what would the standard deviation of arrival times need to be?

A) 3.33 minutes B) 0.83 minutes C) 1.67 minutes D) 6.67 minutes Answer: C Explanation: In order to reach Six Sigma quality, the specification range needs to be at least 12 standard deviations wide. 20/12 = 1.67 Difficulty: 2 Medium Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Implementation of a Six Sigma program typically involves: A) Applying for the Malcolm Baldrige Award.

B) Setting up training at various levels including green belt and black belt training.

C) A cost of quality analysis.

D) None of these are usually involved in implementing Six Sigma.

Answer: B Explanation: Six Sigma starts with training at different levels.

Difficulty: 1 Easy Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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31) "Product quality" is best explained as: A) The result of both design quality and conformance quality B) Absence of defect C) Customer satisfaction D) Desirable features Answer: A Explanation: Product quality is a product's fitness for consumption, which is determined by both its' design and conformance quality.

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 32) "Quality management" is: A) A measure of how well managers achieve goals B) An approach that develops culture and tools with a focus on quality C) Six sigma D) The achievement of all dimensions of quality Answer: B Explanation: Quality management establishes an organizational focus on quality—developing an organizational culture of quality and equipping employees with appropriate quality management tools.

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation

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33) Bill wants to purchase a new machine that is expected to hold tighter tolerances on production parts. What functional managers are likely to have a stake in this decision?

A) Logistics, Human Resources, Manufacturing B) Engineers, Manufacturing, Marketing C) Finance, Manufacturing, Engineering D) Sales, Finance, Logistics Answer: C Explanation: Process engineers, manufacturing management, and financial management will all have input to the decision to purchase new equipment.

Difficulty: 3 Hard Topic: Defining the Dimensions of Quality Learning Objective: 06-02 Explain the roles that operations and other functional managers play in determining product quality.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 34) Ted wants to hire more inspection personnel to insure that all products shipped are free of defects. What TQM core value would this action violate?

A) Workers are more valuable than managers B) Prevention is better than rework C) Better quality leads to long term success D) A PDCA cycle should always be followed Answer: B Explanation: TQM emphasis is on prevention of defects, not inspection to find defects.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

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35) In a Cost of Quality analysis, "failure costs" refers to: A) Costs associated with defects B) Costs of not achieving goals C) Costs of not considering customer needs D) Costs associated with mistakes Answer: A Explanation: Failure costs are costs that arise from defects found in products either before or after the product reaches the customer.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 36) Training Material scrap Warranty

$ $ $

10,000Rework 20,000Product redesign 50,000Process improvement

$ $ $

30,000 40,000 10,000

After digging through many expense reports, Marsha identified the costs shown above. If these costs are accurate, then the total cost of prevention would be: A) $160,000 B) $80,000 C) $60,000 D) $100,000 Answer: C Explanation: Training, product redesign and process improvement costs are related to defect prevention, so the total is: $10,000 + $40,000 + $10,000 = $60,000 Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-04 Perform a cost of quality analysis.

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37) Which of the following statements is NOT consistent with core values of TQM? A) Front line workers usually have the best ideas for solving problems.

B) Every employee has a stake in product quality.

C) Managers should support workers, not the other way around.

D) Opinions are as important as data.

Answer: D Explanation: Problem-solving is most effective when decisions are based on the analysis of actual data rather than on conjecture or opinion.

Difficulty: 2 Medium Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 38) Some consider any level of quality short of perfection to be unacceptable. However, managers who must set quality targets should consider: A) The quality level required by ISO 9000 B) The relative costs of failure, prevention, and appraisal C) The fact that six sigma is a universally accepted standard D) The effects of product quality on stock prices.

Answer: B Explanation: For some products failure costs do not justify the cost of the investments required to eliminate them.

Difficulty: 2 Medium Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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39) Suppose that a producer of 50 pound bags of potting soil decides that bag weight variation within a range of +/- 2 pounds will be acceptable to customers. To deliver a six sigma level of quality for this product, the bagging process will need to have a standard deviation not larger than: A) 2 pounds B) 4 pounds C) 0.33 pounds D) 0.17 pounds Answer: C Explanation: The target standard deviation is 4 pounds divided by 12 equals 0.33 pounds Difficulty: 3 Hard Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 40) The objective of the "control" step in the DMAIC process is: A) To consider differing opinions regarding the root causes of problems B) To create controlled experiments to analyze sources of variation C) To be rigorous in following the DMAIC steps D) To prevent an improved process from becoming highly variable again.

Answer: D Explanation: Monitoring and adjustment systems are installed to ensure that process variations remain minimized.

Difficulty: 2 Medium Topic: Guiding Methodologies for Quality Management Learning Objective: 06-05 Apply the Six Sigma DMAIC approach to quality improvement.

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41) Factors affecting the success of a TQM effort do not include: A) An existing crisis B) A charismatic leader C) An uncomplicated product D) Trust between labor and management Answer: C Explanation: Labor/management trust, charismatic leadership and a compelling motivation are among the factors contributing to the success of a TQM project.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-03 Apply the core values and typical practices associated with quality management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 42) Persons with responsibilities in which business function will make decisions regarding new product testing programs?

A) Marketing B) Finance C) Logistics D) Manufacturing Answer: A Explanation: Marketing management make decisions regarding how new products and new product ideas will be tested.

Difficulty: 2 Medium Topic: Defining the Dimensions of Quality Learning Objective: 06-02 Explain the roles that operations and other functional managers play in determining product quality.

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43) The degree to which the product meets its' design specifications is called: A) Performance quality B) Aesthetic quality C) Conformance quality D) Perceived quality E) Total quality Answer: C Explanation: Conformance quality refers to the degree to which the product meets its' design specifications.

Difficulty: 1 Easy Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 44) Two dimensions of product quality are hard to measure objectively and are therefore subject to subjective assessment. One of those subjective dimensions is: A) Reliability B) Perceived quality C) Support D) Features Answer: B Explanation: Perceived quality is a subjective assessment based upon image, advertising, reputation, or other information related to the product's attributes. The other subjective dimension of product quality is aesthetics.

Difficulty: 1 Easy Topic: Defining the Dimensions of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

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45) An organizational culture is shaped by: A) The experiences of certain charismatic leaders B) Leadership memos and meeting statements C) The organization's value statement or motto D) The actions taken by leadership Answer: D Explanation: Leaders have to recognize that their actions, more than their words, help shape an organization's culture.

Difficulty: 1 Easy Topic: TQM: A Total View of Quality Learning Objective: 06-01 Explain what the concepts of product quality and quality management entail.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 7 Managing Inventories 1) Safety stock exists for which of the following reasons?

A) To allow less expensive purchases by buying more.

B) To allow for transportation time.

C) To provide protection against the uncertainties of supply and demand.

D) None of these selections.

Answer: C Explanation: The role of safety stock is to provide protection against the uncertainties of supply and demand.

Difficulty: 1 Easy Topic: Types and Roles of Inventory Learning Objective: 07-01 Define the different types and roles of inventory in the supply chain.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Which of the following is NOT a role of inventory?

A) Increasing quality of finished goods B) Balancing supply and demand C) Buffering uncertainty in supply or demand D) Enabling geographical specialization Answer: A Explanation: Inventory does not have a role in increasing quality. The other alternatives are roles of inventory.

Difficulty: 1 Easy Topic: Types and Roles of Inventory Learning Objective: 07-01 Define the different types and roles of inventory in the supply chain.

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3) A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory?

A) Raw material B) Work in process C) Finished goods D) Maintenance, repair, and operating supplies (MRO) Answer: B Explanation: Inventory that is still in the production process is work in process.

Difficulty: 1 Easy Topic: Types and Roles of Inventory Learning Objective: 07-01 Define the different types and roles of inventory in the supply chain.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Ball Corporation sells aluminum cans to Anheuser-Busch to use in making six-packs of Budweiser. Anheuser-Busch has a warehouse located at its plant in St. Louis that contains boxes of empty cans received from Ball. From Anheuser-Busch's perspective, the cans in this warehouse represent: A) Raw materials and components inventory.

B) Work in process inventory.

C) Finished goods inventory.

D) MRO inventory.

Answer: A Explanation: Inventory of items to be used in production is raw materials and component parts inventory.

Difficulty: 2 Medium Topic: Types and Roles of Inventory Learning Objective: 07-01 Define the different types and roles of inventory in the supply chain.

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5) Taxes and insurance costs are an example of which of the following costs?

A) Ordering cost.

B) Governmental costs.

C) Carrying (or holding) costs.

D) None of these selections.

Answer: C Explanation: Taxes and insurance are both examples of inventory carrying costs.

Difficulty: 1 Easy Topic: The Financial Impact of Inventory Learning Objective: 07-02 Explain the financial impact of inventory on firm performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) John Jones of Jones Corporation determined that the cost related to processing an invoice from a supplier was approximately $100 per invoice. This cost is an example of: A) Inventory holding (or carrying) cost.

B) Inventory investment.

C) Wasted expense.

D) Order cost.

Answer: D Explanation: Payment processing is one component of order cost.

Difficulty: 2 Medium Topic: The Financial Impact of Inventory Learning Objective: 07-02 Explain the financial impact of inventory on firm performance.

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7) Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000. Johnson has determined inventory carrying cost to be 25 percent. Johnson's inventory carrying cost was: A) $250,000.

B) $275,000.

C) $300,000.

D) $500,000.

Answer: B Explanation: (($1,000,000 + $1,200,000)/2) × .25 = $275,000 Difficulty: 2 Medium Topic: The Financial Impact of Inventory Learning Objective: 07-02 Explain the financial impact of inventory on firm performance.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is the annual inventory turnover?

A) 10 B) 9 C) 0.75 D) 15 Answer: B Explanation: (45/month × 12 months)/60 units = 9. The unit cost is not needed, but students could convert from units to dollars.

Difficulty: 3 Hard Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

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9) If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are $50,000 per day, what is the days of supply?

A) 28 days B) 70 days C) 60 days D) 32 days Answer: A Explanation: $1,400,000/$50,000 = 28 Difficulty: 3 Hard Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Natalie's Cabinets makes cabinets at an average cost of $2,000. Last year, Natalie sold 5,000 units of the cabinets and had an annual turnover rate of four times. Natalie has estimated her inventory carrying cost to be 25 percent. What was Natalie's annual inventory carrying cost?

A) $625,000 B) $250,000 C) $312,500 D) $125,000 Answer: A Explanation: Sales = $2,000 × 5,000 units = $10,000,000. With a turnover rate of four times, average inventory = $1,000,000/4 = $2,500,000. Inventory carrying cost for the year = $2,500,000 × .25 = $625,000.

Difficulty: 3 Hard Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

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11) Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve this turnover rate, what should be the average number of days of supply?

A) 16.6 days B) 36 days C) 0.6 days D) 22 days Answer: A Explanation: 365 days/22 turns = 16.6 days Difficulty: 3 Hard Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 12) Independent demand inventory models can be used to determine: A) When to buy and how much to buy.

B) Safety stock levels.

C) Stock levels for regular and one-time buys.

D) All of these selections.

Answer: D Explanation: This question draws on understanding of all of the inventory models. All answers are true.

Difficulty: 2 Medium Topic: Inventory Management Systems Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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13) Jones Manufacturing Inc. purchases a component from a Chilean supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year. When the company reorders the product, the lead time from the supplier is exactly 10 days.

The product costs $14.00. The company determined that its inventory carrying cost is 20 percent.

The company's order cost is $30.00. If the company decides to order 1,750 units each time it places an order, what will be the total annual cost of this policy? (Do not include the product cost in your answer.)

A) $1,500 B) $2,400 C) $2,750 D) $3,400 Answer: C Explanation: Because there is no variability, no safety stock is needed.

Inventory carrying cost = 1,750 units/2 × $14 per unit × .20 = $2,450.

Ordering cost = 17,500 units/1,750 units order quantity × $30 per order = $300.

Total cost = $2,750.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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14) University Bookstore buys women's polo T-shirts from a supplier according to the price schedule shown below. The store sells 500,000 T-shirts each year. The annual carrying cost of Tshirts is 25 percent, and the ordering cost is $40.

Quantity per order 1-2,499 2,500 or more

Unit price $ 35.00 $ 32.00

What order quantity would give the bookstore the lowest total acquisition cost? (Due to possible differences in rounding, choose the closest answer.)

A) 2,139 B) 2,237 C) 2,500 D) 2,614 Answer: C Explanation: EOQ @ $35 price = sqrt[(2 × 500,000 × $40)/($35 × .25)] = 2,138 units ICC @ $35 = (2,138/2) × $35 × .25 = $9,353.75 Order cost @ $35 price = (500,000/2,138) × $40 = $9,354.54 Product cost @ $35 price = 500,000 × $35 = $17,500,000 Total cost @ $35 price = $17,500,000 + $9,354.54 + $9,353.75 = $17,518,708.29 EOQ @ $32 price = sqrt[(2 × 500,000 × $40)/($32 × .25)] = 2,237 units; however, you must order 2,500 to obtain the $32 price.

ICC @ $32 = (2,500/2) × ($32) × (.25) = $10,000 Order cost @ $32 price = (500,000/2,500) × ($40) = $8,000 Product cost @ $32 price = 500,000 × ($32) = $16,000,000 Total acquisition cost @ $32 price = $16,000,000 + $8,000 + $10,000 = $16,018,000 Thus, ordering 2,500 units in each order gives the lowest total annual ordering cost.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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15) University Bookstore buys women's polo T-shirts from a supplier according to the price schedule shown below. The store sells 500,000 T-shirts each year. The annual carrying cost of Tshirts is 25 percent, and the ordering cost is $40.

Quantity per order 1-2,499 2,500

Unit price $ 35.00 $ 32.00

The lowest total annual acquisition cost for the bookstore quantity is closest to: (Due to possible differences in rounding, choose the closest answer.)

A) $16,018,000 B) $16,018,708 C) $17,518,707 D) $16,258,000 Answer: A Explanation: EOQ @ $35 price = sqrt[(2 × 500,000 × $40)/($35 × .25)] = 2,138 units ICC @ $35 = (2,138/2) × ($35) × (.25) = $9,353.75 Order cost @ $35 price = (500,000/2,138) × $40 = $9,354.54 Product cost @ $35 price = 500,000 × $35 = $17,500,000 Total cost @ $35 price = $17,500,000 + $9,354.54 + $9,353.75 = $17,518,708.29 EOQ @ $32 price = sqrt[(2 × 500,000 × $40)/($32 × .25)] = 2,237 units; however, you must order 2,500 to obtain the $32 price.

ICC @ $32 = (2,500/2) × ($32) × (.25) = $10,000 Order cost @ $32 price = (500,000/2,500) × $40 = $8,000 Product cost @ $32 price = 500,000 × $32 = $16,000,000 Total acquisition cost @ $32 price = $16,000,000 + $8,000 + $10,000 = $16,018,000 Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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carries no safety stock at all. What is Alpha's annual inventory carrying cost?

A) Cannot be determined without further information B) $50 C) $250 D) $500 Answer: D Explanation: Since the EOQ equates annual carrying cost and annual order cost, and there is no safety stock inventory, 10 × $50 = $500.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Reflective Thinking; Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 17) Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha has determined its annual inventory carrying cost is $2,000.

Alpha carries no safety stock at all. What is Alpha's order cost per order?

A) Cannot be determined without further information B) $2,000 C) $200 D) $1,500 Answer: C Explanation: Since the EOQ equates annual carrying cost and annual order cost, and there is no safety stock, cost per order is $2,000/10 = $200.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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18) Jones Company has calculated that the EOQ for a particular item is 1,000 units. However, Jones does not have enough capital to order that many units each time, so it only orders 250 units at a time. This will result in: A) Higher annual inventory carrying cost than ordering the EOQ quantity.

B) Lower annual inventory carrying cost than ordering the EOQ quantity.

C) Lower annual ordering cost than ordering the EOQ quantity.

D) Cannot be determined.

Answer: B Explanation: Ordering less than EOQ results in lower average inventory and more orders.

Therefore annual carrying cost will be lower but annual order costs will be higher.

Difficulty: 2 Medium Topic: The Continuous Review Model Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 19) Blue Star Co. has been using the production order quantity inventory model. If annual demand, daily demand, and the production rate increase to four times their original amounts, which of the following is/a possible consequence?

A) The order quantity will double.

B) The order quantity will increase by four times.

C) The order quantity will be cut in half.

D) There is no impact on order quantity.

Answer: A Explanation: If all three of these variables increase by four times, understanding the calculation for POQ will show that the order quantity doubles. The denominator remains the same, but the numerator increases by four times; thus, the square root is twice the original amount.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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20) Bryson Carpet Mills produces a variety of different carpets. Changing from production of one carpet to another involves a setup cost of $500. One particular carpet costs $8/yard to produce. Annual demand for this style is 50,000 yards. Bryson Mills produces carpet 200 days per year. The production process is most efficient when 2,000 yards/day are produced. Inventory carrying cost is estimated at 20 percent annually. What should be the production order quantity?

A) 4,675 yards B) 5,976 yards C) 8,750 yards D) 2,500 yards Answer: B Explanation: Average daily demand is 50,000/200 days = 250 yards/day.

Qp =

= 5,976.15 = 5,976 yards

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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21) A company has average demand of 30 units per day. Lead time from the supplier averages seven days. Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units. One unit costs $10 and the inventory carrying cost is 25 percent.

1 standard deviation covers 84.13% 1.04 standard deviations covers 85% 1.28 standard deviations covers 90% 1.65 standard deviations covers 95% 1.96 standard deviations covers 97.5% 2 standard deviations covers 97.72% 2.33 standard deviations covers 99% 3 standard deviations covers 99.86% 6 standard deviations covers 99.99966% Suppose management decides it wants to offer a 95 percent service level. That is, it is willing to experience a stockout probability of 5 percent during the order cycle. What is the annual cost of this safety stock policy?

A) $82.50 B) $87.50 C) $115.00 D) $62.50 Answer: A Explanation: A 95 percent service level is 1.65 standard deviations. 1.65 × 20 = 33. Therefore, (33 units × $10 × .25) = $82.50.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-05 Determine the cost of a company's service level policy.

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22) A company has average demand of 30 units per day. Lead time from the supplier averages seven days. Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units. One unit costs $10 and the inventory carrying cost is 25 percent.

1 standard deviation covers 84.13% 1.04 standard deviations covers 85% 1.28 standard deviations covers 90% 1.65 standard deviations covers 95% 1.96 standard deviations covers 97.5% 2 standard deviations covers 97.72% 2.33 standard deviations covers 99% 3 standard deviations covers 99.86% 6 standard deviations covers 99.99966% What is the reorder point for the company if it decides on a 99 percent service level?

A) 243 units B) 257 units C) 77 units D) 210 units Answer: B Explanation: (30 × 7) + (2.33 × 20) = 210 + 46.6 = 257 rounded.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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23) HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days.

Standard deviation of demand during lead time = 90 Desired service level = 95 percent What is the EOQ if HighLife pays $45/unit? Due to possible differences in rounding, choose the closest answer.

A) 287 B) 300 C) 365 D) 398 Answer: C Explanation: EOQ =

= 365.14

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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24) HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days.

Standard deviation of demand during lead time = 90 Desired service level = 95 percent

What is the TAC at $40/unit? (Pick the number closest to the correct answer.)

A) $351,750 B) $362,325 C) $355,840 D) $362,240 Answer: B Explanation: EOQ =

= 387.30 However, it is necessary to order at least 400 units

to obtain the $40 price. Therefore the TAC of ordering 400 units is: Inventory carrying cost = 400/2($40)(.15) = $1,200 Ordering cost = (300)(30)/400 × $50 = $1,125 Product cost = 9,000($40) = $360,000 TAC = $1,200 + $1,125 + $360,000 = $362,325 Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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25) HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days.

Standard deviation of demand during lead time = 90 Desired service level = 95 percent

What is the safety stock that HighLife Corporation should carry for its desired service level of 95 percent?

1.28 standard deviations cover 90 percent 1.65 standard deviations cover 95 percent 1.96 standard deviations cover 97.5 percent A) 149 B) 90 C) 86 D) 112 Answer: A Explanation: Safety stock level = 90(1.65 standard deviations) = 148.5, rounded to 149.

Difficulty: 1 Easy Topic: The Continuous Review Model Learning Objective: 07-05 Determine the cost of a company's service level policy.

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26) A company recently lowered its service performance from 99 percent product availability to 97 percent product availability. The change saved the company exactly $1 million per year in inventory carrying cost. Senior management now wants to lower the service level to 95 percent from 97 percent. Such a further change is likely to save: A) Less than $1 million.

B) Exactly $1 million.

C) More than $1 million.

Answer: A Explanation: Since inventory carrying cost increases at an increasing rate as the level of inventory goes up, a 2 percent reduction in safety stock (from 97 percent to 95 percent) would not save as much expense as a reduction from 99 percent to 97 percent.

Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-05 Determine the cost of a company's service level policy.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 27) When calculating a reorder point (ROP), which of the following factors WOULD NOT affect the calculation?

A) Item's EOQ. B) Delivery lead time.

C) Demand during the delivery lead time.

D) Standard deviation of demand during delivery lead time.

E) All of these would affect the ROP. Answer: A Explanation: The order quantity does not affect reorder point. Lead time and demand both do, as does the variability (because of its impact on safety stock requirements).

Difficulty: 2 Medium Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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28) Which of the following statements is true regarding a periodic review inventory system?

A) Safety stock is not needed when periodic review systems are used.

B) The same quantity of inventory is ordered each time an order is placed.

C) Inventory replenishment orders are placed in equal increments of time.

D) None of the selections are true.

Answer: D Explanation: Periodic review models still may need safety stock, as different quantities may be ordered; however, while inventory is checked periodically, the replenishment orders may not be placed in equal increments of time if we skip ordering in certain review periods. So, really NONE of the selections are true.

Difficulty: 2 Medium Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 29) Bill's Food Emporium uses the periodic system to order cans of Cajun seasoning every 30 days. It typically takes the supplier 10 days to resupply Bill. Sales average eight units per day with a standard deviation of two units per day. Bill does not carry any safety stock of Cajun seasoning. If he runs out for a period of time, he doesn't care. Bill just counted his inventory of Cajun seasoning and found 22 cans on the shelf. How many cans should Bill order?

A) 342 B) 218 C) 262 D) 298 Answer: D Explanation: (30 days + 10 days)(8/day) − 22 on hand = 298 cans Difficulty: 3 Hard Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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30) Jasper's Grocery places an order for Monster every 15 days. Once the order is placed, delivery to the store typically occurs in three days. Average demand is five cases per day, and the standard deviation of demand is 1.5 cases per day. The store policy is to stock an amount of inventory that allows for an average stockout condition of 5 percent (1.65 standard deviations) while waiting for replenishment. It is time to place an order, and there are 20 cases on hand. How many units should be ordered?

A) 90 cases B) 80 cases C) 75 cases D) 86 cases Answer: B Explanation: The uncertainty period is 18 days. σddup =

= 6.36 cases

Q = (5/day*18 days) + (1.65*6.36) − 20 = 90 + 10.49 − 20 = 80.49 cases Difficulty: 3 Hard Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 31) You have a one-time opportunity to buy an item. It costs $20 and sells for $50. It has $4 salvage value if it does not sell. What is the target service level?

A) 50 percent B) 65.21 percent C) 80 percent D) 66.67 percent Answer: B Explanation: Cso = Unit selling price − Unit cost = $50 − $20 = $30 Cos = Unit cost + Disposal cost − Salvage value = $20 + 0 − $4 = $16 TSL =

= $30 / ($30 + $16) = 65.21 percent

Difficulty: 3 Hard Topic: Single Period Inventory Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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32) At each of its home games, the Washington Check-Kiters football team sells programs that give statistics of the teams involved in the current game's contest. Since each game brings a different visiting team, a program is only of value for one contest, and no returns will be accepted by the supplier. On a per-program basis, the selling price is twice the cost. The target service level that will yield the most profits is: A) 33 percent B) 50 percent C) 67 percent D) 75 percent Answer: B Explanation: In this case, the cost of a stockout is equal to the cost of overstock (assume $1 cost, $2 selling price for example). Therefore, TSL = $1/($1 + $1) = .5, or 50 percent.

Difficulty: 3 Hard Topic: Single Period Inventory Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 33) Johnson Manufacturing has decided to consolidate its warehouses and reduce the number of locations from 12 to four. However, Johnson desires to maintain the same service level in terms of the risks of running out of stock in attempting to meet customer demand. As a result, Johnson can expect that: A) The time to fill customer orders will decrease.

B) The required safety stock will increase by approximately 73 percent.

C) The required safety stock will decline by approximately 42 percent.

D) The required safety stock will decline by approximately 58 percent.

Answer: D Explanation: / = .577 = 58% Difficulty: 3 Hard Topic: Impact of Location on Inventory Requirements Learning Objective: 07-06 Explain the advantages and disadvantages of different inventory location strategies.

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34) What might a company do to reduce the amount of cycle stock it holds?

A) Attempt to reduce supplier lead time.

B) Always take advantage of supplier quantity discounts.

C) Attempt to reduce demand variation.

D) Attempt to reduce order costs.

Answer: D Explanation: Alternatives A, B, and C would not reduce order quantity, so cycle stock would not be affected. Reducing order costs would reduce order quantity.

Difficulty: 2 Medium Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 35) Which of the following might a company try to do to reduce the total amount of safety stock it holds?

A) Implement and use ABC analysis of inventory items.

B) Attempt to reduce variation in supplier lead times.

C) Implement demand management approaches.

D) All of these selections.

Answer: D Explanation: All of these approaches can be used to reduce inventory levels.

Difficulty: 2 Medium Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

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36) The ABC analysis used for analyzing inventory is an example of: A) Safety stock calculation.

B) Regression analysis.

C) Pareto's law.

D) Inventory carrying cost.

Answer: C Explanation: ABC analysis identifies the items that have the highest importance, typically a small number of items. This is an example of Pareto's law.

Difficulty: 1 Easy Topic: Managing Inventory Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 37) inventory is the costliest form of inventory one can hold.

A) Finished goods B) Raw materials C) Components D) Work-in-process Answer: A Explanation: As value is added to an item, it becomes more expensive to hold.

Difficulty: 1 Easy Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

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38) When small changes generated by a customer produce progressively larger changes at each stage upstream in the supply chain, this is known as: A) Buffering.

B) Bullwhip effect.

C) Pareto effect.

D) Supplier-managed inventory.

Answer: B Explanation: The bullwhip effect occurs when small disturbances generated by a customer generate successively larger changes at each stage upstream in a supply chain.

Difficulty: 1 Easy Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 39) Which of the following is NOT often associated with supplier-managed inventory (SMI) arrangements?

A) Long-term commitments from both parties.

B) Supplier representative located at the customer site.

C) Customers recommend to suppliers how they should schedule production.

D) Supplier places replenishment orders.

E) All of these are typically associated with SMI. Answer: C Explanation: In SMI, all of these items frequently occur except for customers having input to the supplier regarding production schedules.

Difficulty: 1 Easy Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

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40) A difference between periodic review and continuous review inventory systems is: A) Periodic review is more expensive than continuous review B) Continuous review usually requires more safety stock than periodic review C) In one system, time triggers orders; in the other, quantity triggers orders D) Periodic review requires real-time monitoring systems Answer: C Explanation: The order cycle in periodic review is defined by a time period; in continuous review the order cycle is defined by the quantity of inventory demanded.

Difficulty: 3 Hard Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 41) A retail store's average sales are $100,000 per week. On average it holds $500,000 worth of inventory valued at cost to the retailer. The retailer's average pricing includes a mark-up of 30 percent. The retailer's annual inventory turnover is: A) 0.2 B) 10.4 C) 13.5 D) 8 Answer: D Explanation: To calculate inventory turnover using sales, the inventory must be valued at price.

Turnover = (52 × $100,000) / ($500,000 × 1.3) = 8 Difficulty: 3 Hard Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

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42) You have a one-time opportunity to buy an item. It costs $50 and sells for $100. It's disposal value equals its salvage value. What is the target service level?

A) 50 percent B) 25 percent C) 80 percent D) 66.67 percent Answer: A Explanation: Cso = Unit selling price − Unit cost = $100 − $50 = $50 Cos = Unit cost + Disposal cost − Salvage value = $50 + X − X = $50 TSL =

= $50 / ($50 + $50) = 50 percent

Difficulty: 3 Hard Topic: Single Period Inventory Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 43) Suppose a chief supply chain officer takes the total of all purchasing managers' annual salaries and divides this number by the number of purchase orders placed in a year. This calculation would provide insight into what kind of inventory cost?

A) Purchasing costs B) Ordering costs C) Holding costs D) System management costs Answer: B Explanation: Purchasing managers' salaries represent a large portion of the cost to process purchasing transactions.

Difficulty: 2 Medium Topic: Measures of Inventory Performance Learning Objective: 07-03 Explain and compute asset productivity and customer service-related measures of inventory performance.

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44) Texas Manufacturing has decided to triple the number of distribution centers it operates around North America in order to locate inventories within 500 miles of each major city. What effects should they expect?

A) The time to fill customer orders will increase.

B) Inventory holding costs will triple.

C) Total operating costs for the distribution centers will decrease.

D) The required safety stock will increase.

Answer: D Explanation: Safety stock requirements will increase because demand variabilities (which lead to forecasting errors) are not pooled as much as before.

Difficulty: 3 Hard Topic: Impact of Location on Inventory Requirements Learning Objective: 07-06 Explain the advantages and disadvantages of different inventory location strategies.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 45) Jay's Café orders cans of beans every two weeks. It typically takes the supplier two days to fulfill the order. Jay uses five cans per day on average, with a standard deviation of two units per day. Assume that Jay wants to have a 50 percent service level on the availability of beans. There are currently fifteen cans of beans in Jay's inventory. How many cans should Jay order?

A) 90 B) 70 C) 75 D) 65 Answer: D Explanation: (14 days + 2 days)(5/day) − 15 on hand = 65 cans; (no safety stock is required for a 50 percent service level).

Difficulty: 3 Hard Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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46) General Hospital uses disposable diapers at a rate of 200 per day, with a standard deviation of 20. To place and receive a replenishment of diapers from the third-party logistics provider typically takes three days. The hospital never wants to run out of diapers, so it holds enough safety stock to ensure 99.9 percent availability. Hospital purchasing managers order diapers along with other items every 30 days. It is time to place an order, and there are 800 diapers on hand. How many units should be ordered? (Pick the closest answer.)

A) 5,800 B) 5,852 C) 5,252 D) 5,817 Answer: B Explanation: The uncertainty period is 33 days. σddup = (33 × 32)1/2 = 17.23 diapers From the Z table, three standard deviations yields a service level of 99.9 percent.

Q = (200/day × 33 days) + (3 × 17.23) − 800 = 5,851.7 => Round to 5,852 to ensure at least a 99.9 percent service level.

Difficulty: 3 Hard Topic: The Periodic Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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47) Suppose you are positioning "meals ready to eat" (MREs) for humanitarian aid in an area prone to experiencing hurricanes. If a hurricane occurs, the number of MREs that might be demanded by affected residents of the area is normally distributed with a mean of 10,000 and a standard deviation of 500. MREs cost $1 each to purchase and store. In the event of a hurricane, unused MREs are unlikely to be needed again before they spoil, in which case they must be disposed of at a cost of $0.25 per MRE. If during a hurricane there are not enough stored MREs to meet people's needs, then more MREs can be purchased and quickly shipped in to the site at a cost of $8 each. How many MREs should you preposition in anticipation of a hurricane? (Pick the number closest to the correct answer.)

A) 11,000 B) 10,980 C) 10,520 D) 10,640 Answer: C Explanation: Cso = Unit cost of emergency shipped MREs − unit cost of propositioned MREs = $8 − $1 = $7 Cos = Unit cost + Disposal cost − Salvage value = $1 + 0.25 = $1.25 TSL = TSL =

= $7/($7 + $1.25) = 85 percent; Z = 1.04 (from Z table)

Z = 1.04 = (x − 10,000)/500; x = 10,520 Difficulty: 3 Hard Topic: Single Period Inventory Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

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48) Steve's shop sells seashells by the seashore. Steve buys shells from local collectors for an average price of $0.50 per shell. Steve sells on average 1,000 shells each month. Each time he orders shells from collectors, there is a $20 shipping and handling fee. Steve estimates a unit holding cost of $0.50 per shell per year (many of them get broken if held in inventory too long).

How often should Steve order seashells?

A) about three times per month B) about one time each month C) about one time every other month D) about one time each year Answer: B Explanation: EOQ = ((2 × 12,000 × 20.00)/0.50)1/2 = 980 shells; Order cycle = (980/12,000) × 12 months = order every 0.98 months Difficulty: 3 Hard Topic: The Continuous Review Model Learning Objective: 07-04 Calculate inventory policy parameters to minimize total acquisition cost in continuous review, periodic review, and single period models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 49) Steve's shop sells seashells by the seashore. Steve desires to offer at least a 90 percent instock availability of shells for his customers. He sells 40 shells each day on average, with a standard deviation of 20. When he orders replenishments of shells, it typically takes one day for the supplier to deliver, with a standard deviation of one day. If Steve's holding cost is $0.50 per shell per year, how much money will he spend each year in holding costs in order to provide a 90 percent service level? (Pick the number closest to the correct answer.)

A) $13 B) $29 C) $58 D) $125 Answer: B Explanation: σddup = (1 × 202 + 402 × 12)1/2 =44.7 Z at 90% = 1.28 SS = 1.28 × 44.7 = −57.24; round up to 58 shells in safety stock Annual holding cost = 58 × 0.50 = $29 per year Difficulty: 3 Hard Topic: Determining a Service Level Policy Learning Objective: 07-05 Determine the cost of a company's service level policy.

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50) The main advantage of blockchain over conventional ways to manage transactions across supply chain partners is: A) Unnecessary transactions are blocked from occurring.

B) There is no need for a central authority to validate transactions.

C) Blockchains are easy to construct.

D) Legal documents are no longer required.

Answer: B Explanation: Because all parties engaged in a blockchain track and approve transactions, there is no longer a need for a central authority (such as a bank or logistics provider) to validate them or to serve as a central manager of the information.

Difficulty: 2 Medium Topic: Managing Inventory Across the Supply Chain Learning Objective: 07-07 Describe practical techniques for improving inventory planning and management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 51) Suppose your company decides to create a more "service-oriented" distribution network by doubling the number of independently operated stores located around the country. Assuming demands are spread equally across the stores and inventory policies continue to be optimized, how much would you expect total cycle and safety stocks to increase? (Pick the nearest answer.)

A) 250 percent B) 100 percent C) 40 percent D) 25 percent Answer: C Explanation: Using the square root rule, (2/1)1/2 = 1.41. This indicates approximately a 40 percent increase in inventory.

Difficulty: 3 Hard Topic: Impact of Location on Inventory Requirements Learning Objective: 07-06 Explain the advantages and disadvantages of different inventory location strategies.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 8 Lean Systems 1) In the lean systems approach, as a system improves, it should have hand.

A) More B) The same amount of C) Less D) Twice the amount of

inventory on

Answer: C Explanation: One of the prime reasons for the lean approach is to reduce inventory.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 2) As lean systems thinking is implemented, the amount of training that employees receive: A) Tends to be about the same as with other manufacturing philosophies.

B) Tends to increase.

C) Tends to be reduced dramatically, replaced instead by continuous improvement.

D) Is focused exclusively on statistical process control.

Answer: B Explanation: Lean systems rely on well-trained workers for implementation. Employees must be given the training, tools, and authority to make continuous process improvements.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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3) When lean systems are implemented: A) Variable costs tend to increase, while fixed costs tend to decrease.

B) Fixed costs tend to increase, while variable costs tend to decrease.

C) Fixed and variable costs both tend to decrease.

D) Contribution margin tends to decrease.

Answer: C Explanation: A benefit of lean systems is that both fixed and variable costs tend to decrease.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 4) In a lean system, waste is any action that A) Costs money.

B) Could be done by an outside supplier.

C) Does not generate value.

D) Must be performed manually.

Answer: C Explanation: Because the purpose is to create value for the customer, waste is any action that does not generate value.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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5) John Jones is a plant manager. He believes his plant is guilty of "waste of overproduction."

Which of the following symptoms might he have observed that led to this belief?

A) Idle equipment.

B) Excess inventory.

C) High customer returns of products.

D) All of these.

Answer: B Explanation: Excess inventory is one of the symptoms of waste of overproduction. The other items are indicators of other types of waste.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 6) We observe a man working on a setup. During the process of setting up, the man positions the die at a first position. He then runs through a few pieces to check whether or not they are acceptable. He then repositions the die and repeats the process. What we have observed is which of the following forms of waste?

A) Processing waste B) Waste from product defects C) Inventory waste D) Waste of motion Answer: A Explanation: Sorting, testing, and inspection are symptoms of processing waste.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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7) Most of the tools and techniques used in lean systems seek to: A) Reduce variability from the system.

B) Reduce the operator's discretion.

C) Improve product quality.

D) None of these.

Answer: A Explanation: Standardization, reduction of variability, is fundamental to improvement. Most tools in lean seek this objective. Workers are empowered to do this. The focus is on value, not just product quality.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Achieving the goal of producing at the output rate that matches the rate of customer demand is the goal of: A) Jidoka.

B) Poka-yoke.

C) Total productive maintenance.

D) TAKT time flow balancing.

Answer: D Explanation: TAKT Time flow balancing is a lean scheduling technique that aims to synchronize the output rate with the rate of consumer demand.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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9) A production kanban authorizes a worker to: A) Add an empty bin.

B) Withdraw a standard lot of a specific item.

C) Withdraw any item he feels is needed.

D) Replenish an empty bin.

Answer: D Explanation: Authorizing a worker to replenish an empty bin is the definition of a production kanban.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Zanadu Corp. produces several different colors of a product on a single production line. It used to take several hours to switch colors, but now Zanadu has found a way to prepare for changing colors in a few minutes. This was most likely accomplished by: A) TAKT time flow balancing.

B) Implementing andon lights.

C) Converting internal to external setups.

D) Converting external to internal setups.

Answer: C Explanation: A key step in faster changeover is converting internal to external setups.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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11) In our accounting department, one of the actions taken by a clerk has been to identify the most frequently used forms and to put them in an area where they can be easily accessed. The other less frequently used forms have been tagged and put in their own separate area. This action likely occurred from the use of which lean tool?

A) A 5-S program B) Kanban scheduling C) Jidoka D) Poka-yoke Answer: A Explanation: The example suggests that the clerk sorted and straightened the various forms, which is part of a 5-S program.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 12) A standard electrical plug fits into an outlet in only one way because one of the two prongs is larger than the other. This ensures that people will insert the plug properly to create a grounded circuit. This is an example of: A) Cause-and-effect analysis.

B) Kanban.

C) Poka-yoke.

D) A benefit of Pareto analysis.

Answer: C Explanation: Poka-yoke refers to design that reduces potential errors, which the electrical plug design accomplishes.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-04 Apply the concept of lean systems to product design.

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13) Lean systems applications have found the most acceptance and adoption in: A) Service firms.

B) Entire supply chains.

C) Design activities.

D) Manufacturing firms.

Answer: D Explanation: While lean systems have been employed in all of these environments, most application has occurred in manufacturing.

Difficulty: 1 Easy Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Applying lean systems to supply chain relationships has which of the following risks?

A) It encourages companies to buy at the lowest unit price.

B) It encourages firms in the supply chain to hold extra inventory to protect themselves from failure.

C) It makes the supply chain more vulnerable to performance breakdowns.

D) All of these.

Answer: C Explanation: Lean systems eliminate buffers (like inventory, lead times, excess capacity), and therefore the supply chain becomes more vulnerable to potential performance problems.

Difficulty: 2 Medium Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

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15) Johnson Corp. has so strongly embraced the lean philosophy that it wants to apply the approach to all processes in the organization. Doing this may actually have the most severe negative impact on: A) Radical product innovation.

B) Incremental product innovation.

C) TAKT time.

D) All of these.

Answer: A Explanation: Lean systems thinking tries to eliminate slack and complexity, which may be needed in radical product innovation. Lean design approaches are most compatible with incremental product innovation.

Difficulty: 2 Medium Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Which two of the following areas does lean/just-in-time production focus its attention on?

I. Cost II. Quality III. Variance IV. Waste A) I and III B) II and IV C) I and II D) III and IV Answer: D Explanation: As pointed out in the text, the key focal points for lean are variance and waste.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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17) Misuse of automation is a root cause of which of the following types of waste?

A) Overproduction B) Process C) Motion D) Rework Answer: A Explanation: Misuse of automation is one of the root causes of both overproduction and waiting types of waste.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Which of the following most accurately describes the role of quality in a lean/just-in-time manufacturing environment?

A) High quality is an important waste reduction tool. Reducing defects reduces wasted material and capacity, and reduces the need for safety stocks.

B) Quality has little to do with JIT. JIT is primarily a scheduling and inventory control tool.

C) The important thing is to screen the defects out of incoming components and raw materials. If this is done, the production process can carry on without much concern for quality.

D) Because everything is being done just in time, there is no time to worry about quality during the production process. Instead, we rely on screening out defects during finished goods inspection.

Answer: A Explanation: High quality contributes to less waste and lower variance.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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19) Which of the following would you NOT expect to find in a company attempting to implement lean/just-in-time production?

A) Emphasis on flexible, cross-trained workers B) Inspections after each piece is produced C) Frequent changeovers from one product to another D) Emphasis on preventive maintenance for equipment Answer: B Explanation: Inspections after each piece is produced violates the Lean Systems Objectives of building with perfect quality and with no waste of labor, materials or equipment.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 20) McGreen Burger Shop sells about two burgers per minute. Although the cook can cook up to 10 burgers per minute, he starts to cook another burger only after the salesperson removes a burger from the ramp. The ramp is large enough to hold only five burgers and keep them warm until a sale is made. This is an example of a: A) Pull system.

B) Push system.

C) Group technology.

D) Poka-yoke.

Answer: A Explanation: This describes a pull system (as in the case of a kanban)—the other options are not appropriate.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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21) The purpose of the kanban card is to: A) Be a signal from the user authorizing the maker to start producing the required parts.

B) Keep track of defective products.

C) Inform the maker of the exact specification of the required parts.

D) Keep track of the total labor hours spent on a finished product.

Answer: A Explanation: The word “kanban” is described in the text as the Japanese term for “signal.” Its purpose is to authorize manufacture of the required parts.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Footprinting is an example of which of the following elements of the 5-S program?

A) Seiri/Sort/Clear out B) Seiton/Straighten/Configure C) Seiso/Scrub/Clean and check D) Seiketsu/Systematize/Confirm Answer: B Explanation: In the 5-S program, footprinting is making a painted outline of each item to ensure that there is “a place for everything” used in an operation or a task.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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23) Which of the following is NOT associated with quality at the source?

A) Total productive maintenance B) Jidoka C) Stop-and-fix systems D) Andons (trouble lights) Answer: A Explanation: The techniques associated with quality at the source do not include total productive maintenance.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Which of the following is NOT one of the principles associated with lean/just-in-time production?

A) Encourage use of unique components.

B) Specify value for each specific product.

C) Pursue perfection.

D) Let the customer pull value from the producer.

Answer: A Explanation: Encouraging use of unique components is not one of the guiding principles of lean/JIT production.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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25) Taichi Ohno, the founder of lean/just-in-time, when he came to America in the 1950s was most impressed with which of the following American developments?

A) The assembly line B) Ford's River Rouge assembly plant C) The productivity of American workers D) The American supermarket Answer: D Explanation: In the American supermarket, Ohno found his vision of the ideal operating system.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Which of the following lean principles best communicates the notion of demand synchronization?

A) Produce only the products that the customer wants.

B) Build with perfect quality.

C) Build only as quickly as customers want them.

D) Build only with features that the customers want and no others.

Answer: C Explanation: “Build only as quickly as customers want them” articulates the notion of demand synchronization.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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27) Which of the following is an important belief found in lean cultures?

A) Inventory is to be reduced.

B) Cost must be reduced.

C) Management must be done through the use of appropriate tools and procedures.

D) Waste is a symptom.

Answer: D Explanation: As discussed in the section dealing with lean culture, the only belief that is central to the lean culture is the notion that waste is a symptom. Consequently, it should not be attacked directly. Rather, it should be studied to identify the underlying root causes, and management should then attack these root causes.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 28) We have a situation where we have many different processes; high quantities are required to deliver the product's value both on the factory floor and in the customer's use. Which of the following categories of waste in product design have we encountered in this situation?

A) Complexity B) Precision C) Danger D) Sensitivity Answer: A Explanation: This is a straight definition-based question. The description provided directly corresponds to the definition of complexity as provided in Table 8-6.

Difficulty: 1 Easy Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

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29) In which operational setting has lean/just-in-time experienced the lowest levels of acceptance/implementation?

A) Manufacturing B) Services C) Across the supply chain D) Turbulent business settings Answer: D Explanation: In turbulent business environments, lean/just-in-time has found very limited application (Table 8-4).

Difficulty: 1 Easy Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 30) The use of Lean and Lean Systems is most supportive of which of the following competitive priorities, as described in Chapter 2?

A) Quality B) Cost C) Timeliness D) Innovation Answer: B Explanation: The use of lean and lean systems operates favourably on cost, quality, timeliness, and innovation—each of which drives operations to significantly reduce cost, which is the ultimate competitive priority supported by lean and lean systems.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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31) Kaizen events are most effective when applied to problems involving which of the following elements?

A) Processes B) Products C) Customers D) Measures Answer: A Explanation: A Kaizen event is a short-term project aimed at improving an existing process or an activity within a process.

Difficulty: 1 Easy Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Lean design strives to achieve which of the following objectives?

A) Design products at the lowest cost B) Design products that can be built with existing equipment C) Design products that exactly meet customers’ needs D) Design products with the fewest number of options Answer: C Explanation: One of lean design’s three major goals is to design products that exactly meet the customer’s needs.

Difficulty: 1 Easy Topic: Lean Systems: Range of Application Learning Objective: 08-04 Apply the concept of lean systems to product design.

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33) What is the possible impact of lean systems, if taken to its extreme, on supply chain risk?

A) No impact – they are not related B) Positive impact – lean reduces risk C) Negative impact – lean increases risk D) Yet to be determined – the data is not yet in Answer: C Explanation: The lean supply chain produces benefits, yet it can also open up risks.

Difficulty: 2 Medium Topic: Lean Systems: Range of Application Learning Objective: 08-03 Recognize the strengths and limitations of lean systems.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 34) Which phrase/word best captures what lean is?

A) A set of effective, well defined tools designed to reduce waste B) A quantitative methodology for attacking variance C) A procedure to be used within operation management and supply chain systems D) A corporate philosophy Answer: D Explanation: The lean systems approach is a philosophy of operations management used in various activities of the enterprise.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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35) An initial step in implementing lean is: A) Lower the break-even point so smaller quantities can be economically produced.

B) Outsource any non-core activity that can be done more efficiently by a supplier than by the firm.

C) Increase the contribution margin of product being sold.

D) Empower Kaizen teams to improve specific processes/activities.

Answer: B Explanation: An initial step in implementing lean is to outsource any activity that a supplier can do better than the firm and that is not a core competency of the firm.

Difficulty: 1 Easy Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 36) Responsibility for a Kaizen event is in the hands of: A) A manufacturing/industrial engineer B) A member of top management C) A facilitator D) An employee of the process being studied E) None of these Answer: E Explanation: Responsibility for a Kaizen event is placed in the hands of a cross-functional team.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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37) The goal of total productive maintenance is: A) To fix equipment breakdowns before they happen.

B) Rigorous equipment design and upkeep.

C) Disciplined adherence to operating procedures.

D) Zero unplanned downtime.

Answer: D Explanation: Total productive maintenance (TPM) works to achieve the ambitious goal of zero unplanned downtime.

Difficulty: 2 Medium Topic: Implementing Lean Systems: Tools and Techniques Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 38) A lean systems culture is one that: A) Focuses on maximizing output while minimizing input.

B) Produces mass-market products with wide appeal or applicability.

C) Places high value on respect for the people in the system.

D) Values accountability for errors and requires conformance.

Answer: C Explanation: A lean systems culture places high value on respect for the people in the system.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-02 Describe the cultural changes; tools; and techniques needed to implement a lean approach.

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39) What is the defining objective of lean?

A) Eliminating waste and its causes B) Reducing process variance C) Producing a product that a customer will want D) Reducing cost Answer: A Explanation: The elimination of waste and its causes is the defining objective of lean.

Difficulty: 2 Medium Topic: Lean Systems Defined Learning Objective: 08-01 Explain how the lean system approach improves value for internal operations and across the supply chain.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 9 Customer Service Management 1) From an operations perspective, companies should strive to: A) Provide customer success to all customers.

B) Realize different customer management approaches may be appropriate for different customers.

C) Realize that all customers desire close customer success types of relationships.

D) Never refuse to do business with a customer.

Answer: B Explanation: A key point of this chapter is that customers are not all alike, and therefore operations management must adapt to the customer.

Difficulty: 2 Medium Topic: Basic Service Learning Objective: 09-01 Describe how operations management helps establish and fulfill different levels of customer service.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Johnson Company has the following data about customer orders for the month of June: Orders Received: 5,000 orders Total Units Ordered: 40,000 units Total Units Delivered: 37,800 Total Orders Delivered Complete: 4,600 What was Johnson's unit fill rate?

A) 92 percent B) 94.5 percent C) 12.5 percent D) 91 percent Answer: B Explanation: 37,800/40,000 = 94.5 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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3) Refer to the following information. What is the unit fill rate?

# of Lines Delivered Order Orders Units Ordered Lines Units Delivered Complete 2,000 30,000 6,000 28,500 5,600

Order Delivered Complete 1,820

A) 95 percent B) 98 percent C) 92 percent D) 99 percent Answer: A Explanation: 28,500/30,000 = 95 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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4) Refer to the following information. What is the line fill rate?

# of Lines Delivered Order Orders Units Ordered Lines Units Delivered Complete 2,000 30,000 6,000 28,500 5,600

Order Delivered Complete 1,820

A) 95.80 percent B) 93.33 percent C) 96.30 percent D) 97.58 percent Answer: B Explanation: 5,600/6,000 = 93.33 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 5) Refer to the following information. What is the order fill rate?

# of Lines Delivered Order Orders Units Ordered Lines Units Delivered Complete 2,000 30,000 6,000 28,500 5,600

Order Delivered Complete 1,820

A) 98 percent B) 92 percent C) 91 percent D) 95 percent Answer: C Explanation: 1,820/2,000 = 91 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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6) With respect to lead-time performance, most customers would prefer which of the following from a supplier?

A) A consistent three-day lead time.

B) A lead time that averages three days with a range of one to four days.

C) A lead time that averages two days with a range of one to four days.

D) All of these are equally preferable.

Answer: A Explanation: In general, customers prefer lead times that are reliable over lead times that are shorter but less consistent.

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

Bloom's: Evaluate AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 7) Order-to-delivery lead time generally would be longest for which type of product?

A) One that is engineered to order B) One that is assembled to order C) One that is made to stock D) One that is made to order Answer: A Explanation: ETO has the most lead-time components.

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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8) Which measure of basic service will most likely show poorest performance for a firm?

A) Unit fill rate B) Order fill rate C) Line fill rate D) Perfect orders Answer: D Explanation: Because perfect orders not only involve availability measures but also lead time and reliability, the rate of perfect orders will always be lower than the other alternatives.

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 9) A firm has found that it provides a 90 percent order fill rate (orders shipped complete), 90 percent on-time delivery, 90 percent of its orders arrive at customers' destinations in perfect condition, and 90 percent of the time all documentation is correct. These are all of the elements of a perfect order for this company's customers. What is the best estimate of its perfect order performance?

A) 90 percent B) 60 percent C) 0 percent D) 66 percent Answer: D Explanation: .90 × .90 × .90 × .90 = .6561 rounded to 66 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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10) A firm has found that it provides a 90 percent order fill rate (orders shipped complete), 90 percent on-time delivery, 90 percent of its orders arrive at customers' destinations in perfect condition, and 90 percent of the time all documentation is correct. These are all of the elements of a perfect order for this company's customers. If the firm improves its performance in on-time delivery to 98 percent, what is its new perfect order performance?

A) 88 percent B) 98 percent C) 0 percent D) 80 percent E) 71.4 percent Answer: E Explanation: .90 × .98 × .90 × .90 = .71441 rounded to 71.4 percent Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 11) Jones Company makes every effort to consistently meet the expectations of all of its customers. It is clear that Jones Company is focused on: A) Customer service.

B) Customer satisfaction.

C) Customer happiness.

D) Customer success.

Answer: B Explanation: Meeting expectations is the definition of customer satisfaction.

Difficulty: 1 Easy Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

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12) Jones Company promised a customer that the customer would receive at least 98 percent of all items ordered. In fact, the customer received 95 percent of the items. This is an example of which "gap" in the customer satisfaction model?

A) Performance gap B) Knowledge gap C) Standards gap D) Communications gap Answer: D Explanation: The difference between what is communicated to a customer and actual performance is the communications gap.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 13) Alpha Company has a performance standard of 97 percent fill rate. Last month it achieved a 94 percent fill rate. This is an example of: A) A knowledge gap.

B) A standards gap.

C) A performance gap.

D) A perception gap.

Answer: C Explanation: The difference between a performance standard and actual performance is the performance gap.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

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14) A company surveyed both its customers and its senior management about customer expectations. Senior management's perceptions of customer expectations did not match customers' actual expectations. This is an example of: A) A knowledge gap.

B) A standards gap.

C) A performance gap.

D) A perception gap.

Answer: A Explanation: The difference between management's perceptions of customer expectations and customers' actual expectations is called the knowledge gap.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 15) Zanda Company has told a supplier that it is difficult to contact people in the supplier's company to learn the status of its orders and when they might arrive. Zanda is explaining which type of expectation it has of this supplier?

A) Reliability B) Courtesy C) Credibility D) Access Answer: D Explanation: Access refers to the expectation that suppliers have processes to facilitate contact to obtain information.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

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16) Senior management thought customers expected a rate of at least 96 percent for on-time delivery. However, senior management established a standard of 94 percent. The difference is the: A) Satisfaction gap.

B) Performance gap.

C) Standards gap.

D) Knowledge gap.

Answer: C Explanation: The difference between management perceptions of customer expectations and standards of performance is the standards gap.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 17) If a company has some customers who express that they are satisfied with the company's performance, the company can count on the fact that: A) Those customers are happy.

B) Those customers will continue to buy and be loyal.

C) The company meets requirements of those customers.

D) None of these selections.

Answer: D Explanation: Meeting some customers' expectations (not requirements) may satisfy those customers, but satisfaction does not guarantee happiness or loyalty.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

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18) The difference between a "customer success" focus and a "customer satisfaction" focus is that: A) Customer satisfaction is more difficult to achieve.

B) Customer success deals with expectations of customers, while customer satisfaction deals with their requirements.

C) Customer satisfaction deals with expectations, while customer success deals with requirements.

D) There really isn't any difference.

Answer: C Explanation: This answer is the definition of satisfaction and success.

Difficulty: 1 Easy Topic: Customer Success Learning Objective: 09-05 Explain the requirements for a commitment to customer success.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 19) Which customer management approach requires a comprehensive supply chain perspective on the part of operations executives?

A) Customer success B) Customer satisfaction C) Customer service D) Customer happiness Answer: A Explanation: Achieving customer success requires in-depth understanding of customers and customers' customers to truly meet requirements.

Difficulty: 1 Easy Topic: Customer Success Learning Objective: 09-05 Explain the requirements for a commitment to customer success.

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20) Customer relationship management attempts to: A) Ensure the development of customer success for customers.

B) Ensure the development of strategically appropriate relationships with customers.

C) Meet the expectations of customers.

D) Use technology to replace human interaction with customers.

Answer: B Explanation: This answer is the definition of customer relationship management.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-06 Describe the technological and relational aspects of customer relationship management.

Bloom's: Understand AACSB: Reflective Thinking; Technology Accessibility: Keyboard Navigation; Screen Reader Compatible 21) The use of technology to collect and analyze data concerning customers' buying behavior is an important aspect of: A) Basic customer service.

B) Customer satisfaction.

C) Customer relationship management.

D) Customer success.

Answer: C Explanation: CRM is a software and information technology-based approach used to collect and analyze customer data from numerous sources for the purpose of developing strategically appropriate relationships with customers.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-06 Describe the technological and relational aspects of customer relationship management.

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22) Commitment to "customer success" is likely the best approach for a firm to use with: A) All of its customers.

B) Customers who represent a small source of revenue for the firm.

C) Customers who have high expectations.

D) None of these selections.

Answer: D Explanation: Customer success relationships are resource-intensive and typically should be reserved only for a few customers who represent the highest revenue and profit potential for a firm.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-07 Segment customers and tailor service strategies.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 23) Customers who are both low revenue generators and low profit generators for a firm should be: A) Terminated as customers.

B) Provided with a minimum level of customer service.

C) Reviewed for possible termination or continuation.

D) Treated with customer success relationships to improve revenue and profit.

Answer: C Explanation: Low profit/low revenue customers should not necessarily be terminated, but they should be reviewed to determine whether termination is appropriate. If not, the appropriate relationship should be determined.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-07 Segment customers and tailor service strategies.

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24) Anthony Company has analyzed its customer base and realizes that it has a few customers who provide both high revenue and high profitability. This suggests that the appropriate commitment to those customers would be: A) Customer success.

B) Review reason for doing business.

C) Good basic customer service.

D) Customer satisfaction.

Answer: A Explanation: High profit/high revenue customers are those most likely to be considered for customer success relationships.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-07 Segment customers and tailor service strategies.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 25) Which of the following statements most clearly expresses a company's commitment to customer success?

A) "We attempt to meet or exceed the expectations of all of our customers."

B) "We attempt to meet our standards of providing perfect order performance to all of our customers."

C) "We attempt to meet the requirements of our customers."

D) All of these are clear expressions of commitment to customer success.

Answer: C Explanation: Customer success is an approach that tries to fulfill customer requirements.

Difficulty: 2 Medium Topic: Customer Relationship Management Learning Objective: 09-07 Segment customers and tailor service strategies.

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26) Lead-time performance is an element of: A) Minimal importance to most industrial customers.

B) Basic service.

C) Customer satisfaction.

D) Customer success.

Answer: B Explanation: Lead-time performance is at the lowest level of service to customers.

Difficulty: 2 Medium Topic: Basic Service Learning Objective: 09-01 Describe how operations management helps establish and fulfill different levels of customer service.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 27) Given the following information for the last two months, which fill rate measure showed the greatest improvement?

Units # of Order Units Lines Delivered Month Orders Ordered 1 2,000 30,000 6,000 28,500 2 2,500 25,000 8,000 22,000

Lines Delivered Complete 5,600 7,000

Order Delivered Complete 1,820 2,400

A) Unit fill rate B) Line fill rate C) Order fill rate D) None of the fill rates improved Answer: C Explanation: Month 1 Month 2

Unit fill Line fill 28,500/30,000 = .95 5,600/6,000 = .93 22,000/25,000 = .88 7,000/8,000 = .88

Order fill 1,820/2,000 = .91 2,400/2,500 = .96 (most improved)

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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28) A service strategy that allows customers many different options for ordering and fulfillment of purchases is known as: A) Customer success.

B) Omni-channel.

C) Flexible purchasing.

D) Customer convenience.

Answer: B Explanation: An omni-channel strategy allows customers to place orders in different ways (phone, internet, in person) and receive orders in different ways (in-store, home delivery).

Difficulty: 1 Easy Topic: Customer Satisfaction Learning Objective: 09-01 Describe how operations management helps establish and fulfill different levels of customer service.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 29) If shorter lead times are also typically the most reliable, then which market orientation is likely to provide more reliable order fulfillment?

A) Engineer to order B) Assemble to order C) Make to order D) Make to stock Answer: D Explanation: Make to stock has the shortest order-to-delivery lead time, because most of the work is done before an order is placed.

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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30) An example of a major shift in customer expectations driven by the actions of a leading competitor is: A) Amazon effect.

B) Google gambit.

C) Omni-channel.

D) Customer relationship management.

Answer: A Explanation: Through a number of actions, Amazon has raised the bar on delivery and service expectations of retail customers.

Difficulty: 3 Hard Topic: Customer Satisfaction Learning Objective: 09-04 Describe a model of customer satisfaction.

Bloom's: Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 31) Suppose your job is to reduce the number of times production is halted because of a shortage of raw materials. Which of the following items would be of most help to you?

A) Better demand forecasts B) Resource utilization rate C) Line fill rate D) Advance shipment notices Answer: D Explanation: Suppliers and carriers often provide customers with advance shipment notices (ASN), electronically communicated documents that provide detailed information about pending deliveries. The purpose of an ASN is to notify the customer when product movements occur, as well as providing physical characteristics about a shipment, so the customer can be prepared to accept delivery and to make adjustments in its plans to use the items if needed.

Difficulty: 3 Hard Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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32) Using a service like Uber to deliver orders is broadly known as: A) Uberizing B) Amazon Prime C) Third-party distribution D) Crowdsourcing Answer: D Explanation: For years Amazon, Walmart, and other retailers have been hiring people like you and me to deliver products to homes and businesses, one order at a time. They are using thirdparty crowdsource providers such as Uber, as well as their own crowdsourcing platforms.

Difficulty: 1 Easy Topic: Basic Service Learning Objective: 09-02 Define the elements of basic service and explain how they are measured.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 10 Sourcing and Supply Management 1) All of the following are supply management goals EXCEPT: A) Ensure timely availability of resources.

B) Purchase at the lowest price.

C) Enhance quality.

D) Assess technology and innovation.

Answer: B Explanation: Only purchasing at the lowest price is not a goal of supply management. Rather than reduce purchase price, the appropriate goal is to reduce total cost of ownership.

Difficulty: 1 Easy Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) In its own country, a former supplier to your company recently began selling its own product that is identical to a product that was developed by your company. This is an example of: A) Supply chain risk.

B) Sustainability.

C) Insourcing.

D) Strategic sourcing.

Answer: A Explanation: Theft of intellectual property is one type of supply chain risk.

Difficulty: 3 Hard Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

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3) Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource but bring the production back to a company located in the United States.

This decision was likely made after Zanda: A) Conducted a spend analysis.

B) Conducted a make or buy analysis.

C) Examined total cost of ownership.

D) Developed supplier certification processes.

Answer: C Explanation: The decision to bring production closer to home could only come after an analysis of total cost of ownership.

Difficulty: 2 Medium Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) If you are evaluating whether a supplier's workforce is receiving fair wages, you are most likely doing a(n): A) Spend analysis.

B) Assessment of sustainability.

C) ISO 9000 assessment.

D) Total cost of ownership assessment.

Answer: B Explanation: Wage disputes can affect the ability of a supplier to deliver on its commitments.

Difficulty: 2 Medium Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

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5) Which of the following would NOT be a step in conducting an insourcing/outsourcing analysis?

A) Assessing quantitative costs of outsourcing B) Evaluating new suppliers who could make the SKU C) Assessing the relationship of the product to the firm's core competencies D) Conducting a detailed internal audit of purchasing practices Answer: D Explanation: All of these are steps in make or buy analysis except reviewing internal purchasing practices.

Difficulty: 1 Easy Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Outsourcing is often a good choice when: A) There are only a few suppliers.

B) A product is in the mature phase of the life cycle.

C) Technology is new.

D) The product is critical to a firm's competitiveness.

Answer: B Explanation: Outsourcing is often a good choice for mature products. There should be many capable suppliers and known technology. Critical competitive items generally shouldn't be outsourced.

Difficulty: 2 Medium Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

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7) Qualitative factors that should be assessed when making an insourcing/outsourcing decision include all of the following EXCEPT: A) Compatibility of the supplier's organizational culture and values with your company B) The importance assigned to the supplier's location C) The skills and knowledge of the supplier's management team D) The costs incurred at the start of the contract Answer: D Explanation: The costs incurred at the start of a contract are quantitative, not qualitative, costs.

Difficulty: 1 Easy Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 8) Which of the following is NOT a benefit of outsourcing?

A) Greater flexibility to change technology B) Better access to market information C) Lower supply management costs D) Less capital needed for investment Answer: C Explanation: When outsourcing, a company has to spend more time and effort managing a supplier, so supply management costs are likely to increase rather than to decrease.

Difficulty: 1 Easy Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 9) The process of understanding how a firm is spending its money and with which suppliers is called: A) Strategic sourcing.

B) Make or buy analysis.

C) Market analysis.

D) Spend analysis.

Answer: D Explanation: Spend analysis refers to analyzing the dollars spent with which suppliers.

Difficulty: 2 Medium Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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10) Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, has bought 20 different models of that item, and total expenditures last year for the item were $100,000. Aspen most likely is conducting: A) Supplier audits.

B) Spend analysis.

C) Supplier certification.

D) Make or buy analysis.

Answer: B Explanation: Spend analysis refers to analyzing the dollars spent with which suppliers.

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 11) Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low. A recommended sourcing strategy for Jones is to: A) Use multiple sourcing.

B) Increase efficiencies.

C) Build partnerships.

D) Consolidate purchases.

Answer: A Explanation: When supply risk is high and the value of the purchase to the firm is low, multiple sourcing is recommended (see Figure 10-2).

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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12) Which approach is likely to be used for leverage purchases?

A) Purchasing cards B) Vendor-managed inventory C) Using executive champions D) Standardizing purchases Answer: D Explanation: Standardizing purchases across the company increases the purchase volume needed for leverage purchases. Purchasing cards and VMI are used for noncritical purchases, and executive champions are used for strategic purchases.

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Remember; Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 13) Moderate- to high-risk purchases with low to moderate levels of spend are categorized as: A) Noncritical.

B) Leverage.

C) Bottleneck.

D) Strategic.

Answer: C Explanation: Moderate- to high-risk purchases with low to moderate levels of spend are categorized as bottleneck, as shown in Figure 10-2.

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Remember; Apply AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 14) Benefits of single sourcing include all of the following EXCEPT: A) Quantity discounts.

B) More consistent quality.

C) Better supplier relationships.

D) Less supply risk.

Answer: D Explanation: Single sourcing increases supply risk.

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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15) Squeaky Klean, a small consumer products company, purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland, Ohio. To make these bottles, specialized tooling must be purchased at a high cost and installed at a supplier's plant. Its sourcing strategy for bottles should be to: A) Use three or more suppliers.

B) Dual source.

C) Single source.

D) Insource bottle production.

Answer: C Explanation: For a small company, with a single production location, and high tooling costs, the lower capital investment needed for single sourcing will outweigh the potential cost savings and risk reduction of using dual or multiple sourcing. Plastic bottle production does not fit with the core competencies of a cleaning products manufacturer.

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) A primary reason for using global suppliers is to: A) Improve sustainability.

B) Reduce transportation costs.

C) Take advantage of free trade agreements.

D) Work with the same suppliers in many different regions of the world.

Answer: D Explanation: When expanding globally, many companies want their suppliers to be able to expand with them.

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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17) A global food products company makes soups that are specifically tailored to the tastes of consumers in individual countries. What sourcing strategy is the company likely to use for its fresh ingredients such as vegetables?

A) Local, close to its production plant when possible.

B) National, using suppliers within each country.

C) Global, using the same suppliers across the world.

D) Low-cost country sourcing.

Answer: A Explanation: Although the company is global, fresh ingredients such as vegetables should be purchased locally, if possible, to ensure high quality.

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Which of the following is (are) advantage(s) of full partnerships with suppliers, as compared to traditional adversarial relationships?

I. They help reduce uncertainties for both buyer and supplier.

II. The full partnership is easier to establish and maintain than other relationships, so more suppliers can be dealt with.

III. The full partnership assures the lowest material price.

A) I only B) II only C) III only D) I and II only E) II and III only Answer: A Explanation: The information shared as part of a full partnership, such as production schedules and long-term forecasts, helps to reduce uncertainty for both the buyer and the supplier. Full partnerships focus on total cost, not on material price (see Figure 10-3).

Difficulty: 2 Medium Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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19) Zanda Corp. is considering trying to develop a full partnership with a particular supplier.

This suggests that the item Zanda buys from the supplier is: A) A noncritical part.

B) A "bottleneck" item.

C) A strategically important part.

D) An item appropriate for a "leverage" strategy.

Answer: C Explanation: Full partnerships are appropriate for strategically important items.

Difficulty: 3 Hard Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) A relationship with a supplier that is characterized by high levels of distrust, little communication, and short-term transactions is called a(n): A) Adversarial relationship.

B) Arm's-length relationship.

C) Acceptance of mutual goals.

D) Full partnership.

Answer: A Explanation: The characteristics describe an adversarial relationship (see Figure 10-3).

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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21) When you need to identify a supplier for a new purchase, the FIRST place that you should look is: A) A local trade show.

B) The list of your company's current suppliers.

C) The list of suppliers that your company has used in the past.

D) The websites of industry groups.

Answer: B Explanation: The starting point should be the list of current suppliers. If a current supplier can be used, the time required to evaluate and manage the supplier can be reduced.

Difficulty: 2 Medium Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Which of the following is NOT true with respect to an RFQ or RFP? A) It describes the purchase requirements.

B) It is the first step in competitive bidding.

C) It is often communicated to suppliers electronically.

D) It is used to determine weights in supplier scorecards.

Answer: D Explanation: Weights in supplier scorecards are determined based on the importance to the organization. An RFQ or RFP is used to communicate the purchase needs to suppliers, usually electronically.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

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23) Advanced Manufacturing Company is evaluating two suppliers for a component sourcing.

After much internal discussion, AMC's management has determined that the critical factors in choosing suppliers are: quality, delivery, price, and service. Further, management has rated the importance of these factors as 0.4, 0.3, 0.2, and 0.1, respectively. On a scale of 1 to 5, Supplier A is rated at 5, 3, 3, and 3, respectively. Supplier B's ratings are 4, 4, 3, and 4. Which supplier has the better-weighted score?

A) Supplier A B) Supplier B C) Neither, they both have the same weighted score.

Answer: C Explanation: Supplier A's score = .4(5) + .3(3) + .2(3) + .1(3) = 3.8.

Supplier B's score = .4(4) + .3(4) + .2(3) + .1(4) = 3.8 Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Which of the following is true about the use of weighted scoring models for supplier selection?

A) Once developed, the model weights should never change.

B) The supply management department should determine the weights.

C) The highest-scoring supplier should always be selected to receive the business.

D) There is a good deal of subjectivity in developing and using the model.

Answer: D Explanation: Both the weights (which should be developed by a team that includes the key departments influenced by the purchase) and the supplier ratings are subjective. Judgment should be used to make the final selection decision. Weights should change when company priorities change.

Difficulty: 2 Medium Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

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25) An online auction used for sourcing: A) Typically drives prices up as suppliers compete against each other.

B) Is used in situations similar to negotiation.

C) Can hurt supplier relationships.

D) Can only consider price.

Answer: C Explanation: Online auctions can damage supplier relationships. Typically, online auctions drive prices down; they are used in the same situations as competitive bidding, and the software can consider factors other than price.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Negotiation is typically used when: A) Price is the most important factor.

B) There are many equally qualified suppliers who are willing to compete.

C) Early supplier involvement is needed in new product development.

D) There are standard product specifications that are clear and complete.

Answer: C Explanation: Negotiation is used when early supplier involvement is needed. If price is the most important factor, there are many capable and willing suppliers, or there are clear standard specifications, then competitive bidding should be used.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

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27) A legally binding document that signals to a supplier that goods and services are needed is a(n): A) Purchase requisition.

B) Electronic data interchange.

C) Purchase order.

D) Supplier relationship management document.

Answer: C Explanation: A legally binding document that signals to a supplier that goods and services are needed is a purchase order.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) All of the following are true about supplier scorecards EXCEPT: A) They reduce the need for incoming quality inspection.

B) They are used to provide performance feedback to suppliers.

C) They are often used to categorize suppliers based on an overall score.

D) They are used to measure supplier performance based on key performance indicators.

Answer: A Explanation: Supplier scorecards do not reduce the need for incoming inspection, but they do provide feedback on key performance indicators, and they are used to categorize suppliers.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

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29) A company has decided that it no longer needs to extensively count and inspect the products it receives from a particular supplier. This suggests that the purchasing company has begun: A) Spend analysis.

B) Supplier certification.

C) Process simplification.

D) Time reduction analysis.

Answer: B Explanation: After certifying a supplier, a company may decide it no longer needs to perform certain activities such as counting and inspecting.

Difficulty: 2 Medium Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) Williams Inc. has acquired software to help manage interactions with its supply base. This suggests that Williams Inc. is involved in: A) Vendor-managed inventory.

B) Supplier relationship management.

C) Online reverse auctions.

D) Supplier auditing.

Answer: B Explanation: SRM is a comprehensive system utilizing software for managing interactions with the supply base.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

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31) The identification, acquisition, positioning, and management of resources and capabilities that a firm needs to attain its strategic objectives is: A) Sourcing.

B) Supply management.

C) Supply chain management.

D) Spend analysis.

Answer: B Explanation: Supply management is the identification, acquisition, positioning, and management of resources and capabilities that a firm needs to attain its strategic objectives.

Difficulty: 1 Easy Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-01 Define supply management and understand its impact on a firm s performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Supply management: A) Only focuses on direct materials that are used in a company's products.

B) Is essential for an organization to attain its strategic objectives.

C) Is only involved with supplier selection.

D) Should always strive for the lowest purchase price.

Answer: B Explanation: Supply management plays a strategic role in an organization.

Difficulty: 2 Medium Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-01 Define supply management and understand its impact on a firm s performance.

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33) The identification, evaluation, selection, and management of suppliers is: A) Sourcing.

B) Supply management.

C) Supply chain management.

D) Spend analysis.

Answer: A Explanation: Sourcing is the identification, evaluation, selection, and management of suppliers.

Difficulty: 1 Easy Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-01 Define supply management and understand its impact on a firm s performance.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) A company that had been using single sourcing decided to add a second supplier for one of its key raw materials. Which supply management goal does this BEST accomplish?

A) Fostering sustainability.

B) Reducing total costs.

C) Identifying, assessing, and mitigating supply chain risk.

D) Accessing technology and innovation.

Answer: C Explanation: Using more than one supplier for critical purchases so that there is a "backup" just in case can reduce supply chain risk.

Difficulty: 3 Hard Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

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35) A company requires its suppliers to make its products in at least three different locations around the world. Which supply management goal does this BEST accomplish?

A) Fostering sustainability.

B) Reducing total costs.

C) Identifying, assessing, and mitigating supply chain risk.

D) Accessing technology and innovation.

Answer: C Explanation: Requiring suppliers to have geographically dispersed operations reduces supply chain risk.

Difficulty: 3 Hard Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) A company's supplier for a critical part was selected based on the lowest purchase price. Six months later, the company's warranty costs began to rise because of defective parts. The company has experienced: A) Reduced sustainability.

B) Higher total costs of ownership.

C) Problems with availability of resources.

D) Higher levels of spend analysis.

Answer: B Explanation: Higher warranty costs because of supplier quality problems is an example of a cost that occurs after the transaction that increases the total cost of ownership.

Difficulty: 3 Hard Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

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37) All of the following can increase supply chain risk except: A) Using a supplier that is having financial difficulty.

B) Holding higher levels of inventory of critical materials.

C) A company in Canada using suppliers in Thailand.

D) Single sourcing.

Answer: B Explanation: Holding higher inventory levels is one way to mitigate supply chain risk.

Difficulty: 2 Medium Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 38) The capability to resist and recover from supply chain disruptions is: A) Supply chain risk.

B) Total cost of ownership.

C) Supply chain resilience.

D) Sustainability.

Answer: C Explanation: Supply chain resilience is the capability to resist and recover from supply chain disruptions.

Difficulty: 1 Easy Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 39) Sustainability: A) Focuses primarily on increasing environmental compliance.

B) Can lower a company's total cost.

C) Does not include worker safety.

D) Focuses only on social issues.

Answer: B Explanation: Sustainability can reduce a company's total costs by reducing waste and avoiding problems.

Difficulty: 1 Easy Topic: Supply Management's Impact on Firm and Supply Chain Performance Learning Objective: 10-02 Define and describe each of the six supply management goals.

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40) Outsourcing: A) Should be used for an organization's core activities.

B) Always uses suppliers from developing countries.

C) Can reduce a company's capital requirements D) Is only done for services.

Answer: C Explanation: Outsourcing reduces a company's capital requirements because the company does not need to invest in equipment or facilities to make the sourced product.

Difficulty: 1 Easy Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 41) Outsourcing is least likely when: A) The process is highly innovative.

B) Products are in the mature phase of the life cycle.

C) The production processes are standard.

D) The activity is not strategically important.

Answer: A Explanation: When a product is highly innovative it is more likely to be insourced to protect intellectual property.

Difficulty: 2 Medium Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 42) Which activity at a university is the least likely to be outsourced?

A) Operation of the bookstore.

B) Operation of the residence halls.

C) Classroom instruction.

D) Information technology support services.

Answer: C Explanation: Classroom instruction is a core activity for a university and therefore is least likely to be outsourced.

Difficulty: 3 Hard Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

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43) Which activity is most likely to be outsourced by an automotive company such as Ford Motor Co.?

A) The concept design for future cars.

B) Final car assembly.

C) Design of the engine.

D) Production of tires.

Answer: D Explanation: Tires are standard products that do not fit with the automotive company's core capabilities. The production of tires is most likely to be outsourced.

Difficulty: 3 Hard Topic: Making an Insourcing/Outsourcing Decision Learning Objective: 10-03 Analyze costs and make insourcing/outsourcing decisions.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 44) Which of the following is not uncovered during an analysis of supply market intelligence?

A) The number of potential suppliers.

B) Which of the company's current purchases are from which supplier.

C) The number of other buyers.

D) The potential level of supply chain risk.

Answer: B Explanation: Analyzing current purchases within a company is part of spend analysis, not analysis of supply market intelligence. All of the other items are part of a analysis of supply market intelligence.

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

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45) Data on the supply market's structure, price forecasts, and supply chain risk are assessed during a/an: A) Spend analysis.

B) Insourcing/outsourcing decision.

C) Analysis of supply market intelligence.

D) Supplier certification process.

Answer: C Explanation: Data on the supply market's structure, price forecasts, and supply chain risk are assessed during a analysis of supply market intelligence.

Difficulty: 1 Easy Topic: Supply Category Management Learning Objective: 10-04 Describe the steps in supply category management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 46) Stainless steel is an important raw material for an appliance company. Steel accounts for a high level of spend and is critical to customer satisfaction. Further, only three suppliers worldwide can produce steel to meet the company's quality standards. Which is appropriate in this situation?

A) Using electronic catalogs for steel.

B) Finding substitute materials.

C) Using competition to select suppliers.

D) Building collaborative partnerships with suppliers.

Answer: D Explanation: The high value of spend and the high level of supply risk suggest that this is a strategic situation. Building collaborative partnerships is appropriate in this situation.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

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47) Floor cleaning supplies for an elementary school would be considered: A) Leverage.

B) Noncritical.

C) Strategic.

D) Bottleneck.

Answer: B Explanation: The level of spend and risk for floor cleaning supplies for a school are both low.

This is a noncritical purchase.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 48) Determining the right number of suppliers that a company should use is: A) Spend analysis.

B) Strategic sourcing.

C) Supply base optimization.

D) Supply chain resilience.

Answer: C Explanation: Determining the right number of suppliers that a company should use is supply base optimization.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 49) Local sourcing: A) Reduces delivery costs.

B) Is called "nearshoring."

C) Is used when cost is the primary objective.

D) Takes advantage of lower trade barriers from trade agreements.

Answer: A Explanation: Because of proximity, local sourcing reduces delivery costs.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-05 Explain the steps in the sourcing process.

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50) The type and level of assessment of suppliers during the selection process: A) Should be the same for all of a company's purchases.

B) Is always done by cross-functional teams.

C) Depends upon factors such as the level of spend and type of relationship desired.

D) Is normally very extensive for noncritical purchases.

Answer: C Difficulty: 2 Medium Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 51) The Smith Manufacturing Co. uses a weighted-point model to evaluate new suppliers. Based on its competitive priorities, quality performance is weighted 60 percent, delivery performance is 25 percent, and cost is 15 percent. On a five-point scale, a supplier is rated 4 on quality, 5 on delivery, and 5 on cost. What is its overall weighted score?

A) 14.

B) 4.4.

C) 4.

D) 5.

Answer: B Explanation: The ratings are weighted by the weights and then added together. 0.6 × 4 + 0.25 × 5 + 0.15 × 5 = 4.4.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

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52) The Williams Manufacturing Co. uses a weighted-point model to evaluate new suppliers.

Based on its competitive priorities, quality performance is weighted 40 percent, delivery performance is 30 percent, and cost is 30 percent. On a five-point scale, a supplier is rated 5 on quality, 3 on delivery, and 4 on cost. What is its overall weighted score?

A) 4.1.

B) 12.

C) 1.2.

D) 4.

Answer: A Explanation: The ratings are weighted by the weights and then added together. 0.4 × 5 + 0.3 × 3 + 0.3 × 4 = 4.1.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 53) The Rodriguez Manufacturing Co. uses a weighted-point model to evaluate new suppliers.

Based on its competitive priorities, quality performance is weighted 50 percent, delivery performance is 20 percent, and cost is 30 percent. On a five-point scale, a supplier is rated 3 on quality, 2 on delivery, and 5 on cost. What is its overall weighted score?

A) 10.

B) 3.4.

C) 33.

D) 3.

Answer: B Explanation: The ratings are weighted by the weights and then added together. 0.5 × 3 + 0.2 × 2 + 0.3 × 5 = 3.4.

Difficulty: 3 Hard Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

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54) Competitive bidding should be used when: A) There is only one qualified supplier.

B) Product innovation is more important than price.

C) The spend is small.

D) Product specifications are known and clear.

Answer: D Explanation: Competitive bidding is used when price is the most important factor, the specifications are known and clear, the spend level is large enough, and there are a number of equally qualified suppliers who are willing to compete.

Difficulty: 2 Medium Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 55) The most important stage in the negotiation process is: A) Planning for the negotiation.

B) The face-to-face meeting.

C) When the contract is signed.

D) Forming the negotiating team.

Answer: A Explanation: Planning is the most important stage in negotiation.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-06 Describe how to assess and select suppliers.

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56) A comprehensive system, facilitated by software, that manages the firm's interactions with its supply base is: A) Supplier certification.

B) Supplier scorecard.

C) Supplier relationship management.

D) Collaborative planning, forecasting, and replenishment.

Answer: C Explanation: A comprehensive system, facilitated by software, that manages the firm's interactions with its supply base is supplier relationship management.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 57) Many companies are automating the procure-to-pay process using: A) Blockchain.

B) Robotic process automation (RPA).

C) IoT. D) Collaborative planning, forecasting, and replenishment.

Answer: B Explanation: Robotic process automation is being used to automate routine transactions.

Difficulty: 1 Easy Topic: Examining the Sourcing Process Learning Objective: 10-07 Understand ways to manage ongoing supplier relationships.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 11 Logistics Management 1) Which of the following is NOT a role of logistics management?

A) Planning the forward flow of materials.

B) Controlling the storage of goods.

C) Designing the reverse flow of goods.

D) Selecting suppliers for parts and components.

Answer: D Explanation: Supplier selection for parts and materials is a role of supply management, not logistics management.

Difficulty: 1 Easy Topic: The Role of Logistics in Supply Chain Management Learning Objective: 11-01 Describe logistics and the six major activities of integrated logistics management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Which of the following is NOT an activity of integrated logistics management?

A) Transportation management.

B) Selecting raw material suppliers.

C) Order processing.

D) Determining the number and locations of warehouses.

Answer: B Explanation: Selection of suppliers for raw materials is a role of supply management, not logistics management.

Difficulty: 1 Easy Topic: The Role of Logistics in Supply Chain Management Learning Objective: 11-01 Describe logistics and the six major activities of integrated logistics management.

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3) Logistics is responsible for all of the following EXCEPT: A) Determining how much inventory to hold.

B) Setting product quality standards.

C) Determining where to hold inventory in the supply chain.

D) Selecting the mode of transportation used to ship products.

Answer: B Explanation: Product quality standards are set by engineers, not logistics managers.

Difficulty: 1 Easy Topic: The Role of Logistics in Supply Chain Management Learning Objective: 11-01 Describe logistics and the six major activities of integrated logistics management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Logistics management is important to an organization because: A) Typically, 50 percent to 75 percent of an organization's costs are attributed to logistics.

B) Logistics affects customer service.

C) Offshoring of services is increasing.

D) Its primary role is managing inbound logistics.

Answer: B Explanation: Logistics management affects customer service.

Difficulty: 2 Medium Topic: The Role of Logistics in Supply Chain Management Learning Objective: 11-01 Describe logistics and the six major activities of integrated logistics management.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 5) All of the following can improve order processing EXCEPT: A) Increasing the number of orders entered manually.

B) Redesigning the website so it is easier for customers to use.

C) Integrating internal information systems.

D) Automating order entry using robotic process automation.

Answer: A Difficulty: 1 Easy Topic: Order Processing Learning Objective: 11-01 Describe logistics and the six major activities of integrated logistics management.

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6) Jones Company decided to limit deliveries to selected areas to specific days of the week to save money on transportation. This is an example of: A) Market consolidation.

B) Pooled delivery consolidation.

C) Scheduled delivery consolidation.

D) Transportation consolidation.

Answer: C Explanation: This is the definition of scheduled delivery consolidation.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 7) Smith Company learned that several other shippers in its hometown had customers located in the same markets that it serves. With this information, Jones should investigate the possibility of: A) Market area consolidation.

B) Scheduled delivery consolidation.

C) Pooled delivery consolidation.

D) Traffic consolidation.

Answer: C Explanation: Because other shippers are involved in this question, pooled delivery consolidation is the most appropriate answer.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

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8) Zanda Corp. can make three individual deliveries to three different customers at a cost of $500 each or can consolidate them into one shipment with a cost of $1,300 and a stop-off charge of $100 per stop. Should Zanda do this?

A) Yes, it will save $100.

B) Yes, it is simpler to do.

C) No, it will increase cost by $100.

D) It doesn't matter based on cost.

Answer: C Explanation: $1,300 + 3($100) = $1,600, an increase in cost of $100.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 9) Miller Corp. can make three individual deliveries to three different customers at a transportation cost of $600 each or can consolidate them into one shipment with a transportation cost of $1,200 and a stop-off charge of $100 per stop. Should Miller Corp. consolidate the shipments?

A) Yes, it will save $100.

B) Yes, it will save $300.

C) No, it will increase cost by $100.

D) It doesn't matter based on cost.

Answer: B Explanation: Nonconsolidated cost = $600(3) = $1,800.

Consolidated cost = $1,200 + $100(3) = $1,500. Consolidation saves $300.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

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10) Suppose you are shipping 1,000 pounds of product to a customer location that is 500 miles away from you. The customer calls you and increases the order size to 10,000 pounds. In this case: A) The cost per pound of transportation for the order will decrease.

B) The total cost of transportation for the order will decrease.

C) The cost per distance traveled will decrease.

D) The fixed cost will be spread over more miles.

Answer: A Explanation: This consolidation is likely to both decrease the cost per pound of transportation and increase the total cost.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 11) The Williams Co. combines all of its orders going to Tokyo, Japan, during the month into a single shipment. This is an example of: A) Market area consolidation.

B) Pooled delivery consolidation.

C) Economies of distance.

D) Scheduled delivery consolidation.

Answer: A Explanation: Market area consolidation occurs when a shipper combines all of its orders to a geographic region into a single shipment.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

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12) Falcon Enterprises has four orders to be shipped to different customers located in Houston, Texas. The weights of the respective orders are 4,000 pounds, 5,000 pounds, 8,000 pounds, and 6,000 pounds. The cost to ship each order individually is $12 per 100 pounds. The shipments can be consolidated into a single order for a cost of $10 per 100 pounds with an additional charge of $200 per stop. Should the shipments be consolidated?

A) It does not matter; the cost is the same.

B) No, the cost is $340 higher with consolidation.

C) Yes, the cost is $700 lower with consolidation.

D) No, the cost is $700 higher with consolidation.

Answer: B Explanation: Nonconsolidated cost = [(4000 + 5000 + 8000 + 6000)/100] × $12 = $2,760.

Consolidated cost = {[(4000 + 5000 + 8000 + 6000)/100] × $10} + (4 stops × $200/stop) = $3,100.

Consolidation is more expensive by $340.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 13) Bowling Green Manufacturing Co. has three orders to be shipped to different customers located in Seattle, Washington. The weights of the respective orders are 13,000 pounds, 9,000 pounds, and 10,000 pounds. The cost to ship each order individually is $17 per 100 pounds. The shipments can be consolidated into a single order for a cost of $14 per 100 pounds with an additional charge of $250 per stop. Should the shipments be consolidated?

A) It does not matter; the cost is the same.

B) No, the cost is $210 higher with consolidation.

C) Yes, the cost is $210 lower with consolidation.

D) Yes, the cost is $750 lower with consolidation.

Answer: C Explanation: Nonconsolidated cost = [(13,000 + 9000 + 10,000)/100] × $17 = $5,440.

Consolidated cost = {[(13,000 + 9000 + 10,000)/100] × ($14)} + 3 stops × $250/stop = $5230.

Consolidation is less expensive by $210.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-02 Estimate cost savings from transportation consolidation.

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14) With respect to transportation regulation today in the United States: A) There is no economic regulation of transportation.

B) There is more economic regulation than ever before.

C) There is very little safety/social regulation.

D) There is more safety/social regulation than ever before.

Answer: D Explanation: There is still a small amount of economic regulation, but safety and social regulation has increased dramatically.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 15) Which of the following is an example of economic regulation?

A) Restrictions on shipping hazardous materials.

B) C-TPAT. C) Restrictions on truck driver hours.

D) Restrictions on the type of logistics services a provider can offer.

Answer: D Explanation: An example of an economic regulation is placing restrictions on the types of services that a provider can offer. The other choices are safety and security regulations.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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16) Economic deregulation of transportation can: A) Reduce service innovation.

B) Increase safety.

C) Increase efficiency.

D) Reduce security.

Answer: A Explanation: Economic regulations can inhibit innovation.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 17) All of the following are safety and security regulations EXCEPT: A) C-TPAT. B) Restrictions on truck driver hours.

C) Restrictions on who can form a logistics company.

D) Controls on hazardous materials transportation.

Answer: C Explanation: Restrictions on who can form a logistics company are an example of an economic regulation, not a safety and security regulation.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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18) With respect to the following operating service characteristics of the modes of transportation, which combination is INCORRECTLY specified?

A) Speed: air is best; pipeline is worst.

B) Availability: truck is best; pipeline is worst.

C) Capability: pipeline is best; water is worst.

D) Dependability: pipeline is best; air is worst.

Answer: C Explanation: Only the option regarding capability is incorrect. For capability, pipeline is worst, water is best.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 19) With respect to the following operating service characteristics of the modes of transportation, which combination is CORRECTLY specified?

A) Speed: air is best; pipeline is worst.

B) Availability: air is best; pipeline is worst.

C) Capability: rail is best; air is worst.

D) Dependability: pipeline is best; truck is worst.

Answer: A Explanation: Air is the fastest mode, pipeline is the slowest. Air is low in availability (location of airports). Water can handle more different types/sizes of shipments than rail. Truck is more dependable than rail or air.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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20) Generally, the most expensive transportation mode (from among the following choices) is: A) Air. B) Water.

C) Truck.

D) Rail.

Answer: A Explanation: Air is generally the most expensive mode of transportation.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 21) In the United States, most freight is shipped by: A) Pipeline.

B) Air. C) Rail.

D) Truck.

Answer: D Explanation: Trucks are used for the majority of freight shipped in the United States.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 22) Your company needs to ship 10 heart pacemakers that cost $10,000 each from Indianapolis, Indiana, to Miami, Florida. Which transportation mode should you use?

A) Water.

B) Air. C) Rail.

D) Truck.

Answer: B Explanation: The small size, high product cost, and distance would lead to the use of air as the transportation mode.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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23) Which of the following transportation modes has relatively low fixed costs but high variable costs?

A) Pipeline.

B) Air. C) Rail.

D) Truck.

Answer: D Explanation: Trucks have relatively low fixed costs relative to the other modes but higher variable costs.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 24) Intermodal transportation: A) Is only used for international shipments.

B) Achieves economies of distance.

C) Achieves economies of scale and service availability.

D) Always combines transportation by truck and rail.

Answer: C Explanation: Intermodal transportation uses two or more modes of transportation to reduce cost by achieving economies of scale with some modes while achieving service availability benefits by using other modes.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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25) Inventory levels: A) Are not affected by the choice of transportation mode.

B) Are higher when rail rather than truck transportation is used.

C) Increase when air rather than truck transportation is used.

D) Are not affected by the number of warehouses used.

Answer: B Explanation: Because rail is a slower transportation mode than truck, in-transit inventory is higher.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 26) The Smith Company has decided to change its shipping mode from truck to rail. Its inventory levels will: A) Increase.

B) Decrease.

C) Not change.

D) More information is needed to determine the change in inventory levels.

Answer: A Explanation: Because rail is a slower transportation mode than truck, in-transit inventory is higher.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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27) The increasing size of container ships is being driven by: A) Economies of scale.

B) Total cost of ownership.

C) Market consolidation.

D) Economies of distance.

Answer: A Explanation: With larger container ships fixed costs are spread across a larger volume of shipments, resulting in economies of scale.

Difficulty: 2 Medium Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 28) As the shipping distance increases: A) Variable costs are spread over more miles.

B) The shipping costs per pound increase.

C) Economies of scale are achieved.

D) The cost per unit of distance decreases.

Answer: D Explanation: Economies of distance show that as the shipping distance increases, the cost per unit of distance decreases.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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29) Bill's glass store needs to ship an order of 10 chandeliers to a builder about 1,000 miles away. The chandeliers cost about $10,000 each, and Bill will be paid upon delivery. Bill plans to ship the order by truck at a cost of $1,000. The delivery will take 10 days. Bill uses a 30 percent annual inventory carrying cost. What will be the approximate total shipping and transit inventory carrying cost of the shipment? Assume 365 days per year.

A) $633.33 B) $821.92 C) $1,000.00 D) $1,821.92 Answer: D Explanation: $1,000 + ($100,000 × 10/365 × .3) = $1,821.92 Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 30) You are shipping 200 diamonds to one customer located 2,000 miles away. The value of a diamond is $1,500. You can ship via air for $500 and the diamonds will arrive in two days, or you can ship via a specialty ground carrier for $250 and the diamonds will arrive in four days.

You figure your inventory carrying cost is 25 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment. Using the air carrier would save approximately how much money in total cost? Use 365 days as the number of days in a year.

A) Nothing, it would actually cost more.

B) $150.00 C) $247.95 D) $160.96 Answer: D Explanation: Cost of air = $500 + ($300,000 × 2/365 × .25) = $910.96 Cost of ground = $250 + ($300,000 × 4/365 × .25) = $1,071.92. Air will save $1,071 − $910.96 = $160.96.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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31) Your company needs to ship two large machines that cost about $75,000 each to a customer across the country. The machines will be shipped by rail at a cost of $2,000. Shipping will take 14 days. Your company uses 15 percent to determine the annual inventory carrying cost. What are the approximate total costs of shipping and in-transit inventory? (Use 365 days as the number of days in a year.)

A) $2,000.

B) $863.

C) $2,863.

D) $2,026.

Answer: C Explanation: The total cost = the carrier cost + in-transit inventory. The cost = $2,000 + [(2 × $75,000/machine) × (14 days/365 days) × .15] = $2,863.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Your company needs to ship a large piece of construction equipment that costs about $500,000 to a customer across the country. Shipping by rail costs $3,000 and will take eight days. Your company uses 20 percent to determine the annual inventory carrying cost. What are the approximate total costs of shipping and in-transit inventory? (Use 365 days as the number of days in a year.)

A) $3,000.

B) $2,192.

C) $5,192.

D) $10,000.

Answer: C Explanation: The total cost = the carrier cost + in-transit inventory. The cost = $3,000 + [($500,000/machine) × (8 days/365 days) × .2] = $5,192.

Difficulty: 3 Hard Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

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33) Which transportation mode has the highest level of greenhouse gas emissions per ton?

A) Air. B) Rail.

C) Long-haul truck.

D) Light duty delivery truck.

Answer: A Explanation: Transport by air emits the highest level of greenhouse gases.

Difficulty: 1 Easy Topic: Transportation Management Learning Objective: 11-03 Assess and select transportation modes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) One function of distribution centers (DC) is "consolidation." This means that the warehouse/distribution center is used to: A) Group small inbound loads into larger outbound loads.

B) Collect products/packaging materials that are sent back for disassembly, reclamation, or disposal.

C) Hold inventory to buffer the system from variability in either supply or demand.

D) Hold inventory needed because of seasonal requirements.

Answer: A Explanation: This is the definition of the consolidation role of distribution centers.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

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35) Products are received, sorted, sequenced, and selected into loads at a: A) Stockpiling center.

B) Product support warehouse.

C) Transshipment point.

D) Reverse logistics center.

Answer: C Explanation: Products are received, sorted, sequenced, and selected into loads at a transshipment center.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) Splitting shipments into individual orders and arranging them for local delivery to customers is: A) Stockpiling.

B) Cross-docking.

C) Break-bulk.

D) Reverse logistics.

Answer: C Explanation: Break-bulk involves splitting shipments into individual orders and arranging them for local delivery to customers.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

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37) Cross-docking: A) Sorts items for production support.

B) Stores inventory to support seasonal demand.

C) Combines break-bulk and consolidation activities.

D) Supports reverse logistics.

Answer: C Explanation: Cross-docking involves both break-bulk and consolidation activities.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 38) Returned products are generally handled at a warehouse that provides: A) Stockpiling.

B) Cross-docking.

C) Production support.

D) Reverse logistics support.

Answer: D Explanation: Returned products are processed at a warehouse that provides reverse logistics support.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

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39) The process of removing products from storage and assembling them into appropriate quantities and assortments to fill customer orders is: A) Consolidation.

B) Order picking.

C) In-storage handling.

D) Staging.

Answer: B Explanation: Order picking is the process of removing products from storage and assembling them into appropriate quantities and assortments to fill customer orders.

Difficulty: 1 Easy Topic: Distribution/Fulfillment Management Learning Objective: 11-04 Explain the primary functions of distribution and fulfillment centers.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 40) Computer-controlled systems that use robots for materials handling activities are: A) RFID. B) AS/RS. C) Unitization.

D) Value-added systems.

Answer: B Explanation: Automated storage and retrieval systems (AS/RS) are computer-controlled systems that use robots to automatically select, find, retrieve, and convey products from storage bins to loading docks.

Difficulty: 1 Easy Topic: Materials Handling and Packaging Learning Objective: 11-05 Explain the importance of packaging and materials handling.

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41) The benefits of automated storage and retrieval systems (AS/RS) include all of the following EXCEPT: A) Fewer errors in order picking.

B) Increased facility utilization.

C) Lower direct labor costs.

D) Lower fixed costs.

Answer: D Explanation: Fixed costs will be higher because of the investment in the robotic systems.

Difficulty: 1 Easy Topic: Materials Handling and Packaging Learning Objective: 11-05 Explain the importance of packaging and materials handling.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 42) Packaging paper towels with six rolls in a package: A) Is an example of the use of RFID. B) Increases material handling costs.

C) Is an example of unitization.

D) Increases the complexity of materials handling.

Answer: C Explanation: Unitization occurs when several smaller units are grouped together into a larger container.

Difficulty: 2 Medium Topic: Materials Handling and Packaging Learning Objective: 11-05 Explain the importance of packaging and materials handling.

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43) Zanda Corporation's CEO watched in amazement and frustration as workers handled and loaded individual products onto trucks. She felt handling the individual items was very cumbersome. She should investigate the possibility of: A) Using RFID. B) Containerization.

C) AS/RS. D) Private transportation.

Answer: B Explanation: Containerization creates larger containers out of smaller units to facilitate handling.

Difficulty: 2 Medium Topic: Materials Handling and Packaging Learning Objective: 11-05 Explain the importance of packaging and materials handling.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 44) Zanda Corp. decided to use a more expensive mode of transportation to deliver orders to customers. This decision was likely made after an examination of: A) Cost-to-cost trade-offs.

B) Consolidation strategies.

C) Product availability problems.

D) Cost-to-service trade-offs.

Answer: D Explanation: Increasing cost to improve service performance represents a cost-to-service tradeoff.

Difficulty: 2 Medium Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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45) Which of the following best describes the concept of total landed cost?

A) The sum of all logistics costs related to a product.

B) The lowest logistics cost for a product.

C) The sum of all product-related and logistics-related costs.

D) The difference between product-related and logistics-related costs.

Answer: C Explanation: Total landed cost is the sum of all product-related and logistics-related costs.

Difficulty: 1 Easy Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 46) Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant and move production to Mexico. This decision was likely made after Zanda: A) Conducted a spend analysis.

B) Conducted a make-or-buy analysis.

C) Examined total landed cost.

D) Evaluated consolidation strategies.

Answer: C Explanation: Total landed cost requires examination of all product- and logistics-related costs.

This type of examination may result in decisions regarding the lowest-cost place for manufacturing.

Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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47) A company finds the following information about its customers and their locations: Location A B C

X coordinate 20 95 60

Y coordinate 90 75 30

Weight shipped 400,000 lb.

200,000 lb.

600,000 lb.

The center of gravity is: A) X* = 52.5; Y* = 57.5.

B) X* = 58.33; Y* = 65.

C) X* = 56.66; Y* = 61.66.

D) Cannot be determined.

Answer: A Explanation: X* = (20(400,000) + 95(200,000) + 60(600,000))/(400,000 + 200,000 + 600,000) = 52.5 Y* = (90(400,000) + 75(200,000) + 30(600,000))/(400,000 + 200,000 + 600,000) = 57.5 Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 48) The center-of-gravity method of determining a facility location: A) Requires that demand be estimated in terms of the dollar sales revenue in each market.

B) Requires that cost be measured in dollars of transportation cost.

C) Does not require that qualitative factors be considered in location decisions.

D) Evaluates all production and logistics costs, and other costs such as taxes.

Answer: C Explanation: The method considers only the volume of demand and distance when determining location.

Difficulty: 2 Medium Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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49) In determining the number of facility locations, the lowest total cost is typically: A) Not the lowest cost of either transportation or inventory.

B) The lowest cost of either transportation or inventory.

C) Not related to transportation or inventory.

D) Difficult to generalize.

Answer: A Explanation: The lowest total cost is typically determined by the sum of inventory and transportation costs, but it is not the point at which either of the two is at its lowest point.

Difficulty: 2 Medium Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 50) A company decides to reduce its number of distribution centers (logistically postpone). This decision would result in or .

A) Poorer service to customers or higher transportation cost B) Better service to customers or less transportation cost C) Better service to customers or higher transportation cost D) Confusion for customers or for the company Answer: A Explanation: Reducing the number of locations will result in either longer times to deliver to customers or higher transportation cost to use a faster mode of transportation, a classic cost-toservice evaluation.

Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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51) A company has determined the ideal number of locations by looking at the trade-offs described in the text. It decides to open more distribution centers than this "ideal." This decision would most likely result in and .

A) Poorer service to customers and higher cost B) Better service to customers and lower cost C) Better service to customers and higher cost D) Poorer service to customers and lower cost Answer: C Explanation: If a company has determined the "ideal" number of locations and decides to have more, this obviously results in higher cost. However, it may be done in order to provide more rapid delivery to customers.

Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Evaluate AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 52) Stockouts are very costly for a medical device company. The logistics manager has decided to hold more inventory to reduce stockouts. This is an example of: A) Cost-to-cost trade-offs.

B) Market consolidation strategy.

C) Value density.

D) Cost-to-service trade-offs.

Answer: D Explanation: Holding more inventory to avoid stockouts improves customer service and thus is a cost-to-service trade-off.

Difficulty: 2 Medium Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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53) All of the following are considered when determining total landed costs EXCEPT: A) Fuel costs.

B) Product liability costs.

C) Insurance.

D) Supply chain risk.

Answer: B Explanation: Product liability costs occur after a product's use and therefore are not included in total landed costs.

Difficulty: 1 Easy Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 54) The sum of all product- and logistics-related costs is: A) Total landed costs.

B) Total cost of ownership.

C) Cost-to-cost trade-offs.

D) Cost-to-service trade-offs.

Answer: A Explanation: The sum of all product- and logistics-related costs make up total landed cost.

Difficulty: 1 Easy Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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55) Which of the following is LEAST likely to be considered when determining total landed costs?

A) Raw material costs.

B) Currency exchange rates.

C) The cost of inventory held as safety stock.

D) Product warranty costs.

Answer: D Explanation: Product warranty costs occur after the product is in use and thus are not considered in total landed cost.

Difficulty: 1 Easy Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 56) What is the center of gravity according to the following information?

Retail Location A B C

X Coordinate 20 35 10

Y Coordinate 40 30 80

Shipments/Year 100 50 300

A) X = 21.7, Y = 50.

B) X = 15, Y= 65.6.

C) X = 65, Y = 150.

D) X = 6.9, Y = 3.

Answer: B Explanation: X Coordinate = [(20 × 100) + (35 × 50) + (10 × 300)]/(100 + 50 + 300) = 15 Y Coordinate = [(40 × 100) + (30 × 50) + (80 × 300)]/(100 + 50 + 300) = 65.6 Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

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57) What is the center of gravity according to the following information?

Retail Location A B C

X Coordinate 55 30 75

Y Coordinate 10 40 30

Shipments/Year 500 800 1000

A) X = 55, Y = 29.1.

B) X = 14.4, Y = 28.8.

C) X = 53.3, Y = 26.7.

D) X = 160, Y = 80.

Answer: A Explanation: X Coordinate = [(55 × 500) + (30 × 800) + (75 × 1000)]/(500 + 800 + 1000) = 55 Y Coordinate = [(10 × 500) + (40 × 800) + (30 × 1000)]/(500 + 800 + 1000) = 29.1 Difficulty: 3 Hard Topic: Logistics Network Design Learning Objective: 11-06 Discuss the logistics network design process and apply the centerof-gravity method.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 58) Companies that provide a bundle of logistical services to their customers are called: A) AS/RS providers.

B) Common carriers.

C) 3PLs. D) Contract logistics companies.

Answer: C Difficulty: 1 Easy Topic: Third-Party Logistics Service Providers Learning Objective: 11-07 Describe the benefits of third-party logistics service providers (3PLs).

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59) 3PLs: A) Typically only operate fulfillment centers.

B) Consolidate storage and shipments across customers.

C) Increase supply chain risk.

D) Have minimal investment in information systems.

Answer: B Explanation: 3PLs can achieve lower costs by consolidating storage and shipments across customers.

Difficulty: 1 Easy Topic: Third-Party Logistics Service Providers Learning Objective: 11-07 Describe the benefits of third-party logistics service providers (3PLs).

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 12 Demand Planning: Forecasting and Demand Management 1) The primary difference between demand management and demand forecasting is: A) Forecasting is only possible when quantitative data are available.

B) Demand management is proactive, while forecasting attempts to predict.

C) A firm cannot execute both approaches simultaneously.

D) One approach deals with uncertainty, while the other deals with known demand.

Answer: B Explanation: Demand management proactively attempts to influence demand, while forecasting simply tries to predict demand.

Difficulty: 1 Easy Topic: Demand Planning: An Overview Learning Objective: 12-02 Differentiate between demand planning, demand forecasting, and demand management activities.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Strategic demand planning would best be utilized: A) To direct day-to-day operations in a manufacturing plant.

B) To determine plans for employee overtime.

C) To decide whether or not to close a manufacturing plant.

D) To determine plans for hiring or laying off employees.

E) All answers are correct.

Answer: C Explanation: Strategic demand planning is necessary for long-term decisions such as building or closing a plant. The others described are shorter-term decisions.

Difficulty: 2 Medium Topic: Demand Planning: An Overview Learning Objective: 12-01 Explain the role of demand planning in operations management, in the firm, and in the supply chain.

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3) The demand for housing is characterized by a regular pattern of increasing to a peak, then falling. When the demand reaches a low point, it then repeats the pattern. This pattern usually takes place over a three- to five-year period. This is an example of which type of demand pattern?

A) Autocorrelation B) Seasonality and cycles C) Step change D) Trend Answer: B Explanation: Seasonality and cycles are regular patterns of repeating highs and lows, as described in this example.

Difficulty: 2 Medium Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

Bloom's: Understand AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Suppose your firm is about to launch a radically new product. The type of demand forecasting system you would most likely use is: A) Regression.

B) Executive judgment.

C) Time series.

D) Moving average.

E) Exponential smoothing.

Answer: B Explanation: Radically new products do not have any data to support quantitative forecasting.

Only executive judgment is a qualitative technique.

Difficulty: 2 Medium Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

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5) An office manager forecasts demand for office stationery by exponential smoothing, with alpha = 0.4. Actual demand two weeks ago (i.e., the week before last) was 12 boxes, but the forecast for that period was only 10. Actual demand last week was seven. What was the forecast for last week?

A) 10.8 B) 11.0 C) 11.2 D) 8.2 E) 8.8 Answer: A Explanation: Forecast = 10 + .4(12 − 10) = 10.8 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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6) For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business.

The gambling take for the hotel on Saturdays over the past four weeks was: Week $Take 1. $250,000 2. $190,000 3. $300,000 4. $280,000 Using a moving average with n = 3 terms, what would be the forecast for week 5?

A) $256,667 B) $246,667 C) $255,000 D) $232,124 Answer: A Explanation: ($190,000 + $300,000 + $280,000)/3 = $256,667 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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7) For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business.

The gambling take for the hotel on Saturdays over the past four weeks was: Week $Take 1. $250,000 2. $190,000 3. $300,000 4. $280,000 Platinum Nugget uses a three-period weighted moving average to forecast demand, with a t = 0.6, at−1 = 0.3, and at−2 = 0.1. What is the forecast for week 5?

A) $232,000 B) $237,000 C) $277,000 D) $295,000 Answer: C Explanation: (.6($280,000) + .3($300,000) + .1($190,000))/3 = $277,000 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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8) Alpha Company sold 2,000 widgets yesterday. It had forecasted sales of 1,900 units. Using exponential smoothing with a smoothing constant of 0.6, what is the forecast for today's sales of widgets?

A) 2,060 B) 1,940 C) 2,040 D) 1,960 Answer: D Explanation: 1,900 + 0.6(2,000 − 1,900) = 1,960 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 9) Jones Company had sales of $100,000 last week. The company had forecasted that sales would be $120,000. Using exponential smoothing with a smoothing constant of 0.2, what is the forecast for this week's sales?

A) $124,000 B) $116,000 C) $104,000 D) $112,000 Answer: B Explanation: $120,000 + .2($100,000 − $120,000) = $116,000 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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10) Over a six-month period, the demand for a product has been: June = 200, July = 210, August = 240, September = 240, October = 260, and November = 280. The three-month moving average forecast for December is: A) 240.

B) 260.

C) 280.

D) 300.

Answer: B Explanation: (240 + 260 + 280)/3 = 260 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 11) Convex Computer Company makes many different forecasts. Which of the following forecasts is probably the least accurate?

A) Total number of computers (laptops and desktops) to be sold next month.

B) Total number of laptops to be sold next month.

C) Total number of desktops to be sold next year.

D) Total number of laptops with 2 gigabyte RAM, 80 gigabyte hard drive, and 16x DVD drive to be sold next year.

Answer: D Explanation: Usually short term forecasts are more accurate than long-term forecasts. Similarly forecasts of aggregate demand are more accurate than forecasts of demand at detailed levels.

Difficulty: 2 Medium Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

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12) A company has the information shown in the chart below regarding its forecast performance in the past three periods.

Period Actual Demand 1 800 2 3 1,400

Forecast Demand 1,100 1,000

Error

Absolute Value of Error 300

200 −100

What is the mean absolute deviation (MAD)?

A) 200 B) 225 C) −66.67 D) 1,200 Answer: A Explanation: Summing the absolute values of the errors and determining the average results is (300 + 200 + 100)/3 = 200.

Difficulty: 3 Hard Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

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13) Given the data below, what is the bias of these forecasts?

Period Actual Demand 1 800 2 3 1,400

Forecast Demand 1,100 1,000

Error

Absolute Value of Error 300

200 −100

A) Positive.

B) Negative.

C) There is no bias.

Answer: B Explanation: The error for period 1 is −300, therefore the MFE is −66.7. This is a negative bias.

Difficulty: 3 Hard Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 14) Designing postponable products has the potential to allow operations managers to: A) Ignore forecasts.

B) Move from build-to-stock to assemble or make-to-order operations.

C) Influence the timing of demand.

D) All the items are correct.

Answer: B Explanation: Postponable products obtain final form after customer demand is actually known.

Some forecasts are still necessary (for components), and the timing of demand is not changed.

Difficulty: 2 Medium Topic: Improving the Constraints on Demand Planning Learning Objective: 12-06 Explain how certain improvements to both product design and operations across the supply chain can make demand planning easier.

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15) In recent years some companies have begun to work closely with their customers and/or suppliers by sharing information to develop demand plans and execute those plans. The procedure they are following is known as: A) Coordinated foreplanning of requirements.

B) Joint planning of demand forecasts.

C) Collaborative planning, forecasting, and replenishment.

D) Conjoint analysis and forecasting.

Answer: C Explanation: Collaborative planning, forecasting, and replenishment is a process for sharing information and plans with supply chain partners.

Difficulty: 1 Easy Topic: Improving the Constraints on Demand Planning Learning Objective: 12-06 Explain how certain improvements to both product design and operations across the supply chain can make demand planning easier.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) Assume that the forecast for the last period is FITt = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assuming a smoothing coefficient of α = 0.20 and a trend smoothing coefficient of β = 0.10, what is the BASE forecast for the next period?

A) 210 B) 206 C) 236 D) 226 Answer: B Explanation: Ft+1 = FITt + α (dt − FITt) = 200 + 0.20 (230 − 200) = 206 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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17) Assume that the forecast for the last period is FITt = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assume a smoothing coefficient of α = 0.20 and a trend smoothing coefficient of β = 0.10. What is the ADJUSTED forecast for the next period?

A) 210.0 B) 210.6 C) 216.6 D) 216.0 Answer: C Explanation: Tt+1 = Tt + β(Ft+1 − FITt) = 10 + 0.10 (206 − 200) = 10 + 0.6 = 10.6.

FITt+1 = Ft+1 + Tt+1 = 206 + 10.6 = 216.6.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 18) Assume that the forecast for the last period is FITt = 200 units, and recent experience suggests a likely sales increase of 10 units each period. Actual sales for the last period reached 230 units. Assume a smoothing coefficient of α = 0.20 and a trend smoothing coefficient of β = 0.10. Demand in period t + 1 turned out to be 220. What is the adjusted forecast for period t + 2?

(Choose the closest answer.)

A) 227.3 B) 215.9 C) 217.3 D) 221.3 Answer: A Explanation: Ft+2 = FITt+1 + α (dt+1 − FITt+1) = 216.6 + 0.20 (220 − 216.6) = 217.28 Tt+2 = Tt+1 + β(Ft+2 − FITt+1) = 10.6 + 0.10 (217.28 − 216.6) = 10.6 + 0.068 = 10.668 FITt+2 = Ft+2 + Tt+2 = 216.6 + 10.668 = 227.268 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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19) Zanda Corp. has experienced demand in the last four years as shown below.

Period (t)

Total Average

Dem and (dt) 1 20 2 30 3 32 4 38 10 120 2.5 30

t*dt

t2 20 60 96 152 328

1 4 9 16 30

What is the trend value (b) in the data? (Choose the closest answer.)

A) 5.6 units/period B) 2.5 units/period C) 2.87 units/period D) −1.25 units/period Answer: A Explanation: b = [328 − (4)(2.5)(30)]/[30 − (4)(2.5)2] = 5.6 per period a = (30) − (5.6)(2.5) = 16 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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20) Refer to the data below for Zanda Corp. What is the linear regression forecast for period 5?

(Choose the nearest number of whole units.)

Period (t)

Total Average

1 2 3 4 10 2.5

Demand (dt) 20 30 32 38 120 30

t*dt

t2 20 60 96 152 328

1 4 9 16 30

A) 44 B) 42 C) 34 D) 28 Answer: A Explanation: b = [328 − (4)(2.5)(30)]/[30 − (4)(2.5)2] = 5.6 per period a = (30) − (5.6)(2.5) = 16 F5 = 16 + 5(5.6) = 44 units Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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21) Jones Corp. has noticed that sales of its product seem to be related to a variable it calls Gamma. It has developed the data shown below.

Gamma

Total Average

Sales 10 18 14 14 12

22 34 26 30 24

13.6

27.2

Gamma × Sales 220 612 364 420 288 1,904

Gamma2 100 324 196 196 144 960

Develop a simple linear regression from the data and tell Jones what the sales forecast will be if Jones expects Gamma to be 16. (Round your forecast to the nearest number of whole units.)

A) 31 B) 33 C) 28 D) 34 Answer: A Explanation: You must determine the value of a and b in a simple linear regression. b = [1,904 − (5)(13.6)(27.2)]/[960 − (5)(13.6)2] = 54.4/35.2 = 1.55 a = (27.2) − (1.55)(13.6) = 27.2 − 21.08 = 6.12 Sales = 6.12 + 1.55(16) = 30.92.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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22) Use the data below and the regression model.

Gamma

Total Average

Sales 10 18 14 14 12

22 34 26 30 24

13.6

27.2

Gamma × Sales 220 612 364 420 288 1,904

Gamma2 100 324 196 196 144 960

What is the sales forecast if Gamma is expected to be 21? (Round your forecast to the nearest number of whole units.)

A) 42 B) 36 C) 48 D) 39 Answer: D Explanation: You must determine the value of a and b in a simple linear regression. b = [1904 − (5)(13.6)(27.2)]/[960 − (5)(13.6)2] = 54.4/35.2 = 1.55 a = (27.2) − (1.55)(13.6) = 27.2 − 21.08 = 6.12 Sales = 6.12 + 1.55(16) = 30.92.

Sales = 6.12 + 1.55(21) = 6.12 + 32.55 = 38.67 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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23) A company uses actual demand data to develop its seasonal indices. It has the data shown below for each quarter of the previous two years.

Quarter Demand

1 50

2 60

3 90

4 80

1 60

2 70

3 100

4 90

What is the seasonal index for Quarter 1?

A) 0.714 B) 0.750 C) 1.25 D) 0.732 Answer: D Explanation: Year 1 average demand = (50 + 60 + 90 + 80)/4 = 70.

Year 2 average demand = (60 + 70 + 100 + 90)/4 = 80.

Quarter 1 SI for year 1 = 50/70 = 0.714. Q1 SI for year 2 = 60/80 = 0.75.

Q1 average SI = 0.732.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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24) Use the data below.

Quarter Demand

1 50

2 60

3 90

4 80

1 60

2 70

3 100

4 90

A company has forecasted next year's demand to be 400. What is the seasonally adjusted forecast for Quarter 1? (Choose the closest answer.)

A) 75 B) 71 C) 125 D) 73 Answer: D Explanation: Year 1 average demand = (50 + 60 + 90 + 80)/4 = 70.

Year 2 average demand = (60 + 70 + 100 + 90)/4 = 80.

Quarter 1 SI for year 1 = 50/70 = 0.714. Q1 SI for year 2 = 60/80 = 0.75.

Q1 average SI = 0.732.

Average/quarter = 100, seasonal adjustment for Q1 = 100(0.732) = 73.2.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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25) A company has the data shown in the chart below concerning its forecast performance over the past four time periods.

Period 1 2 3 4 5

Actual Demand

Absolute Absolute Percentage Forecast Error Value of Error Error 345 320 25 320 10 335 350 340 −30 350 20

Complete the chart and compute the MAD. A) 2 B) 20 C) 10 D) 100 Answer: B Explanation: Actual Period Demand Forecast 1 345 320 2 320 310 3 335 350 4 310 340 5 370 350

Absolute Absolute Value of Error Percentage Error 25 25 25/345 = 7.25% 10 10 10/320 = 3.13% −15 15 15/335 = 4.48% −30 30 30/310 = 9.68% 20 20 20/370 = 5.41% MAPE = MFE = MAD = 100/5 29.95%/5 = 10/5 = 2 = 20 5.99% Error

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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26) Using the data below, determine the MAPE.

Period 1 2 3 4 5

Actual Demand

Absolute Absolute Percentage Forecast Error Value of Error Error 345 320 25 320 10 335 350 340 −30 350 20

A) 5.0 percent B) 7.25 percent C) 5.99 percent D) 5.41 percent Answer: C Explanation: Actual Period Demand Forecast 1 345 320 2 320 310 3 335 350 4 310 340 5 370 350

Absolute Absolute Value of Error Percentage Error 25 25 25/345 = 7.25% 10 10 10/320 = 3.13% −15 15 15/335 = 4.48% −30 30 30/310 = 9.68% 20 20 20/370 = 5.41% MAPE = MFE = MAD = 100/5 29.95%/5 = 10/5 = 2 = 20 5.99% Error

Difficulty: 2 Medium Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

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27) In examining the data below, the manager exclaimed that he was very happy to see no bias in the forecasts. How would you respond to the manager?

Period 1 2 3 4 5

Actual Demand

Absolute Absolute Percentage Forecast Error Value of Error Error 345 320 25 320 10 335 350 340 −30 350 20

A) You are correct.

B) I'm sorry, but there is a slight negative bias.

C) I'm sorry, but there appears to be a slight positive bias.

D) There is no way to estimate bias with the given information.

Answer: C Explanation: Actual Period Demand Forecast 1 345 320 2 320 310 3 335 350 4 310 340 5 370 350

Absolute Absolute Value of Error Percentage Error 25 25 25/345 = 7.25% 10 10 10/320 = 3.13% −15 15 15/335 = 4.48% −30 30 30/310 = 9.68% 20 20 20/370 = 5.41% MAPE = 29.95%/5 = MFE = MAD = 100/5 10/5 = 2 = 20 5.99% Error

The MFE of +2 indicates a slight positive bias in the forecasts.

Difficulty: 3 Hard Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

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28) Zanda Corp. has been testing the performance of two different forecasting models to see which it should adopt for use. It wants to choose the model that has the smaller standard deviation of the forecast errors. Zanda should compare which of the following to make its choice?

A) MAD of the two models B) MAPE of the two models C) RMSE of the two models D) MFE of the two models Answer: C Explanation: RMSE provides a good approximation of the standard deviations of a model's forecast errors.

Difficulty: 2 Medium Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

Bloom's: Understand AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 29) The tracking signal will suggest to a manager that: A) Demand for an item is changing.

B) There is seasonality in demand.

C) A forecast mode's parameters may need adjustment.

D) All the answers are correct.

Answer: C Explanation: The tracking signal suggests to a manager that model parameters may need adjustment.

Difficulty: 1 Easy Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

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30) A forecasting system that changes the value of the alpha parameter in response to the level of forecast error is known as: A) A tracking signal.

B) A trend-enhanced exponential smoothing model.

C) A causal regression.

D) A time series model.

E) An adaptive model.

Answer: E Explanation: Adaptive forecasting automatically adjusts smoothing coefficients in an exponential smoothing model in response to a tracking signal.

Difficulty: 1 Easy Topic: Assessing the Performance of the Forecasting Process Learning Objective: 12-05 Evaluate and select forecasting models using various measures of accuracy and bias.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 31) Long-term/strategic demand planning is typically done using what units?

A) Total business unit sales B) Total product family sales C) Total product item sales D) Sales at a given location Answer: A Explanation: Strategic demand planning supports total business-level decisions.

Difficulty: 2 Medium Topic: Demand Planning: An Overview Learning Objective: 12-01 Explain the role of demand planning in operations management, in the firm, and in the supply chain.

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32) What is the relationship between demand management and demand forecasting?

A) The two planning activities are managed independently.

B) Demand management plans are usually an input to demand forecasting.

C) Demand management is done by operations managers, while demand forecasting is done by marketing managers.

D) All the answers are correct.

Answer: B Explanation: Demand management plans such as pricing and promotion are inputs needed to forecast demand.

Difficulty: 1 Easy Topic: Demand Planning: An Overview Learning Objective: 12-02 Differentiate between demand planning, demand forecasting, and demand management activities.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 33) Which of the following factors should be considered when one designs a forecasting process?

A) Time horizon for planning.

B) Level of detail for planning.

C) Availability of data.

D) All the answers are correct.

Answer: D Explanation: Time horizon, Level of detail and Data availability are all important considerations when designing a forecasting system.

Difficulty: 1 Easy Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

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34) A forecasting technique that seeks inputs from people who are in close contact with customers is known as: A) Historical analogy.

B) Focused forecasting.

C) Grassroots forecasting.

D) Marketing research.

Answer: C Explanation: "Grassroots" refers to forecasts based on data collected at lower levels of the organization, including workers who are on the front lines of the business.

Difficulty: 2 Medium Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

Bloom's: Understand AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 35) How does product design affect forecasting accuracy?

A) Postponable product designs remove the need to forecast demand for final product configurations.

B) A popular product design improves the demand volume and forecast.

C) Forecast accuracy is not related to product design.

D) None of the statements are true.

Answer: A Explanation: Postponable product designs allow forecasting at the component level, which is more accurate.

Difficulty: 2 Medium Topic: Improving the Constraints on Demand Planning Learning Objective: 12-06 Explain how certain improvements to both product design and operations across the supply chain can make demand planning easier.

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36) A computer program that uses algorithms to learn by analyzing many different types of models applied to large amounts of data is called: A) Historical analogy.

B) Focused forecasting.

C) Artificial intelligence.

D) Algorithmic modeling.

Answer: C Explanation: Artificial intelligence (also called machine learning) is the use of algorithms and big data to develop (learn) effective forecasting models.

Difficulty: 1 Easy Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 37) Which of the following statements best describes demand forecasting?

A) The objective of forecasting is to develop the best statistical model.

B) Better forecasts usually come from combinations of inputs.

C) Executives usually make better forecasts than machines.

D) Forecasting and demand planning have little to do with each other.

Answer: B Explanation: Developing a good forecasting process usually involves more than just statistical analysis of data. Combinations of inputs help avoid bias in a forecasting process.

Difficulty: 2 Medium Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

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38) Which of the following statements most accurately describes the outcome of using a simple moving average model to forecast demand that has a strong trend?

A) Using more periods in the moving average calculation will produce better forecasts.

B) Moving average models require less historical data than exponential smoothing models.

C) Moving averages must be weighted in order to accurately predict a trend.

D) Changes in forecasts produced by a moving average model will lag behind changes in demand.

Answer: D Explanation: Moving average models are purely based on history. They include no trend adjustment (prediction) so they will always lag behind changes in demand, though using fewer periods in the moving average calculation will decrease the amount of the lag.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

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39) Apply regression to the data shown below. The slope of the line estimated using the regression model is:

Sales January February March April May June July August September October November December

100 200 150 400 300 200 250 350 400 350 400 500

A) 50.0 B) 45.3 C) 27.3 D) 15.4 Answer: C Explanation: y = 27.273x + 122.73 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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40) Apply regression to the data shown below. The forecast for next January's sales is: Sales January February March April May June July August September October November December

100 200 150 400 300 200 250 350 400 350 400 500

A) 150.0 B) 477.3 C) 450.0 D) Not enough information is given to make a forecast Answer: B Explanation: y = 27.273x + 122.73; January forecast = 27.273(13) + 122.73 = 477.3 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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41) Using an exponential smoothing model, the forecast for next January's sales is: Sales January February March April May June July August September October November December

100 200 150 400 300 200 250 350 400 350 400 500

A) 150.0 B) 477.3 C) 450.0 D) Not enough information is given to make a forecast Answer: D Explanation: You need the smoothing coefficient (alpha) and a past forecast in order to develop a forecast using exponential smoothing.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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42) Using the data shown below, the forecast for week 5 using a three-period moving average model is:

Week Sales

1 165

2 140

3 115

4 200

A) 200 B) 155 C) 152 D) 158 Answer: C Explanation: F5 = (140 + 115 + 200)/3 = 151.67 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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43) Using the data shown below, the forecast for week 5 using an exponential smoothing model is:

Week Sales Forecast

1

2 165 170

3 140 168

4 115

200 140.1

A) 164.1 B) 146.1 C) 200.1 D) Not enough information is given to produce a forecast Answer: A Explanation: Ft+1 = α dt + (1 − α ) Ft or Ft+1 = Ft + α (dt − Ft); α = (168 − 170)/(165 − 170) = 0.4 F5 = 140.1 + 0.4 (200 − 140.1) = 164.1 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 44) Increasing the value of alpha (α) in an exponential smoothing model would produce which of the following results?

A) Reduce the influence of more recent demands in computing future forecasts B) Reduce the amount of data that needs to be stored to support the forecasting process C) Increase the sensitivity of the forecast process to recent changes in demand D) Reduce the ability of the forecast process to respond to seasonality in demand Answer: C Explanation: A larger value of alpha places more weight on the most recent demand. It transfers more of the forecast error to the adjustment of the prior forecast.

Difficulty: 2 Medium Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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45) Given a demand of 19 for the most recent period, use α = .2 and β =.4 to create a trendenhanced smoothing-based forecast. Assume that FIT1 = 22 and T1 = 7.83. The correct answer is closest to: A) 29.0 B) 21.4 C) 23.2 D) 31.3 Answer: A Explanation: F2 = FIT1 + 0.2(d1 - FIT1) = 22 + 0.20 (19 - 22) = 21.4 T2 = T1 + .4(F2 - FIT1) = 7.83 + 0.4 (21.4 - 22) = 7.6 FIT2 = F2 + T2 = 21.4 + 7.6 = 29 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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46) The data below show the forecasted probability of rain on Election Day and the actual number of people who voted in the election for each of the past eight years in a given city. If tomorrow is Election Day and the weather forecast shows a 50 percent chance of rain, how many voters do you expect to turn out?

Years in the past probability of rain (%) Number of voters (100s)

8 10 20

7 15 25

6 0 40

5 80 15

4 15 20

3 25 10

2 0 35

1 90 10

A) 28.3 B) 20.0 C) 17.4 D) 75.2 Answer: C Explanation: Regression equation from formulas: Voters = 28.3 − 0.22 (probability of rain); 28.3 − 0.22(50) = 17.4 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation 47) Demand planning for the intermediate term (tactical plans) would be done using dollar or unit sales for: A) A business unit B) An entire sales network C) A product family in a region D) A particular item at a given location Answer: C Explanation: Intermediate planning (6−18 months) is done for a product family and seeks to forecast and manage aggregate demand.

Difficulty: 1 Easy Topic: Demand Planning: An Overview Learning Objective: 12-01 Explain the role of demand planning in operations management, in the firm, and in the supply chain.

Bloom's: Remember AACSB: Reflective thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 48) Which of the following is not typically considered a component driver of demand?

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A) Seasonality B) Trend C) Perturbation D) Autocorrelation Answer: C Explanation: The components of demand are stable pattern, seasonality and cycles, trend, shift or step change, autocorrelation, and forecast error.

Difficulty: 1 Easy Topic: Demand Forecasting Learning Objective: 12-03 Describe various qualitative and quantitative demand forecasting procedures.

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49) The table below shows quarterly sales data over four years. A regression of sales on quarters yields this equation: Sales = 18.25 + 1.55 × Quarter number. Using the regression estimate as the base, what is the seasonal index for the fourth quarter? (Pick the answer that is closest to the correct number.)

Quarter 1 2 3 4

Year 1 15 17 15 25

2 26 29 24 30

3 17 20 13 23

4 24 24 22 30

A) 1.10 B) 1.23 C) 1.04 D) 0.81 Answer: A Explanation: Predicted sales for fourth quarter = 18.25 + 1.55 (4) = 24.45 Average fourth-quarter sales = (25 + 30 + 23 + 30)/4 = 27 Seasonal index = 27/24.45 = 1.10 Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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50) The table below shows quarterly sales data over four years. Using the average demand as the base, what is the seasonal index for the third quarter (Pick the answer that is closest to the correct number.)

Quarter 1 2 3 4

Year 1 15 17 15 25

2 26 29 24 30

3 17 20 13 23

4 24 24 22 30

A) 0.92 B) 0.82 C) 0.99 D) 1.20 Answer: B Explanation: Average for all demands = 22.125. Average for third-quarter demands = 18.25.

Seasonal index = 18.25/22.125 = 0.8249.

Difficulty: 3 Hard Topic: Demand Forecasting Learning Objective: 12-04 Develop forecasts using moving average, exponential smoothing, and linear regression models.

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51) The city of Dallas would like to control the amount of traffic on a major tollway. One way to manage the demand is by: A) Rapid forecasting.

B) Dynamic pricing.

C) Signaling alternatives.

D) Opening and closing lanes.

Answer: B Explanation: Dynamic pricing uses sensors to monitor the current demand for a product or service. If the demand is too low or high then the price can be lowered or raised to manage the demand. Opening or closing lanes manages the supply, not the demand.

Difficulty: 2 Medium Topic: Demand Management Learning Objective: 12-02 Differentiate between demand planning, demand forecasting, and demand management activities.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 13 Sales and Operations Planning 1) Generally speaking, the sales function and operations function differ in objectives. Which of the following is NOT one of those differences?

A) Sales prefers detailed forecasts for setting bonuses; operations prefers aggregate forecasts.

B) Sales prefers many product variations; operations prefers few variations.

C) Sales emphasizes revenue; operations emphasizes cost minimization.

D) Sales prefers rapid response; operations prefers stable production schedules.

Answer: A Explanation: Sales prefers aggregate forecasts while operations prefers detailed forecasts.

Difficulty: 2 Medium Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Sales and Operations Planning focuses on what time frame?

A) Very short, immediate plans B) Intermediate range planning C) Long term Plans D) All of the above Answer: B Explanation: S&OP is intermediate-range planning.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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3) Which of the following is true concerning sales and operations planning?

A) Once the plan is finalized, it should not be changed during the planning period.

B) There is a specific set of steps all firms should follow in the sales and operations planning process.

C) A benefit of the process is that the firm should achieve high service levels with lower inventory.

D) By keeping the schedule stable, production can be optimized.

Answer: C Explanation: A benefit of S&OP is that the firm can achieve improved customer service with lower finished good inventory.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Each month the sales and operations team at Johnson Company meets to develop plans for each of the next six months. This process is known as: A) Collaborative planning and forecasting.

B) Rolling planning horizons.

C) Unconstrained planning.

D) Continuous planning.

Answer: B Explanation: Replanning each time period for a given number of periods into the future is known as rolling planning horizons.

Difficulty: 2 Medium Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

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5) The focus of an aggregate production plan, in general, is on all of the following EXCEPT: A) The intermediate-term future.

B) Product lines.

C) Facilities and capital equipment.

D) Inventory levels.

Answer: C Explanation: Facilities and capital equipment decisions are long-term decisions with strategic implications; aggregate plans focus on intermediate-term non-strategic decisions.

Difficulty: 2 Medium Topic: Aggregate Production Planning Learning Objective: 13-02 Define the contents of an aggregate plan.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Which of the following is NOT one of the costs considered in aggregate production planning?

A) Subcontracting cost.

B) Capital equipment cost.

C) Inventory cost.

D) Firing (layoff) cost.

Answer: B Explanation: Facilities and capital equipment decisions are long-term decisions with strategic implications; aggregate plans focus on intermediate-term non-strategic decisions.

Difficulty: 1 Easy Topic: Aggregate Production Planning Learning Objective: 13-03 Explain the relevant costs in developing an aggregate plan.

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7) If a make-to-stock manufacturing firm with highly seasonal demand follows a chase demand strategy, which of the following is likely to be true?

A) Inventory will fluctuate significantly during the year.

B) The production rate must be set equal to the demand in the heaviest demand period, and it must stay at that level all year.

C) It will be easy to keep the workforce size stable.

D) The firm likely will have higher capital investment than if it followed a level plan.

Answer: D Explanation: A level production plan builds inventory in low-demand periods and depletes inventory during high-demand periods.

A chase strategy requires sufficient capital equipment to produce at peak levels while that equipment is less utilized during lower-demand periods. Hence, the chase strategy requires a larger investment in capital equipment than if they used a level production plan.

Difficulty: 2 Medium Topic: Aggregate Production Planning Learning Objective: 13-04 Contrast different types of aggregate production strategies.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 8) If a company strongly prefers that its aggregate output plan be closer to a level plan than a chase plan, this implies that it is concerned about minimizing: A) Inventory carrying costs.

B) Hiring and layoff costs.

C) Cost of quality defects.

D) Lost sales costs.

Answer: B Explanation: A level production plan minimizes hiring and layoff costs due to changes in output volume.

Difficulty: 1 Easy Topic: Aggregate Production Planning Learning Objective: 13-04 Contrast different types of aggregate production strategies.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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9) If a make-to-stock manufacturing firm with highly seasonal demand follows a level production strategy, which of the following is likely to be true?

A) Inventory will fluctuate significantly during the year.

B) The production rate must be set equal to the demand in the heaviest demand period, and stay at that level all year.

C) It will be difficult to keep the workforce size stable.

D) The firm must make sure that its maximum capacity is at least as high as the heaviest demand period.

Answer: A Explanation: The firm is meeting fluctuating demand by drawing from inventory in peak demand periods and replenishing that inventory during lower demand periods.

Difficulty: 2 Medium Topic: Sales and Operations Planning Learning Objective: 13-03 Explain the relevant costs in developing an aggregate plan.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 10) Zanda Corp. and Jones Corp. are identical in every way (products produced, costs, demand, etc.) except for one. Zanda uses a level production plan while Jones prefers a chase production plan. Which of the following is most likely to be true?

A) Zanda will have higher investment in plant and equipment.

B) Zanda will have higher hiring and firing costs.

C) Zanda will have higher inventory carrying costs.

D) Zanda will have higher overtime costs.

Answer: C Explanation: A firm with a level production plan will have higher average inventory levels than a firm pursuing a chase production plan.

Difficulty: 2 Medium Topic: Aggregate Production Planning Learning Objective: 13-04 Contrast different types of aggregate production strategies.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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11) Zanda Corp. and Jones Corp. are identical in every way (products produced, costs, demand, etc.) except for one. Zanda uses a level production plan while Jones prefers a chase production plan. Which of the following is most likely to be true?

A) Jones will have higher investment in plant and equipment.

B) Jones will have higher hiring and firing costs.

C) Jones will have lower inventory carrying costs.

D) All of the selections are true.

Answer: D Explanation: A chase production plan will require a higher investment in equipment and will endure fluctuating work force levels but will have lower inventory costs.

Difficulty: 2 Medium Topic: Aggregate Production Planning Learning Objective: 13-04 Contrast different types of aggregate production strategies.

Bloom's: Understand AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 12) Which type of aggregate production plan is likely to have the LEAST negative impact on the local community and the workforce?

A) Chase plan with hiring and firing B) Chase plan with overtime C) Level plan D) The plans do not differ in their impact on the local community and the workforce.

Answer: C Explanation: The level production plan will provide more stability and security for the workforce while a chase plan impacts both the workforce and the community with frequent layoffs.

Difficulty: 2 Medium Topic: Aggregate Production Planning Learning Objective: 13-04 Contrast different types of aggregate production strategies.

Bloom's: Understand AACSB: Reflective Thinking; Ethics / Accessibility: Keyboard Navigation; Screen Reader Compatible

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13) Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters. The company's expected quarterly demand is given in the following chart.

The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter. Following is other critical data: Production cost per unit = $250 Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory) Hiring cost per worker = $1,000 Firing cost per worker = $2,000 Beginning number of workers = 10 Each worker can produce 100 units per quarter.

Any worker on the staff at the end of the year will not be fired at that time.

Beginning Inventory: 1,000 Regular Quarter Demand Production Overtime 1 4,000 2 6,000 3 3,000 4 7,000 Total 20,000

Beginning Workers: 10 Ending Workers Inventory Required Hire Fire

If Jones prefers a level plan, what will be the regular production rate per quarter?

A) 5,000 units B) 4,000 units C) 6,000 units D) Regular production will vary each month.

Answer: A Explanation: 20,000 units annually divided by 4 quarters is 5,000 units per quarter.

Difficulty: 1 Easy Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation

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14) Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters. The company's expected quarterly demand is given in the following chart.

The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter. Following is other critical data: Production cost per unit = $250 Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory) Hiring cost per worker = $1,000 Firing cost per worker = $2,000 Beginning number of workers = 10 Each worker can produce 100 units per quarter.

Any worker on the staff at the end of the year will not be fired at that time.

Beginning Inventory: 1,000 Beginning Workers: 10 Regular Ending Workers Quarter Demand Production Overtime Inventory Required Hire Fire 1 4,000 2 6,000 3 3,000 4 7,000 Total 20,000 Given this data, what is the inventory carrying cost of a LEVEL plan?

A) $100,000 B) $700,000 C) $70,000 D) $7,000 Answer: C Explanation: A level production plan is [20,000 units / 4 quarters = 5,000 units per quarter.

With the 1,000 units of beginning inventory, this results in ending inventory of 2,000 units at the end of quarter 1 and 3,000 units of inventory at the end of quarter 3. The ending inventory at the end of quarter 2 and 4 is 1,000 in accordance with the company policy of holding at least 1,000 units at the end of each quarter. The total quarterly ending inventory is, therefore, 2,000 + 1,000 + 3,000 + 1,000 units = 7,000 units. At $10 per unit carrying cost per quarter, that is $70,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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15) Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters. The company's expected quarterly demand is given in the following chart.

The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter. Following is other critical data: Production cost per unit = $250 Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory) Hiring cost per worker = $1,000 Firing cost per worker = $2,000 Beginning number of workers = 10 Each worker can produce 100 units per quarter.

Any worker on the staff at the end of the year will not be fired at that time.

Beginning Inventory: 1,000 Regular Quarter Demand Production Overtime 1 4,000 2 6,000 3 3,000 4 7,000 Total 20,000

Beginning Workers: 10 Ending Workers Inventory Required Hire Fire

Given this data, what is the total cost of a LEVEL plan?

A) $5,000,000 B) $5,140,000 C) $5,110,000 D) $5,740,000 Answer: C

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Explanation: A level production plan is 20,000 units ÷ 4 quarters = 5,000 units per quarter. 40 workers need to be hired at $1,000 per worker = $40,000. 20,000 washers will be produced at $250 each = $5,000,000. With the 1,000 units of beginning inventory, this results in ending inventory of 2,000 units at the end of quarter 1 and 3,000 units of inventory at the end of quarter 3. The ending inventory at the end of quarter 2 and 4 is 1,000 in accordance with the company policy of holding at least 1,000 units at the end of each quarter. The total quarterly ending inventory is, therefore 2,000 + 1,000 + 3,000 + 1,000 units = 7,000 units. At $10 per unit carrying cost per quarter, that is $70,000.Total production cost = $40,000 + $5,000,000 + $70,000 = $5,110,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 16) Zanda Corporation is preparing an aggregate production plan for its product for the next four months. The company's expected monthly demand is given in the following chart. The company will have 100 units in inventory at the beginning of the month and wishes to maintain at least 100 units at the end of each month. Following is other critical data: Production cost per unit = $125 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $50 Firing cost per worker = $100 Beginning number of workers = 25 Each worker can produce 25 units per month.

Beginning Inventory: 100 Regular Month Demand Production Overtime 1 600 2 800 3 700 4 900 Total 3,000

Beginning Workers: 25 Ending Workers Inventory Required Hire Fire

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The total inventory carrying cost of a chase plan is: A) $6,000 B) $4,000 C) $5,000 D) $4,500 Answer: B Explanation: In a chase production plan, production is equal to demand. Hence, the only inventory carrying cost will arise from the company’s policy of always maintaining 100 units on hand at the close of every month. The inventory carrying cost for these four months is therefore 100 units × $10/unit × 4 months = $4,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 17) Zanda Corporation is preparing an aggregate production plan for its product for the next four months. The company's expected monthly demand is given in the following chart. The company will have 100 units in inventory at the beginning of the month and wishes to maintain at least 100 units at the end of each month. Following is other critical data: Production cost per unit = $125 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $50 Firing cost per worker = $100 Beginning number of workers = 25 Each worker can produce 25 units per month.

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Beginning Inventory: 100 Regular Month Demand Production Overtime 1 600 2 800 3 700 4 900 Total 3,000

Beginning Workers: 25 Ending Workers Inventory Required Hire Fire

What is the total cost of a CHASE plan (using hiring/firing)?

A) $379,800 B) $379,000 C) $381,100 D) $380,300 Answer: D Explanation: With a chase plan, production will be 3,000 units at $125 per unit = $375,000.

Using a chase strategy you will lay off one worker in month 1 and four workers in month 3. 5 layoffs at $100 each = $500 You will hire 8 workers in month 2 and month 4. 16 workers hired at $50 each = $800 Inventory carry cost will be 100 units per month at $10 per month for 4 months = $4,000 $375,000 + $500 + 800 + 4,000 = $380,300.

Difficulty: 3 Hard Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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18) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the regular monthly actual production for a level plan?

A) 800 B) 1,000 C) 1,250 D) 1,500 Answer: C Explanation: (1,000 + 1,200 + 1,500 + 1,300 = 5,000) ÷ 4 = 1,250 widgets Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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19) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the total inventory carrying cost for the level plan?

A) 0 B) $6,000 C) $8,000 D) $6,500 Answer: C Explanation: A Level plan produces 1,250 per month. Including the 50 units minimum inventory policy, ending inventory in month one will be 300 units, month two 350 units, month three 100 units, and month four 50 units.

The total monthly ending inventory is 300 + 350 + 100 + 50 = 800 units at $10 per unit per month, 800 × $10 = $8,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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20) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the total cost of the level plan?

A) $250,000 B) $260,700 C) $252,700 D) $258,000 Answer: B Explanation: A Level plan produces 1,250 per month. This will require 25 workers, which means that 9 workers will be hired at $300, an expenditure of $2,700.

Including the 50 units minimum inventory policy, ending inventory in month one will be 300 units, month two 350 units, month three 100 units, and month four 50 units.

The total monthly ending inventory is 300 + 350 + 100 + 50 = 800 units at $10 per unit per month. 800 × $10 = $8,000.

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Production of 5,000 units at $50 each = $250,000.

Total: $2,700 + $8,000 + $250,000 = $260,700.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 21) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the inventory carrying cost of a chase plan accomplished through hiring and firing?

A) 0 B) $200 C) $1,000 D) $2,000 Answer: D 16 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Explanation: With a chase plan the amount produced will be equal to demand. The ending inventory for each month will be the company’s policy of holding 50 units at the end of each month, a total of 200 unit-months of inventory at $10 each = $2,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 22) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the total cost of hiring and firing the workers in a chase plan which uses only hiring and firing?

A) 0 B) $800 C) $5,000 D) $6,400 Answer: C 17 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Explanation: A chase plan will require four additional workers in month 1, four more in month 2, six more in month 3, and layoff 4 in month 4. At $300 hiring expense and $200 firing expense, that is 14 hires and 4 layoffs; 14 × 300 + 4 × 200 = $5,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 23) Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months. The company's expected monthly demand is given in the following chart. The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month. Following is other critical data: Production cost per unit = $50 Inventory carrying cost per month per unit = $10 (based on ending month inventory) Hiring cost per worker = $300 Firing cost per worker = $200 Beginning number of workers = 16 Each worker can produce 50 units per month.

Beginning Inventory: 50 Regular Month Demand Production Overtime 1 1,000 2 1,200 3 1,500 4 1,300 Total

Beginning Workers: 16 Ending Workers Inventory Required Hire Fire

What is the total cost of a chase plan which uses only hiring/firing?

A) $257,000 B) $257,400 C) $257,600 D) $257,900 Answer: A 18 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Explanation: 5,000 units will be produced at $50 each, a total production cost of $250,000. A chase plan will require a total of 14 hires and 4 layoffs, 14 × $300 + 4 × $200 = $5,000 Inventory carrying cost will apply to the 50 units minimum inventory company policy. $10/unit month × 50 units × 4 months = $2,000.

Total cost = $250,000 + $5,000 + $2,000 = $257,000.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Analyze AACSB: Analytical Thinking / Accessibility: Keyboard Navigation 24) John Jones, senior VP for Zanda Corp., is looking at three alternative aggregate production plans for the next six-month period. At his company, demand varies by month with substantial month-to-month differences. The three alternatives are a "pure level plan," which keeps an absolutely constant workforce, a "pure chase plan" relying on hiring and layoffs, and a hybrid plan. He is most likely to find that the hybrid plan: A) Has lower inventory carrying cost than the level plan and lower hiring/layoff cost than the chase plan.

B) Has higher hiring/layoff cost than the chase plan and higher inventory carrying cost than the level plan.

C) Has lower inventory carrying cost than the chase plan and higher hiring/layoff cost than the level plan.

D) None of these selections.

Answer: A Explanation: The hybrid plan will have lower hiring/layoff and overtime expenses than the chase plan but will have higher inventory carrying costs. The hybrid plan will have higher hiring/layoff and overtime costs than the level plan but will have lower inventory carrying costs.

Difficulty: 3 Hard Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible

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25) John Jones, senior VP for Zanda Corp., is looking at three alternative aggregate production plans for the next six-month period. At his company, demand varies by month with substantial month-to-month differences. The three alternatives are a "pure level plan," which keeps an absolutely constant workforce, a "pure chase plan" relying on hiring and layoffs, and a hybrid plan. He is most likely to find that the pure level plan: A) Has lower inventory carrying cost than the hybrid plan.

B) Has higher hiring/layoff cost than the chase plan.

C) Has higher hiring/layoff cost than the hybrid plan.

D) Has higher inventory carrying cost than the chase plan.

Answer: D Explanation: The hybrid plan will have lower hiring/layoff and overtime expenses than the chase plan but will have higher inventory carrying costs. The hybrid plan will have higher hiring/layoff and overtime costs than the level plan but will have lower inventory carrying costs.

Difficulty: 3 Hard Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 26) Which of the following is an advantage of a chase production strategy (as compared to a level plan)?

A) Low investment in equipment.

B) High inventory carrying cost.

C) Lower inventory investment.

D) Less investment in employee training.

Answer: C Explanation: The chase plan will have lower inventory investment than the level plan but will have higher hiring/layoff, overtime and training costs and will require higher equipment investment than the level plan.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-04 Contrast different types of aggregate production strategies.

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27) Dave's Stove-Top Popcorn currently has three full-time employees who are each paid $1,500 per month. An employee can only work a maximum of 100 hours per month because production normally takes place at night. They do receive $1,500 even if they do not work 100 hours, however. Part-time employees can be hired at a cost of $25 per hour. Dave's Stove-Top Popcorn has forecasted that demand for the next six months will be as follows: Month Hours Needed

1 380

2 280

3 450

4 420

5 520

6 390

What is the total labor cost if Dave relies on part-time employees to meet additional demand?

A) $43,500 B) $53,500 C) $70,500 D) $77,500 Answer: A Explanation: Full-time employee cost = 3 × $1,500 × 6 = $27,000 Needed hours = 80 + 0 + 150 + 120 + 220 + 90 = 660 hours needed × $25.00 = $16,500 Total labor cost = $27,000 + $16,500 = $43,500.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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28) Dave's Stove-Top Popcorn currently has three full-time employees who are each paid $1,500 per month. An employee can only work a maximum of 100 hours per month because production normally takes place at night. They do receive $1,500 even if they do not work 100 hours, however. Part-time employees can be hired at a cost of $25 per hour. Dave's Stove-Top Popcorn has forecasted that demand for the next six months will be as follows: Month Hours Needed

1 380

2 280

3 450

4 420

5 520

6 390

What is the total labor cost if Dave hires one more full-time employee to meet additional demand?

A) $30,750 B) $36,000 C) $40,750 D) $52,500 Answer: C Explanation: Full-time employee cost = 4 × $1,500 × 6 = $36,000 Needed hours = 0 + 0 + 50 + 20 + 120 + 0 = 190 hours needed × $25.00 = $4,750 Total labor cost = $36,000 + $4,750 = $40,750.

Difficulty: 2 Medium Topic: Creating an Aggregate Production Plan Learning Objective: 13-05 Develop alternative aggregate production plans.

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29) You are sitting next to a person in business class on a flight from Los Angeles to Sydney, Australia. You mention to that person that you got your ticket two months ago for only $12,500.

The person responds that she bought her ticket two days ago for $7,800. This sometimes happens because airlines often use an approach called: A) Capacity management.

B) Yield management.

C) Load management.

D) Workforce leveling.

Answer: B Explanation: Yield management attempts to adjust demand by changing prices for a service as demand occurs.

Difficulty: 1 Easy Topic: Aggregate Planning for Service Industries Learning Objective: 13-06 Explain the differences in aggregate planning in services versus manufacturing industries.

Bloom's: Apply AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 30) How does aggregate planning for services differ from aggregate production planning for products?

A) There is no difference.

B) Demand for products typically is stated as the number of hours of labor required, whereas demand for services is generally stated as the number of units of service desired.

C) Most service plans are based primarily on labor requirements.

D) Service plans make extensive use of inventory to meet demand.

Answer: C Explanation: Because services cannot be inventoried, when supply and demand do not match, the impact is felt most strongly by human resources.

Difficulty: 1 Easy Topic: Aggregate Planning for Service Industries Learning Objective: 13-06 Explain the differences in aggregate planning in services versus manufacturing industries.

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31) Within the hierarchy of planning, the Sales & Operations Planning system occurs at which of the following levels?

A) Long range B) Intermediate range C) Short range D) Operational level.

Answer: B Explanation: S&OP is intermediate-range planning.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 32) The process of replanning each period for a given number of periods into the future is referred to as which of the following terms?

A) Rolling planning horizon B) Material requirements planning C) Aggregate planning D) Master production schedule Answer: A Explanation: A firm using rolling planning horizons plans each period for a given number of periods into the future.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

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33) Which of the following is NOT an input into the S&OP? A) Safety Stocks B) Spare Parts Demand C) Promotion D) Lot Sizing Logic.

Answer: D Explanation: S&OP considers all forecasted demands including safety stocks, spare parts, and promotional demands. Lot sizing is not part of S&OP. Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 34) Every year around mid-May, the Grand Hotel on Mackinac Island runs a special to coincide with the Lilac Festival. This special offers visitors a three day stay (3 days/2 nights) combined with all meals and a guided tour of the various Lilac displays. Which of the following terms best captures this program?

A) Sales and Operations Planning B) Marketing Strategy C) Yield Management D) Aggregate Planning.

Answer: C Explanation: Yield management is a strategy that shapes demand in a way that generates greater revenues and profits.

Difficulty: 1 Easy Topic: Aggregate Planning for Service Industries Learning Objective: 13-06 Explain the differences in aggregate planning in services versus manufacturing industries.

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35) Sales and Operational Planning: A) Provides an opportunity for customers to interact with the cross-functional team that develops operational and marketing strategies.

B) Ensures that decisions in sales, marketing and operations can be taken without reference to financial concerns.

C) Provides a regular opportunity for cross-functional teams to review data from the field and to decide how the company should best respond.

D) Is a forum where detailed production plans are developed and ratified.

Answer: C Explanation: Sales and operational planning give companies a regular opportunity to review data from the field and to decide how the company should best respond.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 36) S&OP has both “hard” and “soft” benefits. Which of the following is not considered a “soft” benefit of S&OP? A) Greater accountability for results B) Enhanced teamwork at both the executive and operating levels C) Better decisions with less effort D) Higher sales and enhanced quality Answer: D Explanation: Higher sales and enhanced quality are not considered “soft” benefits of S&OP. Difficulty: 2 Medium Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

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37) Which of the following are not considered a relevant aggregate planning cost?

A) Lost sales cost B) Inventory holding cost C) Management and supervisory training cost D) Subcontracting cost Answer: C Explanation: Relevant costs for aggregate planning are: inventory holding cost, regular production cost, overtime, hiring/firing/layoff costs, backorder/lost sales cost, and subcontracting cost.

Difficulty: 1 Easy Topic: Aggregate Production Planning Learning Objective: 13-03 Explain the relevant costs in developing an aggregate plan.

Bloom's: Remember AACSB: Reflective Thinking / Accessibility: Keyboard Navigation; Screen Reader Compatible 38) Firms in which of these industries experience no difficulty in balancing supply and demand?

A) The commercial real estate industry.

B) The airline industry.

C) The fast food industry.

D) All companies must make difficult decisions in balancing supply and demand.

Answer: D Explanation: All firms experience difficulty in balancing supply and demand.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-01 Describe the role and the process of sales and operations planning.

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39) What is the major aggregate planning difference between service and manufacturing firms?

A) Aggregate planning is not as critical in service firms as it is in manufacturing companies.

B) Demand for services is often stated in terms of service products delivered rather than units of manufactured goods.

C) Service firms cannot hold inventory of their product.

D) Customer satisfaction with service products can be precisely measured, whereas satisfaction with manufactured goods is often a matter of interpretation.

Answer: C Explanation: A service cannot build finished product in advance of demand.

Difficulty: 1 Easy Topic: Sales and Operations Planning Learning Objective: 13-06 Explain the differences in aggregate planning in services versus manufacturing industries.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 14 Materials and Resource Requirements Planning 1) MRP is a process that would be most applicable in which situation?

A) Planning requirements for repair parts for production equipment in a manufacturing plant.

B) Planning requirements for safety stocks of finished goods in a distribution center.

C) Planning requirements for bicycle seats in a bicycle production plant.

D) None of these.

Answer: C Explanation: MRP is used for dependent demand items. Only planning requirements for bicycle seats in a bicycle production plant is a dependent demand item.

Difficulty: 2 Medium Topic: Materials Requirements Planning Learning Objective: 14-01 Explain the materials requirements planning (MRP) process and when it should be used.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Materials requirements planning (MRP) systems are used primarily to: A) Plan orders.

B) Plan lead time.

C) Plan amounts of end items to produce.

D) Plan distribution.

Answer: A Explanation: MRP is a system for planning the ordering of materials.

Difficulty: 1 Easy Topic: Materials Requirements Planning Learning Objective: 14-01 Explain the materials requirements planning (MRP) process and when it should be used.

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3) Planning for which of the following products would see the LEAST benefit from the use of an MRP system?

A) Microwave ovens B) Mobile phones C) Shampoo D) Power lawn mowers Answer: C Explanation: The greatest benefit from MRP is attained when planning complex, discrete products that are assembled, such as microwave ovens, mobile phones, and power lawn mowers.

Difficulty: 3 Hard Topic: Materials Requirements Planning Learning Objective: 14-01 Explain the materials requirements planning (MRP) process and when it should be used.

Bloom's: Apply AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) The quantities of end items to be completed in each time period into the future is shown in a(n): A) MRP. B) MPS. C) BOM. D) ERP. Answer: B Explanation: An MPS shows the quantities of end items that are to be completed during each time period over the planning horizon.

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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5) The longest lead-time path in the BOM is the: A) Time bucket.

B) Planning horizon.

C) Time window.

D) Cumulative lead time.

Answer: D Explanation: The cumulative lead time is the longest lead-time path in the BOM. Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) If the cumulative lead time is eight weeks, for a project to be feasible the MPS planning horizon must be: A) Exactly eight weeks.

B) At least eight weeks.

C) Less than eight weeks.

D) At least 16 weeks.

Answer: B Explanation: The MPS planning horizon must be equal to or greater than the cumulative lead time to ensure that there is enough time to plan, order, receive material, and make the end items.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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7) A master production schedule shows the following information:

Beginning inventory = 20 Forecast Actual orders Projected on-hand inventory Available to promise MPS

Period 1 90 100

Period 2 200 180

Using a lot-for-lot rule, what is the MPS quantity for period 1?

A) 90 B) 80 C) 100 D) 40 Answer: B Explanation: The MPS quantity in period 1 is the greater of the forecast or actual orders minus the beginning inventory. The actual orders are the greatest, so the MPS is 100 − 20 = 80.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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8) A master production schedule shows the following information:

Beginning inventory = 20 Forecast Actual orders Projected on-hand inventory Available to promise MPS

Period 1 90 100

Period 2 200 180

What is the number of items available to promise for period 2?

A) 0.

B) −20.

C) 20.

D) None of these.

Answer: C Explanation: The number of items available to promise in period 2 is the forecast minus the actual customer orders, which is 200 − 180 = 20.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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9) A master production schedule shows the following information:

MPS Beginning inventory = 100 Forecast Actual customer orders Projected on-hand inventory Available to promise MPS

Week Week Week Week 1 2 3 4 500 550 400 500 550 600 500 450

Using a lot-for-lot rule, what is the MPS quantity for week 4?

A) 500 B) 400 C) 450 D) 50 Answer: A Explanation: The MPS in week 4 is 500, which is the greater of the forecast or actual orders.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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10) A master production schedule shows the following information:

MPS Beginning inventory = 300 Forecast Actual customer orders Projected on-hand inventory Available to promise MPS

Week Week Week Week 1 2 3 4 1,000 1,200 1,300 1,200 800 1,000 800 700 0 0 0 0

Based on the information in the MPS, what is the number of items that is available to promise in week 4?

A) 1,200 B) 700 C) 500 D) 1,500 Answer: C Explanation: The number of items available to promise in week 4 is the forecast minus the actual customer orders, which is 1,200 − 700 = 500.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) Which of the following is NOT an input into the MRP? A) Bill of materials B) Inventory records file C) Master production schedule D) Planned order release Answer: D Explanation: The BOM, inventory records file, and the MPS are the inputs.

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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12) A bill of materials file contains: A) Invoices for materials that must be paid in this period.

B) Lists of materials required to produce end item products.

C) Accounts payable for materials.

D) None of these.

Answer: B Explanation: The BOM lists all of the materials required to produce an item.

Difficulty: 2 Medium Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 13) End item A is made by assembling two of part B and three of part C. Part C is made from two of component D and two of component E. Component D is considered to be a: A) Level 0 input.

B) Level 1 input.

C) Level 2 input.

D) Level 3 input.

Answer: C Explanation: Component D is needed to make part C, which is a level 1 input to the end item.

Thus, component D is a level 2 input.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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14) Using the BOM, if two units of A are needed, how many of K will be required? Assume that there is no on-hand inventory of any items.

A) 16 B) 34 C) 52 D) 104 Answer: D Explanation: Ks are used in B and C. In B, four Ks are needed (4 × 1). For C, the number of Ks is 4 × 4 = 16. To make one A requires one B and three Cs, so the number of Ks is (4 × 1) + (3 × 16) = 52. Two As require 52 × 2 = 104 Ks. Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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15) Which of the following is NOT included in the information about the inventory records file for an item?

A) Safety stock B) Preferred order quantity C) Net requirements D) Lead time Answer: C Explanation: Net requirements are an output of MRP and are not in an inventory records file.

Difficulty: 2 Medium Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 16) End item A is made by assembling two parts of B and 4 parts of C. Part C is made from 3 parts of D and 2 parts of E. Gross requirements for end item A are 100 units.

Units on-hand in inventory End item A Part B Part C Part D Part E

50 30 75 100 75

What is the net requirement for part C? A) 70 units B) 200 units C) 125 units D) 100 units Answer: C Explanation: The gross requirements for A is 100, but there are 50 units of A in inventory, so only 50 units of A need to be produced. There are four Cs for each A, so the gross requirement for C is 4 × 50 = 200, but there are 75 units of C in inventory, so only 125 Cs must be produced.

Difficulty: 3 Hard Topic: MRP Process Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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17) End item A is made by assembling two parts of B and four parts of C. Part C is made from three parts of D and two parts of E. Gross requirements for end item A are 100 units.

Units on-hand in inventory 50 30 75 100 75

End item A Part B Part C Part D Part E

What is the gross requirement for part E? A) 175 B) 275 C) 375 D) 250 Answer: D Explanation:

End item A Part B (2) Part C (4) Part D (3) Part E (2)

Gross requirements 100 100 (50 × 2) 200 (50 × 4) 375 (125 × 3) 250 (125 × 2)

Units on-hand in inventory 50 30 75 100 75

Net requirements 50 70 125 275 175

Difficulty: 3 Hard Topic: MRP Process Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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18) Jones Company uses widgets as component parts. In a particular week it has gross requirements for 250 units of widgets, beginning inventory of 50 widgets, and scheduled receipts of 350 widgets. Available inventory for the next period is: A) 650.

B) 50.

C) 250.

D) 150.

Answer: D Explanation: Beginning inventory (50) + scheduled receipts (350) − gross requirements (250) = 150.

Difficulty: 3 Hard Topic: MRP Process Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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19) An MRP record for a motor is shown in the following table.

MRP Record Lead time = 2 weeks On-hand inventory = 500 Safety stock = 100 Order quantity: LFL Gross Requirements Scheduled Receipts Available Inventory Net Requirements Planned Order Receipts Planned Order Release

Part Name: Motor

Week Week Week Week Week Week Week Week 1 2 3 4 5 6 7 8 6,000 8,000 10,000 10,000 10,000 8,000 6,000 8,000 5,600 8,000 500 100

What is the planned order release for week 4?

A) 0 B) 10,000 C) 8,000 D) 6,000 Answer: C Explanation: The net requirement in week 6 is 8,000 units. Working backward by the two-week lead time, an order must be released for 8,000 units in week 4.

Difficulty: 3 Hard Topic: MRP Process Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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20) Significant changes in an MPS quantity several weeks into the planning horizon can: A) Make the MRP more accurate.

B) Cause inconsistencies in the MRP. C) Reduce stockouts.

D) Increase safety stock.

Answer: B Explanation: Changes in the MPS during the planning horizon can cause nervousness, which is inconsistencies in the MRP plan.

Difficulty: 1 Easy Topic: MRP Outputs and Use Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 21) Constant changing of the master schedule and the resulting changes in the requirements for components is referred to as: A) Master schedule dynamics.

B) System nervousness.

C) Bad planning.

D) MRP failure.

Answer: B Explanation: Changes in the MPS during the planning horizon can cause nervousness, which is inconsistencies in the MRP plan.

Difficulty: 1 Easy Topic: MRP Outputs and Use Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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22) The positioning and replenishment of finished goods inventories at the retail level can be determined using: A) MRP. B) CRP. C) DRP. D) RFID. Answer: C Explanation: DRP (distribution requirements planning) is the system used to help in positioning and replenishing finished goods inventory in a system.

Difficulty: 1 Easy Topic: Distribution Requirements Planning (DRP) Learning Objective: 14-03 Explain how distribution requirements planning (DRP) is used.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 23) Zanda Company is looking for a requirements planning system to help plan replenishment of its finished goods throughout its network of distribution centers. The type of system Zanda should consider is known as: A) CRP. B) DRP. C) MRP. D) ERP. Answer: B Explanation: DRP (distribution requirements planning) is the system used to help in positioning and replenishing finished goods inventory in a system.

Difficulty: 2 Medium Topic: Distribution Requirements Planning (DRP) Learning Objective: 14-03 Explain how distribution requirements planning (DRP) is used.

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24) Capacity requirements planning does all of the following EXCEPT: A) Determine if a work center has the capacity to implement the MRP plan.

B) Use planned order releases and scheduled receipts to estimate work center loads.

C) Develop a load profile.

D) Recalculate the MRP plan.

Answer: D Explanation: Capacity Requirements can identify where capacity is overloaded or underloaded but does not revise the MRP plan.

Difficulty: 1 Easy Topic: Capacity Requirements Planning (CRP).

Learning Objective: 14-04 Conduct capacity requirements planning (CRP) using an infinite loading approach.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 25) The following table shows capacity requirements data for making Blodgetts.

Processing time per unit = 2 hours Planned order releases Processing load Available capacity

Period 1 Period 2 Period 3 Period 4 Period 5 300 400 340 375 325 700

700

700

700

700

A load profile would show: A) Load above capacity in periods 3 and 5.

B) Load below capacity in periods 1 and 3.

C) Load is exactly equal to capacity in period 5.

D) None of these.

Answer: B Explanation: To equal capacity, planned releases would have to be 350 in a period to result in 700 hours of processing load.

Difficulty: 3 Hard Topic: Capacity Requirements Planning (CRP).

Learning Objective: 14-04 Conduct capacity requirements planning (CRP) using an infinite loading approach.

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26) The following table shows capacity requirements data for making tabletops.

Processing time per unit = 10 minutes Planned order releases (units) Processing load (hours) Available capacity (hours)

Day 1 Day 2 Day 3 Day 4 Day 5 40 46 40 54 50 8

8

8

8

8

Which of the following is TRUE? A) Overtime is needed in day 1.

B) Capacity exactly meets demand in day 5.

C) All of the excess demand in days 4 and 5 can be shifted to day 3.

D) New machines are needed.

Answer: C Explanation: With the current capacity, exactly 48 units can be made each day. The excess of order releases (demand) over capacity in day 4 is six and in day 5 is two. These units can be shifted to day 3, and capacity would exactly meet demand in days 3 through 5.

Difficulty: 3 Hard Topic: Capacity Requirements Planning (CRP).

Learning Objective: 14-04 Conduct capacity requirements planning (CRP) using an infinite loading approach.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 27) Software that consolidates all of the business planning systems and data throughout an organization is: A) MPS. B) MRP. C) DRP. D) ERP. Answer: D Explanation: An ERP system consolidates all of the business planning systems and data throughout an organization.

Difficulty: 1 Easy Topic: Advances in Planning Systems Learning Objective: 14-05 Describe how materials requirements and resource planning functions work together within an enterprise resource planning (ERP) system.

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28) Benefits of ERP systems include all of the following EXCEPT: A) Easy implementation.

B) Fewer data entry errors.

C) More informed business decisions.

D) Improved customer service.

Answer: A Explanation: ERP systems are complex and can be difficult to implement.

Difficulty: 2 Medium Topic: Advances in Planning Systems Learning Objective: 14-05 Describe how materials requirements and resource planning functions work together within an enterprise resource planning (ERP) system.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 29) Advanced planning and scheduling systems: A) Use a similar logic to the logic used in MRP. B) Consolidate all business planning systems and data throughout an organization.

C) Integrate materials and capacity planning into one system.

D) All of these.

Answer: A Explanation: APS does not consolidate all planning (ERP does that). APS does use logic similar to MRP and integrates materials and capacity planning.

Difficulty: 1 Easy Topic: Advances in Planning Systems Learning Objective: 14-06 Explain how advanced planning systems and scheduling (APS) systems improve the requirements and resource planning process.

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30) The primary purpose of an MRP system is to: A) Develop forecasts.

B) Plan transportation and deliveries.

C) Schedule personnel.

D) Match supply and demand.

Answer: D Explanation: The primary purpose of an MRP system is to match supply and demand.

Difficulty: 1 Easy Topic: Materials Requirements Planning Learning Objective: 14-01 Explain the materials requirements planning (MRP) process and when it should be used.; 14-06 Explain how advanced planning systems and scheduling (APS) systems improve the requirements and resource planning process.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 31) Which of the following would benefit the most from MRP? A) Gasoline production.

B) Building of a new bridge.

C) Production of vacuum cleaners.

D) Production of aluminum soft drink cans.

Answer: C Explanation: Vacuum cleaners are moderately complex, discrete products that are produced in batches, good candidates for the use of MRP for planning.

Difficulty: 3 Hard Topic: Materials Requirements Planning Learning Objective: 14-01 Explain the materials requirements planning (MRP) process and when it should be used.

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32) Which of the following is NOT an input to an MRP system?

A) Order releases.

B) Actual orders.

C) Inventory receipts.

D) Bill of materials.

Answer: A Explanation: Order releases are outputs from an MRP system.

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 33) All of the following are outputs from an MRP system EXCEPT: A) Order releases.

B) Change orders.

C) Forecasts.

D) Exception reports.

Answer: C Explanation: Forecasts are inputs to an MRP system.

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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34) An MPS shows: A) The change orders that are required.

B) The quantities of end items to be completed in each time period.

C) The number of each type of part that is needed to make the final product.

D) The scheduled releases for all parts and components.

Answer: B Explanation: The quantities of end items to be completed in each time period are shown in an MPS. Difficulty: 2 Medium Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 35) If the planning horizon is 12 weeks, the cumulative lead time must be: A) Greater than 12 weeks.

B) Exactly equal to 12 weeks.

C) Greater than six weeks.

D) Less than or equal to 12 weeks.

Answer: D Explanation: The cumulative lead time must be less than or equal to 12 weeks.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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36) The entire time period covered by the MPS is the: A) Time bucket.

B) Cumulative lead time.

C) Planning horizon.

D) Production schedule.

Answer: C Explanation: The entire time period covered by the MPS is the planning horizon.

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 37) A master production schedule shows the beginning inventory is 50 units, the forecast is 80 units, and actual customer orders are 70 units. Using a lot-for-lot rule, what is the MPS quantity for period 1?

A) 30 B) 80 C) 70 D) 20 Answer: A Explanation: The largest of the forecast or customer orders is evaluated. Since the forecast is greater than the customer orders, 80 − 50 = 30 is the number of units that is in the MPS. Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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38) A master production schedule shows the beginning inventory is 100 units, the forecast is 250 units, and actual customer orders are 400 units. Using a lot-for-lot rule, what is the MPS quantity for period 1?

A) 150 B) 250 C) 300 D) 400 Answer: C Explanation: The largest of the forecast or customer orders is evaluated. Since the customer orders are greater than the forecast, 400 − 100 = 300 is the number of units that is in the MPS. Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 39) A master production schedule shows the beginning inventory is 200 units, the forecast is 600 units, and the actual customer orders is 500 units. Using a lot-for-lot rule, what is the MPS quantity for period 1?

A) 400 B) 300 C) 600 D) 500 Answer: A Explanation: The largest of the forecast or customer orders is evaluated. Since the forecast is greater than the customer orders, 600 − 200 = 400 is the number of units that is in the MPS. Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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40) A master production schedule shows the beginning inventory is 40 units, the forecast is 100 units, and actual customer orders are 80 units. What is the quantity that is available to promise in period 1?

A) 40 B) 80 C) 100 D) 60 Answer: D Explanation: The largest of the forecast or customer orders is evaluated. Since the forecast is greater than the customer orders, 100 − 40 = 60 is the number of units that is available to promise.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 41) A master production schedule shows the beginning inventory is 50 units, the forecast is 200 units, and actual customer orders are 220 units. What is the quantity that is available to promise in period 1?

A) 50 B) 150 C) 170 D) 0 Answer: D Explanation: The largest of the forecast or customer orders is evaluated. Since the customer orders are greater than the forecast, 220 − 50 = 170 is the number of units that is in the MPS. Since the MPS plus the on-hand inventory equal the actual customer orders the available to promise is zero.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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42) A detailed description of an "end item" along with a list of all of its raw materials, parts, and subassemblies is shown in a: A) MPS. B) Planning horizon.

C) BOM. D) DRP. Answer: C Explanation: A detailed description of an "end item" along with a list of all of its raw materials, parts, and subassemblies is shown in a bill of materials (BOM).

Difficulty: 1 Easy Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 43) A company has decided to outsource the production of key components for its main product to suppliers. What effect will this have on the product's bill of materials?

A) None.

B) The bill of materials will be wider.

C) The bill of materials will be deeper.

D) The bill of materials will be flatter.

Answer: D Difficulty: 2 Medium Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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44) An end item A is made by assembling four of component B and one of component C. Component B is made from two of part D and four of part E. Within the bill of materials, component B is considered to be: A) Level 0.

B) Level 1.

C) Level 2.

D) Level 3.

Answer: B Explanation: Item B is considered to be a level 1 item.

Difficulty: 2 Medium Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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45) An MRP schedule is as follows. What are the net requirements in week 2?

MRP Record Lead time = 1 weeks on hand = 50 Safety stock = 20 Order quantity: L4L Gross Requirements Scheduled Receipts Available Inventory Net Requirements Planned Order Receipts

Part Name: Pump

Week Week Week Week Week Week Week Week 1 2 3 4 5 6 7 8 20 30 40 40 60 40 50 20

A) 0 units.

B) 20 units.

C) 30 units.

D) 50 units.

Answer: B Explanation: At the end of week 1, the available inventory is 50 units − 20 units = 30 units. The gross requirements in week 2 are 30, so the on-hand inventory − 30 = 0. However, 20 units of safety stock are required so the net requirements are 20 units.

Difficulty: 3 Hard Topic: MRP Inputs Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

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46) Which of the following pieces of information is NOT contained in an MRP secondary report?

A) Cost.

B) Inventory levels.

C) Schedule attainment.

D) Planned order releases.

Answer: D Explanation: Planned order releases are contained in primary reports, not secondary reports.

Difficulty: 1 Easy Topic: MRP Outputs and Use Learning Objective: 14-02 Conduct MRP planning for items at multiple levels in the bill of materials (BOM).

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 47) Distribution requirements planning: A) Uses logic that starts at the manufacturing plant and works forward toward the customer.

B) Includes only firm orders in its calculations.

C) Uses logic similar to MRP, beginning at the point closest to the customer.

D) Is normally not included as a module in ERP software.

Answer: C Explanation: DRP uses logic similar to MRP to create gross requirements, beginning at retailers or the point closest to consumers.

Difficulty: 2 Medium Topic: Distribution Requirements Planning (DRP) Learning Objective: 14-03 Explain how distribution requirements planning (DRP) is used.

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48) The available capacity of a worker, machine, work center, or facility during a specific period of time is compared against the capacity needed for a specific work schedule in a: A) Load profile.

B) Capacity profile.

C) Infinite load.

D) DRP. Answer: A Explanation: A load profile compares weekly capacity needs against the actual capacity that is available.

Difficulty: 1 Easy Topic: Capacity Requirements Planning (CRP).

Learning Objective: 14-04 Conduct capacity requirements planning (CRP) using an infinite loading approach.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 49) The planned order releases in week 5 are 10 units. Each unit must be processed for five minutes at the workstation. If the available capacity at the workstation is one hour: A) Overtime will be needed.

B) Delivery lead times should be increased.

C) The workstation is underloaded.

D) An order backlog will be created.

Answer: C Explanation: The required capacity is 10 units × 5 minutes = 50 minutes. The workstation has 60 minutes of capacity, so it is underloaded.

Difficulty: 3 Hard Topic: Capacity Requirements Planning (CRP).

Learning Objective: 14-04 Conduct capacity requirements planning (CRP) using an infinite loading approach.

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50) Demand-driven MRP: A) Compares materials and capacity requirements within a single firm.

B) Extends planning across the supply chain.

C) Focuses on distribution planning.

D) Is also called advanced planning and scheduling.

Answer: B Explanation: Demand-driven MRP goes beyond a single organization to extend planning across the entire supply chain.

Difficulty: 1 Easy Topic: Advances in Planning Systems Learning Objective: 14-05 Describe how materials requirements and resource planning functions work together within an enterprise resource planning (ERP) system.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 15S Supplement: Advanced Methods for Project Scheduling 1) In evaluating time-cost trade-offs, we start by crashing the task on the critical path that: A) Has the lowest cost to reduce by one unit of time.

B) Has the lowest total crash cost.

C) Can be reduced the most.

D) Is the longest.

E) None of these.

Answer: A Explanation: Crashing begins by reducing the task that has the lowest cost to reduce by one unit of time in the project.

Difficulty: 1 Easy Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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2) Annie is planning a large surprise party for her sister Gwendolyn. She has developed the following plan, including estimates of the time (in hours) and cost necessary to perform each of the tasks required.

Task A. Create Guest List B. Send Invitations C. Buy Decorations D. Plan Menu E. Purchase Food F. Prepare Food

Immediate Predecessor -A A A D E

Planned Duration 8 2 8 3 4 5

Minimum Duration 4 1 6 2 2 3

Crash Cost per Hour $ 27.50 $ 25.00 $ 35.00 $ 60.00 $ 37.50 $ 125.00

What is the planned duration of the preparation for the surprise party, assuming the critical path is completed?

A) 16 hours B) 8 hours C) 20 hours D) 30 hours Answer: C Explanation: The critical path is A, D, E, F at 20 hours. Path AB is 10 hours. Path AC is 16 hours.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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3) Annie is planning a large surprise party for her sister Gwendolyn. She has developed the following plan, including estimates of the time (in hours) and cost necessary to perform each of the tasks required.

Task A. Create Guest List B. Send Invitations C. Buy Decorations D. Plan Menu E. Purchase Food F. Prepare Food

Immediate Predecessor -A A A D E

Planned Duration 8 2 8 3 4 5

Minimum Duration 4 1 6 2 2 3

Crash Cost per Hour $ 27.50 $ 25.00 $ 35.00 $ 60.00 $ 37.50 $ 125.00

Annie will save $40 for every hour she can reduce from her plan. Annie has decided to crash her project and use the money she saves to purchase a larger gift for Gwendolyn. Which task should she crash first?

A) A B) D C) C D) E E) B Answer: A Explanation: The critical path is A, D, E, F at 20 hours. Path AB is 10 hours. Path AC is 16 hours. Activity A has the lowest crash cost of the activities on the critical path.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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4) Annie is planning a large surprise party for her sister Gwendolyn. She has developed the following plan, including estimates of the time (in hours) and cost necessary to perform each of the tasks required.

Task A. Create Guest List B. Send Invitations C. Buy Decorations D. Plan Menu E. Purchase Food F. Prepare Food

Immediate Predecessor -A A A D E

Planned Duration 8 2 8 3 4 5

Minimum Duration 4 1 6 2 2 3

Crash Cost per Hour $ 27.50 $ 25.00 $ 35.00 $ 60.00 $ 37.50 $ 125.00

Annie will save $40 for every hour she can reduce from her plan. If Annie crashes only task A to its minimum duration, how much will she save on the project?

A) $55 B) $185 C) $160 D) $50 Answer: D Explanation: Crash A by four hours at a cost of $110 and a benefit of $160 (4 × $40). Net benefit: $50.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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5) Annie is planning a large surprise party for her sister Gwendolyn. She has developed the following plan, including estimates of the time (in hours) and cost necessary to perform each of the tasks required.

Task A. Create Guest List B. Send Invitations C. Buy Decorations D. Plan Menu E. Purchase Food F. Prepare Food

Immediate Predecessor -A A A D E

Planned Duration 8 2 8 3 4 5

Minimum Duration 4 1 6 2 2 3

Crash Cost per Hour $ 27.50 $ 25.00 $ 35.00 $ 60.00 $ 37.50 $ 125.00

If Annie has already crashed task A to its minimum duration, what is the next task she should crash?

A) A B) C C) E D) F Answer: C Explanation: Task E has the next lowest crash cost per hour on the critical path.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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6) Annie is planning a large surprise party for her sister Gwendolyn. She has developed the following plan, including estimates of the time (in hours) and cost necessary to perform each of the tasks required.

Task A. Create Guest List B. Send Invitations C. Buy Decorations D. Plan Menu E. Purchase Food F. Prepare Food

Immediate Predecessor -A A A D E

Planned Duration 8 2 8 3 4 5

Minimum Duration 4 1 6 2 2 3

Crash Cost per Hour $ 27.50 $ 25.00 $ 35.00 $ 60.00 $ 37.50 $ 125.00

If Annie saves $40 for every hour she can reduce from her plan, what is her total net benefit from crashing this project by six hours?

A) $55 B) $185 C) $160 D) $240 Answer: A Explanation: Savings from crashing: Crash E by two hours at a cost of $75 and a benefit of $80. Net benefit: $5.

The total cost of crashing A and E is $185, and the total benefit is $240. The net benefit is $240 − $185 = $55.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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7) Task A B C D E F

Immediate Predecessor -A A B,C B D,E

Planned Duration

Minimum Duration 10 16 12 17 14 6

8 4 9 16 13 2

Crash Cost per Hour $ 250 $ 400 $ 100 $ 300 $ 300 $ 350

Identify the critical path to completion for the project plan.

A) A, C, D, F is 45 hours.

B) A, B, C, D, E, F is not a path.

C) A, B, E, F is 46 hours.

D) A, B, D, F is 49 hours Answer: D Explanation: The path A, B, D, F is 49 hours. A, B, E, F is 46 hours. A, C, D, F is 45 hours. A, B, C, D, E, F is not a path.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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8) Task A B C D E F

Immediate Predecessor -A A B,C B D,E

Planned Duration

Minimum Duration 10 16 12 17 14 6

8 4 9 16 13 2

Crash Cost per Hour $ 250 $ 400 $ 100 $ 300 $ 300 $ 350

If there is a desire to crash the project, which task should be crashed first?

A) A B) B C) D D) F Answer: A Explanation: Of the tasks on the critical path, Task A has the lowest crash cost.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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9) Task A B C D E F

Immediate Predecessor -A A B,C B D,E

Planned Duration

Minimum Duration 10 16 12 17 14 6

8 4 9 16 13 2

Crash Cost per Hour $ 250 $ 400 $ 100 $ 300 $ 300 $ 350

If the project is crashed so that all work can be completed in 45 hours, what is the total crash cost?

A) $650 B) $950 C) $1,150 D) $1,450 Answer: C Explanation: A total of four hours of reduction is needed. Task A should be crashed by two hours for a total cost of $500. Then Task D should be crashed by the one hour possible for it at a cost of $300. Finally Task F should be crashed for one hour at a cost of $350. Total cost = $1,150.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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10) A project manager has discovered that three tasks are on the critical path for a particular project. She has developed the time estimates (in days) shown in the table below. Complete the table and determine the expected completion time for the project.

Worst Case

Task Best CaseMost Likely A 5 8 B 2 4 C 3 5

Expected Duration

Standard Deviation

Standard Deviation Squared

14 9 7

A) 17 days B) 18 days C) 21 days D) 19 days Answer: B Explanation: Expected completion time for the project is 18 days.

Best Task Case A B C

5 2 3

Most Worst Likely Case 8 4 5

14 9 7

Standard Expected Standard Deviation Duration Deviation Squared (5 + 8 × 4 + (14 − 5)/6 = 14)/6 = 8.5 1.5 2.25 4.5 1.167 1.36 5.0 .667 .444

Difficulty: 1 Easy Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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11) A project manager has discovered that three tasks are on the critical path for a particular project. She has developed the time estimates (in days) shown in the table below. Complete the table and determine the probability that the project will be completed in 20 days or less.

Worst Case

Task Best CaseMost Likely A 5 8 B 2 4 C 3 5

Expected Duration

Standard Deviation

Standard Deviation Squared

14 9 7

A) Approximately 92 percent B) Approximately 88 percent C) Approximately 75 percent D) Approximately 84 percent Answer: D Explanation: Best Task Case A B C

5 2 3

Most Worst Likely Case 8 4 5

14 9 7

Standard Expected Standard Deviation Duration Deviation Squared (5 + 8 × 4 + (14 − 5)/6 = 14)/6 = 8.5 1.5 2.25 4.5 1.167 1.36 5.0 .667 .444

tpath= 8.5 + 4.5 + 5.0 = 18 days Standard deviation of the path = Square root of (2.25 + 1.36 + .444) = 2.01 For completion within 20 days: z = (20 − 18)/2.01 = 0.995. From a standard normal table, F(z) = approximately 0.8413 = approximately 84 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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12) A project manager has discovered that three tasks are on the critical path for a particular project. She has developed the time estimates (in days) shown in the table below.

Worst Case

Task Best CaseMost Likely A 5 8 B 2 4 C 3 5

Expected Duration

Standard Deviation Squared

Standard Deviation

14 9 7

The customer has offered a $10,000 bonus if the project is completed within 14 days. What is the probability that the bonus will be earned?

A) Approximately 85 percent B) Approximately 5 percent C) Approximately 2.3 percent D) Approximately 97.7 percent Answer: C Explanation: Best Task Case A B C

5 2 3

Most Likely 8 4 5

Worst Case 14 9 7

Expected Standard Duration Deviation (5 + 8 × 4 + (14 − 5)/6 = 14)/6 = 8.5 1.5 4.5 1.167 5.0 .667

Standard Deviation Squared 2.25 1.36 .444

tpath= 8.5 + 4.5 + 5.0 = 18 days Standard deviation of the path = Square root of (2.25 + 1.36 + .444) = 2.01 For completion within 14 days: z = (14 − 18)/2.01 = −1.99. From a standard normal table, 1 − F(z) = approximately 0.023 = approximately 2.3 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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13) A simple sequential project (each task must be completed before the next one can begin) has the time estimates (in days) shown below:

Task A B C D E F

Best Case 2 1 .5 1.5 .5 .4

Most Likely 3 1.5 1 2 1 .5

Worst Case

Expected Duration

Standard Deviation

Standard Deviation Squared

4 2 1.5 2.5 1.5 .6

What is the expected total time for the project?

A) 7.33 days B) 9.00 days C) 10 days D) 12.67 days Answer: B Explanation: In this problem, the expected durations for each task will all be equal to the most likely durations since the worst case and best case are an equal distance from the most likely case.

Difficulty: 2 Medium Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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14) A simple sequential project (each task must be completed before the next one can begin) has the time estimates (in days) shown below:

Task A B C D E F

Best Case 2 1 .5 1.5 .5 .4

Most Likely 3 1.5 1 2 1 .5

Worst Case

Expected Duration

Standard Deviation

Standard Deviation Squared

4 2 1.5 2.5 1.5 .6

What is the likelihood the project will be completed in 10 days?

A) Between 88 and 88 percent B) Between 89 and 92 percent C) Between 93 and 97 percent D) Between 98 and 100 percent Answer: D Explanation: Standard Expecte Standard Deviatio Best Most Worst d Deviatio n Activity Predecessor Case Likely Case Duration n Squared A 2 3 4 3 .33 .1089 B A 1 1.5 2 1.5 .17 .0289 C B .5 1 1.5 1 .17 .0289 D C 1.5 2 2.5 2 .17 .0289 E D .5 1 1.5 1 .17 .0289 F E .4 .5 .6 .5 .03 .0011

Standard deviation of the path = square root of the sum of the tasks' standard deviation squared = square root of (.1089 + .0289 + .0289 + .0289 + .0289 + .0011) = square root of .2256 = .475.

Therefore z = (10 − 9)/.475 = 2.105, and from a standard normal table, the probability is approximately 98.2 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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15) A simple sequential project (each task must be completed before the next one can begin) has the time estimates (in days) shown below:

Task Best Case Most Likely Worst Case A 2 3 4 B 1 1.5 2 C .5 1 1.5 D 1.5 2 2.5 E .5 1 1.5 F .4 .5 .6

Expected Duration

Standard Deviation

Standard Deviation Squared

What is the probability that the project will be completed within 8.5 days? (Choose the closest answer.)

A) 80 percent B) 15 percent C) 75 percent D) 5 percent Answer: B Explanation: Standard Expecte Standard Deviatio Best Most Worst d Deviatio n Activity Predecessor Case Likely Case Duration n Squared A 2 3 4 3 .33 .1089 B A 1 1.5 2 1.5 .17 .0289 C B .5 1 1.5 1 .17 .0289 D C 1.5 2 2.5 2 .17 .0289 E D .5 1 1.5 1 .17 .0289 F E .4 .5 .6 .5 .03 .0011

Standard deviation of the path = square root of the sum of the tasks' standard deviation squared = square root of (.1089 + .0289 + .0289 + .0289 + .0289 + .0011) = square root of .2256 = .475 z = (8.5 − 9)/.475 = −0.5/.475 = 1.053. F(z) = approximately 0.75, and 1 − F(z) = approximately 15 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 16) Which of the following statements best describes "crash cost"?

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A) Estimated cost to reduce a project task duration by one time unit.

B) Estimated cost to reduce a project duration by one time unit.

C) Estimated cost to reduce the project schedule by one time unit.

D) Actual cost to reduce a project duration by one time unit.

E) Actual cost to change a project schedule.

Answer: A Explanation: Crash cost is the estimated cost to reduce a given task; it may or may not reduce the project length, depending on other factors.

Difficulty: 1 Easy Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 17) Given the tasks, estimated durations, and crash costs shown below, what is the total cost of the steps needed to provide the cheapest way to reduce the project length by three days?

Task A B C D E

Estimated Predecessors duration (days) none 2 A 3 A 3 B,C 4 D

3

Crash cost per day $ 1000 $ 400 $ 300 $ 800 Cannot be crashed

Number of days task can be crashed 2 1 2 1 0

A) $2,800 B) $2,500 C) $1,100 D) $2,300 Answer: B Explanation: Crash both B and C one day, then D one day, then A one day.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 18) Given the tasks, estimated durations, and crash costs shown below, if the benefit to crash the project by each day is a maximum of $750, how many days would it be worthwhile to crash the project?

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Task A B C D

Estimated Predecessors duration (days) none 2 A 3 A 3 B,C 4

E

D

3

Crash cost per day $ 1000 $ 400 $ 300 $ 800 Cannot be crashed

Number of days task can be crashed 2 1 2 1 0

A) 0 B) 1 C) 2 D) 3 E) 4 Answer: B Explanation: The cost to crash the second day is $800, so the benefit would not justify the cost.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 19) Which of the following statements is true regarding crash costs?

A) Crash costs tend to increase with each additional day of crashing.

B) Crash costs tend to decrease with each additional day of crashing.

C) It is usually cheaper to crash tasks that are not on the critical path.

D) Additional crash costs are rarely justified in practice.

Answer: A Explanation: Crash costs increase for several reasons, one of which is that, as multiple paths become critical, multiple tasks must be crashed in order to reduce the project an additional time unit.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 20) An estimate of the duration of a task that is based on a weighted average of a range of possible task durations is known as: A) Most likely duration.

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B) Expected duration.

C) Worst-case duration.

D) Probabilistic duration.

Answer: B Explanation: Expected duration is the outcome of the weighted average of best-case, worstcase, and most likely case durations.

Difficulty: 1 Easy Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 21) Task X has a best-case duration of 4 days, a worst-case duration of 10 days, and a most likely duration of 6 days. Using this information, we can estimate a 50 percent probability that the task will be completed in no more than how many days?

A) 6.0 days B) 3.3 days C) 10.0 days D) 6.3 days Answer: D Explanation: Expected time is the time for which there is a 50 percent chance that the task will be completed at that time or earlier. Expected time = (4 + 4 × 6 + 10)/6 = 6.3 days.

Difficulty: 2 Medium Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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22) Given the project data below, what is the expected length of path A, B, C?

Task A B C

Predecessors None A B

Most Likely Best Case case 2 4 1 4 .5 1

Worst Case 6 5 6

A) 9.0 B) 9.8 C) 9.4 D) 17 Answer: C Explanation: Expected duration for each task is (B + 4ML + W)/6. Sum up the three expected values to get the expected value for the path.

Therefore, 4.00 + 3.67 + 1.75 = 9.42, or about 9.4.

Difficulty: 2 Medium Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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23) Given the project data below, what is the standard deviation of durations for path A, B, C?

Task A B C

Predecessors None A B

Most Likely Best Case case 2 4 1 4 .5 1

Worst Case 6 5 6

A) 1.3 B) 2.3 C) 1.7 D) None of the choices are correct Answer: A Explanation: Standard deviation for each task is (Worst case − Best case)/6. Square each standard deviation, sum them up, and take the square root to get the standard deviation for the path.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 24) If a project path has an expected duration of 10 days and a standard deviation of three days, what is the probability that the path will be completed in 10 days or less?

A) 0 percent B) 33 percent C) 50 percent D) 75 percent Answer: C Explanation: By definition, the expected value for the path duration is the time for which there is a 50 percent probability that the path will be completed in this time or less.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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25) If a project path has an expected duration of 10 days and a standard deviation of three days, what is the probability that the path will be completed in 13 days or less?

A) 50 percent B) 33 percent C) 75 percent D) 84 percent Answer: D Explanation: For completion within 13 days: z = (13 − 10)/3 = 1.0.

From a standard normal table, F(z) = approximately 0.84 = approximately 84 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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26) Given the project plan shown below, for each task assume that the best-case duration is 80 percent of the most likely duration, and the worst-case duration is 150 percent of the most likely duration. What is the expected completion time for the critical path?

Task ID A B C D E F G

Immediate Predecess ors Most Likely duration (days) 4 5 6 A,B,C 5 D 7 D 4 E,F 3

A) 34 days B) 21.0 days C) 35.7 days D) 22.1 days Answer: D Explanation: a = .8m m b = 1.5m (a + 4m + b)/6 Best case Most likely Worst case Expected Critical path A 3.2 4 6 4.2 B 4 5 7.5 5.25 C 4.8 6 9 6.3 6.3 D 4 5 7.5 5.25 5.25 E 5.6 7 10.5 7.35 7.35 F 3.2 4 6 4.2 G 2.4 3 4.5 3.15 3.15 Total duration

35.7

22.05

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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27) The four tasks below must be completed in order (a single path of tasks). Given the task information, what is the probability that the path of tasks will be completed in 20 days or less?

Task number 1 2 3 4

Expected duration (days) 5 3 4 5

Standard deviation of duration (days) 2 1 2 3

A) 34 percent B) 56.4 percent C) 50 percent D) 76.0 percent Answer: D Explanation: Task number 1 2 3 4 Total

Expected duration Standard deviation (days) of duration (days) Variance = std dev2 5 2 4 3 1 1 4 2 4 5 3 9 17 4.24 18

Z = (20 − 17)/4.24 = 0.708; Z table yields 76.0 percent probability.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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28) Given the project plan shown below, which task has the largest standard deviation (uncertainty) relative to its expected duration (standard deviation divided by expected duration)?

Immediate Task ID Predecessors A B C D A,B,C E D F D G E,F

Most likely duration (days) 4 5 6 5 7 4 3

Best-case duration (days) 3 2 6 3 6 2 2

Worst-case duration (days) 7 8 9 8 9 5 4

A) Task A B) Task B C) Task D D) Task G Answer: B Explanation: Most Best- Worst- Expecte Immediate likely case case d Std Std Task Predecesso duratio duration duration (a + 4m dev (b Dev/expect ID rs n (days) (days) (days) + b)/6 − a)/6 ed A 4 3 7 4.33 0.67 0.154 B 5 2 8 5 1 0.2 C 6 6 9 6.5 0.5 0.077 D A,B,C 5 3 8 5.17 0.83 0.161 E D 7 6 9 7.17 0.5 0.07 F D 4 2 5 3.83 0.5 0.13 G E,F 3 2 4 3 0.33 0.111

Task B has the largest standard deviation relative to its expected (mean) duration. This is an indication of relative uncertainty for the task.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 29) Task X has a most likely duration of 10 days, a best-case duration of 8 days, and a worst24 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

case duration of 15 days. What is the probability that it will be completed in 12 days or less?

A) 0 percent B) 95.7 percent C) 90.1 percent D) 75.3 percent Answer: C Explanation: Expected Worst-case (a + 4m + Std dev (b Most likely Best-case duration (days) duration (days) duration (days) b)/6 − a)/6 10 8 15 10.50 1.17

Z = (12 − 10.5)/1.17 = 1.29; from Z table, probability is 90.07 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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30) Task X has a most likely duration of 10 days, a best-case duration of 8 days, and a worstcase duration of 15 days. What is the probability that it will be completed in 10 days or less?

A) 0 percent B) 50.0 percent C) 33.4 percent D) 83.4 percent Answer: C Explanation: S= (12 −– 10.5)/1.17 = 1.29; from Z table, probability is BestExpected 90.07% Most likely case duration Worst-case (a + 4m + percenttd duration (days) (days) duration (days) b)/6 dev (b − a)/6 10 8 15 10.50 1.17

Z = (10 − 10.5)/1.17 = −0.43; from Z table, probability is 33.4 percent.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 31) Task X has an 82 percent probability that it will be completed in 20 days or less. The standard deviation of its duration is five days. What is its expected duration?

A) 15.4 days B) 15.9 days C) 19.1 days D) 12.3 days Answer: A Explanation: From Z table, a probability of 82 percent yields Z = 0.915; 20 − 0.915 × 5 = 15.42.

Difficulty: 3 Hard Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Given the tasks, estimated durations, and crash costs shown below, which task would you 26 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

crash first?

Task A B C D E

Predecessors A A B, C D

Estimated duration (days) 1 5 3 2 7

Crash cost per day $ 1,000 $ 500 $ 200 $ 800 $ 700

A) Task A B) Task B C) Task C D) Task D E) Task E Answer: B Explanation: Task C is the cheapest to crash, but it is not on the critical path. Task B is the next cheapest and is on the critical path.

Difficulty: 2 Medium Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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33) Given the tasks, estimated durations, and crash costs shown below, which task would you crash last in order to minimize the project length?

Task A B C D E

Estimated Crash cost Number of days task can be Predecessors duration (days) per day crashed 1 $ 1,000 1 A 5 $ 500 1 A 3 $ 1,200 2 B, C 2 $ 800 1 D 7 $ 700 1

A) Task A B) Task B C) Task C D) Task D E) Task E Answer: A Explanation: Task A is the most expensive critical path task to crash. Task C is not on the critical path so crashing it would not reduce the project length.

Difficulty: 1 Easy Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

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34) Given the tasks, estimated durations, and crash costs shown below, what would be the minimum cost to reduce the project by one day?

Task A B C D E

Estimated Crash cost Number of days task can be Predecessors duration (days) per day crashed 1 $ 1,000 2 A 5 $ 500 1 A 5 $ 200 2 B, C 2 $ 900 1 D 7 $ 800 1

A) $200 B) $500 C) $700 D) $800 E) $1,000 Answer: C Explanation: All tasks are critical. The cheapest way to reduce the project is to crash both Tasks B and C by one day each.

Difficulty: 3 Hard Topic: Project Crashing: Making Time-Cost Trade-Offs Learning Objective: 15S-01 Make time and cost trade-offs in projects.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 35) For a project with many task paths of nearly equal lengths, the best way to estimate the probabilities associated with project completion is: A) Estimate the probability for the critical path B) Multiply the probabilities of all paths C) Use simulation to model the project D) Calculate the joint probability of project completion Answer: C Explanation: Project paths are usually not independent (they share tasks). This makes it difficult to estimate probabilities, so simulation is needed.

Difficulty: 1 Easy Topic: Scheduling a Project with Probabilistic Task Duration Estimates Learning Objective: 15S-02 Schedule projects using probabilistic task time estimates.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 15 Project Management 1) Which of the following statements about projects and project management is NOT true?

A) A project is typically a one-time event.

B) Completing a project within budget is the most critical criterion for project success.

C) Projects are typically staffed with people from several different functional areas who may have more loyalty to their function than to the project.

D) None of the statements are true.

Answer: B Explanation: There are three critical criteria for success: that it is completed within budget and on time, and that it meets the deliverables of the project.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-01 Explain the difference between projects and other more routine operational processes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 2) Which of the following are factors affecting the success of a project?

A) Experience and authority of team members.

B) Equipment, facilities, and communications systems.

C) Organizational structure and reward systems.

D) All items are correct.

Answer: D Explanation: Personnel factors affect success. Technology factors affecting project success include hard and soft technologies. Equipment, facilities, and communication systems are hard technologies. Organizational structure and reward systems are examples of soft technologies.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-02 Manage the social and technical factors that are critical for project success.

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3) Nearly all projects seem to go through the same phases in the following sequence: A) Planning, definition, execution, and completion B) Definition, planning, delivering, and closing C) Definition, planning, execution, and completion D) Selection, planning, delivering, and completion Answer: C Explanation: There are four phases in a project's life: definition, planning, execution, and completion.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-02 Manage the social and technical factors that are critical for project success.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 4) Typically the resources required during a project's life are greatest in which stage of its life?

A) Planning B) Definition C) Completion D) Execution Answer: D Explanation: The resource load is typically highest in the execution stage of a project's life.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-02 Manage the social and technical factors that are critical for project success.

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5) What is a key factor that must be considered when an organization evaluates the potential of a project?

A) The project's fit with overall organizational strategy.

B) The availability of resources to execute the project.

C) The business justification for investing in the project.

D) All items are correct.

Answer: D Explanation: Strategic fit, financial returns (or other business justification), and feasibility (including resource availability) are all key in the evaluation of projects.

Difficulty: 1 Easy Topic: Managing a Portfolio of Projects Learning Objective: 15-05 Fashion criteria to guide project selection and management of a portfolio of projects.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 6) Zanda Corp. has decided that it needs a project team to implement a new ERP system. It wants the system implemented as soon as possible. Given this criterion, Zanda should choose a: A) Matrix organizational structure.

B) Pure project structure.

C) Functional project structure.

D) Line and staff organization structure.

Answer: B Explanation: Pure project structure is most appropriate when speed is critical.

Difficulty: 1 Easy Topic: Project Planning Learning Objective: 15-03 Choose the best type of project organizational structure for a given set of objectives.

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7) Colson Corp. has planned a simple project with four tasks. The task information for the project is shown below:

Task A B C D

Immediate Estimated Duration Predecessors 10 daysNone 7 daysA 4 daysA 8 daysB,C

What is the estimated completion time for the project?

A) 29 days B) 25 days C) 22 days D) 19 days Answer: B Explanation: The critical path is A, B, D. Completion time = 10 + 7 + 8 = 25 days.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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8) Colson Corp. has planned a simple project with four tasks. The task information for the project is shown below:

Task A B C D

Immediate Estimated Duration Predecessors 10 daysNone 7 daysA 4 daysA 8 daysB,C

Does any task have slack? If so, how much?

A) None of the tasks have slack.

B) Task B has three days of slack.

C) Task C has four days of slack.

D) Task D has two days of slack.

E) Task C has three days of slack.

Answer: E Explanation: Task C must finish at the end of 17 days. It could finish at the end of 14 days.

Thus slack for B = 3 days.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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9) The network diagram below shows the five tasks required to complete a project and the associated times for those tasks.

Which of the following identifies the critical path tasks?

A) A, B, D, F B) A, B, C, D, E, F C) A, B, E, F D) A, C, E, F Answer: C Explanation: The critical path is the path with the longest duration. Path A, B, E, F takes 24 weeks, the longest of any of the paths.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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10) The network diagram below shows the five tasks required to complete a project and the associated times for those tasks.

What is the earliest completion of the project diagrammed?

A) 23 weeks B) 24 weeks C) 28 weeks D) 37 weeks Answer: B Explanation: The earliest completion is 24 weeks.

Task A B C D E F

Immediate Predecessors None A A B B,C D,E

Immediate Task Successors F None E F D F C E B D,E A B,C

Earliest Start

Earliest Completion 0 2 2 10 2 7 12 18 12 23 23 24

Latest Completion Latest Start Slack(LS − ES) 24 23 23 − 23 = 0 23 12 12 − 12 = 0 23 17 17 − 12 = 5 12 5 5−2=3 12 2 2−2=0 2 0 0−0=0

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Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 11) The network diagram below shows the five tasks required to complete a project and the associated times for those tasks.

What is the latest start date for task C? A) Two weeks B) Seven weeks C) Six weeks D) Five weeks Answer: D Explanation: The latest start date for task C is Five weeks.

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Task A B C D E F

Immediate Predecessors None A A B B,C D,E

Immediate Task Successors F None E F D F C E B D,E A B,C

Earliest Start 0 2 2 12 12 23

Earliest Completion 2 10 7 18 23 24

Latest Completion Latest Start Slack(LS − ES) 24 23 23 − 23 = 0 23 12 12 − 12 = 0 23 17 17 − 12 = 5 12 5 5−2=3 12 2 2−2=0 2 0 0−0=0

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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12) The network diagram below shows the five tasks required to complete a project and the associated times for those tasks.

Which task has the greatest amount of slack?

A) A B) B C) C D) D E) E Answer: D Explanation: Task D has the greatest amount of slack.

Task A B C D E F

Immediate Predecessors None A A B B,C D,E

Earliest Start 0 2 2 12 12 23

Earliest Completion 2 10 7 18 23 24

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Immediate Task Successors F None E F D F C E B D,E A B,C

Latest Completion Latest Start Slack(LS − ES) 24 23 23 − 23 = 0 23 12 12 − 12 = 0 23 17 17 − 12 = 5 12 5 5−2=3 12 2 2−2=0 2 0 0−0=0

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 13) The forward pass in a critical path algorithm involves: A) Calculating the late finish and late start for each task.

B) Calculating the late finish and the earliest possible start times for each task.

C) Calculating the earliest possible start and finish times for each task.

D) Calculating the earliest possible start and late start for each task.

Answer: C Explanation: The forward pass calculates the earliest start and finish dates.

Difficulty: 2 Medium Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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14) "Crashing" in a project refers to: A) Deciding to terminate a project.

B) Attempting to reduce the project scope.

C) Extending the deadline for completion of the project.

D) Speeding up an activity.

Answer: D Explanation: "Crashing" refers to speeding up an activity.

Difficulty: 1 Easy Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 15) Joe Jones is a project manager on a major installation. He has been asked to provide weekly status reports on the project schedule. Joe should consider using which of the following?

A) Gantt chart B) Crashing reports C) WBS report D) Network diagram Answer: A Explanation: A Gantt chart is a tool used in project management to provide schedule status.

Difficulty: 1 Easy Topic: Project Execution Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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16) Why does project management often involve the management of conflict?

A) Projects often compete with routine operations and other projects for resources and personnel.

B) Project managers are under greater pressures than other managers in a firm.

C) Projects are often staffed with the personnel who have the least expertise.

D) All items are correct.

Answer: A Explanation: Projects are often set within organizational structures that favor routine operations.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-01 Explain the difference between projects and other more routine operational processes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 17) Which of the following statements is true of projects?

A) Projects usually involve greater unknowns and uncertainty than repeated routine operations do.

B) Projects are usually more important than repeated routine operations.

C) Once a project plan is made, it is impossible to simultaneously improve the speed, quality, and cost of a project.

D) Technological factors are almost always more important than social factors in affecting project success.

Answer: A Explanation: Because projects are one-time events, managers have less experience upon which to draw regarding the specifics of any given project.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-01 Explain the difference between projects and other more routine operational processes.

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18) A project manager usually has the greatest ability to affect social and technical success factors of a project in what stage of the project?

A) Planning B) Execution C) Completion D) A project manager has equal ability to affect success factors across all stages.

Answer: A Explanation: In the planning stage, the project manager can shape the schedules, budgets, and resources to influence the project. These choices form constraints within which the project must be executed in subsequent stages.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-02 Manage the social and technical factors that are critical for project success.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 19) The project organizational structure that provides the greatest balance between speed and efficiency is: A) Matrix organizational structure.

B) Pure project structure.

C) Functional project structure.

D) Line and staff organization structure.

Answer: A Explanation: Matrix structure shares resources for efficiency but has a single project manager to maintain priority and speed.

Difficulty: 1 Easy Topic: Project Definition Learning Objective: 15-03 Choose the best type of project organizational structure for a given set of objectives.

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20) A primary advantage of a functional project organizational structure is: A) The needs of the project client are prioritized over the needs of the function.

B) A single project manager has full control over the entire project.

C) A functional manager controls both the budget and the schedule.

D) All project team members report to one boss.

Answer: C Explanation: A functional structure allows the functional head to control both the budget and the way that activities are done.

Difficulty: 1 Easy Topic: Project Design Learning Objective: 15-03 Choose the best type of project organizational structure for a given set of objectives.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 21) Which of the following is NOT a good reason to kill a project?

A) Consistent budget and schedule overruns.

B) Inadequate resources to complete the project successfully.

C) Personnel problems on the project.

D) The project objectives are no longer of value to the firm.

Answer: C Explanation: Personnel problems might be remedied if the project is still of value to the firm.

Difficulty: 1 Easy Topic: Project Execution Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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22) Task X is expected to take three days to complete. The maximum (latest) earliest finish date for any predecessors to task X is 10. Therefore, the earliest finish for task X is: A) 7 B) 10 C) 13 D) Cannot determine from the information given Answer: C Explanation: The earliest start of a task is determined by the latest early finish of any of its predecessors. EF = ES + Task duration.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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23) The figure below shows the tasks required to complete a project and the expected duration for each task.

How long should we expect it to take to complete this project?

A) 20 weeks B) 38 weeks C) 21 weeks D) None of these are correct Answer: C Explanation: The critical path defines the project length. It is the path with the longest duration.

Path A, B, D, F takes 21 weeks, the longest of any of the paths.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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24) Project manager Bill Jones has determined that task R has a high variation between "best case" and "worst case" estimated durations. Task R is probably a good candidate for: A) Close monitoring and frequent status reporting.

B) Buffering.

C) Contingency planning.

D) All of these.

Answer: D Explanation: All of the methods shown are ways to manage uncertainty and risk.

Difficulty: 1 Easy Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 25) Why do businesses often NOT pursue the best mix of projects in their project portfolio?

A) Projects are selected based on criteria that are not always consistent with the business strategy.

B) Businesses do not use enough financial metrics in selecting projects.

C) Too much emphasis is placed on feasibility.

D) Selection committees neglect to use a portfolio value matrix.

Answer: A Explanation: Strategic fit is important, but it is often difficult to assess. Managers are often too focused on financial returns.

Difficulty: 1 Easy Topic: Managing a Portfolio of Projects Learning Objective: 15-05 Fashion criteria to guide project selection and management of a portfolio of projects.

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26) Which of the following is a project?

A) The operation of a tollbooth on a highway.

B) The construction of a ship.

C) Balancing your checkbook at the end of each month.

D) Inspecting the quality of units being produced.

Answer: B Explanation: Ship construction has a clear beginning and end, whereas the other items are repeated operations.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-01 Explain the difference between projects and other more routine operational processes.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 27) Which of the following factors is NOT typically considered a best practice for creating a high-performing project team?

A) Team members are volunteers.

B) Team members serve on the project from beginning to end.

C) Team members are from the same functional area.

D) Team members are collocated.

Answer: C Explanation: Diverse teams made up of representatives from different functions tend to perform better.

Difficulty: 1 Easy Topic: Projects and Project Management Learning Objective: 15-02 Manage the social and technical factors that are critical for project success.

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28) Given the project plan shown below, what is the expected completion time for the critical path?

Task ID A B C D E F G

Immediate Predecessors Expected Duration (days) 4 5 6 A,B,C 5 D 7 D 4 E,F 3

A) 34 days B) 21 days C) 16 days D) 18 days Answer: B Explanation: The critical path is C, D, E, G. Length is 6 + 5 + 7 + 3 = 21 days.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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29) Given the project plan shown below, what is the latest start for Task B? Task ID A B C D E F G

Immediate Predecessors Expected Duration (days) 4 5 6 A,B,C 5 D 7 D 4 E,F 3

A) Zero days (must start immediately) B) One day C) Two days D) Three days Answer: B Explanation: Task B is one day shorter than Task C, which is a critical task. Therefore its start can be postponed by one day.

Difficulty: 3 Hard Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 30) Which of the following best describes the overall goal of project portfolio management?

A) Maximize support of business strategy while minimizing risk.

B) Maximize innovation at an affordable cost.

C) Ensure that all projects are selected using the same criteria.

D) Select projects that can easily be terminated if not successful.

Answer: A Explanation: Businesses seek to maximize the "expected" collective impacts of projects; this means choosing high-potential projects that are feasible.

Difficulty: 2 Medium Topic: Managing a Portfolio of Projects Learning Objective: 15-05 Fashion criteria to guide project selection and management of a portfolio of projects.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 31) Which of the following is NOT a good reason to terminate (kill) a project?

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A) Consistent budget and schedule overruns.

B) Changing organizational priorities.

C) Uncertainty regarding the project's outcomes.

D) Wrong resources assigned to the project.

Answer: C Explanation: All projects have some degree of uncertainty.

Difficulty: 2 Medium Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 32) Spending more money to speed up a project is known as: A) Speeding.

B) Crashing.

C) Splurging.

D) Pinching.

Answer: B Explanation: Adding resources to reduce duration is called "crashing."

Difficulty: 1 Easy Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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33) A method for estimating the impacts of uncertainty on project tasks is: A) Rule of thumb estimates.

B) Best case estimates.

C) Probabilistic task duration estimates.

D) Risk-weighted estimates.

Answer: C Explanation: Probabilistic task duration estimation uses probability distributions to represent various duration outcomes.

Difficulty: 1 Easy Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Remember AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 34) Where in a project schedule is a good place to plan a buffer?

A) Immediately after a highly uncertain task.

B) Where scarce resources are needed.

C) At the end of the project.

D) All of these are good places to plan buffers.

Answer: D Explanation: Buffers provide protection (slack) against uncontrollable delays in tasks.

Difficulty: 2 Medium Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

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35) When developing risk mitigation plans, one should: A) Be sure to plan for every possible thing that could go wrong.

B) Have a single person develop all risk scenarios .

C) Always use buffers as the primary risk mitigation technique.

D) Select mitigation plans that give the highest level of prevention or protection at the lowest investment.

Answer: D Explanation: Mitigation plans should be developed by teams and be based on the unique types of risks faced by each project.

Difficulty: 2 Medium Topic: Project Planning Learning Objective: 15-04 Develop a comprehensive project plan, evaluating trade-offs, uncertainties, and risks.

Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation; Screen Reader Compatible 36) Which of the following items should be included in a business case for a project?

A) Fit with the organization's strategy and other projects.

B) Financial returns or other benefits.

C) Feasibility.

D) All of these items should be included in a business case.

Answer: D Explanation: Managers should evaluate potential new projects by considering three categories of factors: 1. The project's fit with the organization's overall strategy and existing portfolio of projects; 2. Financial returns or other benefits associated with the project; 3. The feasibility of the project, including availability of required resources. Project selection should be based on a business case.

Difficulty: 1 Easy Topic: Managing a Portfolio of Projects Learning Objective: 15-05 Fashion criteria to guide project selection and management of a portfolio of projects.

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Managing Ops Across the Supply Chain, 4e (Swink) Chapter 16 Sustainable Operations Management—Preparing for the Future 1) When people and profit intersect, from a sustainability perspective, which of the following areas is most impacted?

A) Equitability B) Sustainability C) Bearability D) Viability Answer: A Explanation: In the triple bottom line diagram the overlap between the "people" circle and the "profit" circle is where people's interests and profitability require trade-offs. That segment of the diagram is called "equitability."

Difficulty: 1 Easy Topic: The Triple Bottom Line Learning Objective: 16-01 Define sustainability using the triple bottom line and explain what this approach means for operations and supply chain management.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 2) Which of the following phrases BEST defines the concept of sustainability, as set out by the United Nations Brundtland Commission: A) To reduce, minimize, and ideally eliminate pollution, thus preserving the planet and its resources for the benefit of not only today's generation but also the future.

B) To meet the needs of the present without compromising the ability of future generations to meet their needs.

C) To ensure that business and the community work together to preserve limited resources while also ensuring that business is appropriately rewarded for its efforts.

D) To foster an environment that satisfies the requirements of the triple bottom line—namely people, profit, and the planet—the keys to our future survival.

Answer: B Explanation: The UN Brundtland Commission defines sustainability as "the ability to meet the needs of the present without compromising the ability of future generations to meet their needs."

Difficulty: 2 Medium Topic: The First P—Planet Learning Objective: 16-02 Explain the reasons why operations managers are increasingly focusing on the environmental impact of their activities.

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3) Which of the following environmental initiatives/programs deals most specifically with the firm's environmental management system?

A) The Kyoto Protocol B) Responsible Care C) ISO 14000 D) LEED certification Answer: C Explanation: ISO 14000 is a set of environmental management standards intended to help firms minimize the environmental impact of their operations.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-02 Explain the reasons why operations managers are increasingly focusing on the environmental impact of their activities.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 4) Which of the following environmental initiatives/programs deals most specifically with building design and construction?

A) The Kyoto Protocol B) Responsible Care C) ISO 14000 D) LEED certification Answer: D Explanation: LEED Certification is a framework for identifying and implementing green standards in design, construction, and operations of buildings.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-02 Explain the reasons why operations managers are increasingly focusing on the environmental impact of their activities.

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5) Which of the following environmental initiatives/programs is an example of an industryspecific program aimed at improving environmental performance?

A) The Kyoto Protocol B) Responsible Care C) ISO 14000 D) LEED certification Answer: B Explanation: Responsible Care is a global, voluntary initiative adopted by the chemical industry to improve health, safety, and environmental impacts.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-02 Explain the reasons why operations managers are increasingly focusing on the environmental impact of their activities.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 6) Which of the following approaches provides management with an appropriate tool for assessing the full impact from creation to disposal of a product?

A) Life cycle assessment B) Total cost of ownership C) Trade-off analysis D) Cost of quality analysis Answer: A Explanation: Life Cycle Assessment considers the full impact of waste from extraction or raw materials to disposal and recycling of a product.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

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7) Over which stage of the product's life cycle does operations management have the greatest amount of direct control?

A) Extraction B) Packaging/transportation C) Usage D) Disposal Answer: B Explanation: Of these four areas, operations can directly influence packaging/transportation; the others are under the control of other areas (e.g., extraction is under the control of suppliers and usage and disposal are under the control of the user).

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 8) BMW has introduced a program of covered scheduled maintenance for its cars. That is, when you bring in your vehicle for maintenance at a BMW dealership, BMW will cover the costs of everything (except for worn-out tires). This practice specifically targets which stage of the product life cycle?

A) Extraction B) Packaging/transportation C) Usage D) Disposal Answer: C Explanation: Usage analysis addresses waste in product use including maintenance, repair, and operation.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

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9) Recycling is a critical consideration during which stage of the product life cycle?

A) Extraction B) Packaging/transportation C) Usage D) Disposal Answer: D Explanation: Disposal/Recycling wastes occur at the end of the product's life.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 10) Which of the following statements most accurately represents the challenge of being environmentally sustainable?

A) The choices facing the firm are clear, and the obvious candidates for improvement can be easily identified.

B) It is not easy to be environmentally responsible since the trade-offs between choices are not always clear.

C) Demands for environmental responsibility are driven by forces that can mostly be ignored.

D) Being environmentally responsible is a matter of complying with government regulations.

Answer: B Explanation: It is not easy to be environmentally responsible since data are not readily available and the trade-offs between choices are not always clear.

Difficulty: 2 Medium Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

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11) From an operations standpoint, sustainability means that: A) Profit is not an important goal.

B) A company should focus its efforts on reducing pollution.

C) Firms should pursue profit without damaging the environment or the well-being of future generations.

D) The firm must improve how it manages its people resources since these are important to the long-term survival of the firm.

Answer: C Explanation: Profit is critical to a firm's existence. Simultaneously, the firm must not damage the environment or impair the well-being of future generations.

Difficulty: 1 Easy Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 12) How does lean systems thinking in operations management relate to sustainability?

A) Its focus on improving product quality.

B) Its focus on delivering products to customers faster.

C) Its focus on reducing waste of all types.

D) Its focus on product innovation.

Answer: C Explanation: Lean systems reduce waste within an operation. Sustainability includes environmental impacts as waste generated over a product's life cycle.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

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13) A specific analysis of the total greenhouse gases caused directly or indirectly by a product is called: A) Carbon footprinting.

B) Life cycle analysis.

C) Life cycle waste assessment matrix.

D) Cap and trade.

Answer: A Explanation: The carbon footprint of a product is the total set of greenhouse gas emissions caused directly or indirectly by a product.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 14) The following environmentally responsible process/material matrix was developed for Zanda Corp. Zanda has determined that a score of 40 is its goal at this time, but efforts to lower its score will continue regardless. What is Zanda's current score, and what is your conclusion?

Resource Extraction Manufacture Prod./Pkg./Trans.

Product Use Disp./Recycle

Material Choice 3 1 0 2 2

Energy Choice 2 1 3 2 1

Solid Residue 4 1 1 2 3

Liquid Residue 2 2 2 1 3

Gaseous Residue 1 2 2 1 3

A) 53, Zanda is doing better than its goal.

B) 53, Zanda is doing worse than its goal.

C) 47, Zanda, is doing better than its goal.

D) 47, Zanda is doing worse than its goal.

Answer: D Explanation: The "score" on this matrix is the sum of the digits in the 25 cells, which is 47. The lower the score, the better. Zanda's goal is 40, so they are not meeting their goal.

Difficulty: 2 Medium Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 15) The following environmentally responsible process/material matrix was developed for Zanda 7 Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Corp. Zanda has determined that a score of 50 is its goal at this time, but efforts to lower its score will continue regardless. What is Zanda's current score, and what is your conclusion?

Resource Extraction Manufacture Prod./Pkg./Trans.

Product Use Disp./Recycle

Material Choice 3 1 0 2 2

Energy Choice 2 1 3 2 1

Solid Residue 4 1 1 2 3

Liquid Residue 2 2 2 1 3

Gaseous Residue 1 2 2 1 3

A) 47, and Zanda has met its goals—no further actions are necessary.

B) 47, and Zanda has met its goal but should do something about solid residue during extraction.

C) 53, and Zanda has not met its goals.

D) 15, (from Manufacture & Prod/Pkg/Trans) and Zanda has met its goals—no further actions are necessary.

Answer: B Explanation: The "score" on this matrix is the sum of the digits in the 25 cells which is 47. The lower the score, the better. Zanda's goal is 50, so they are meeting their goal. Zenda should strive to continuously improve environmental performance. One area to improve is solid residue during extraction.

Difficulty: 2 Medium Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

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16) Walmart has announced that suppliers must attempt to improve their efforts in environmental management. In this announcement, Walmart could have included a requirement that suppliers meet the standards of: A) ISO 9000.

B) ISO 2011.

C) ISO 9002.

D) ISO 14000.

Answer: D Explanation: ISO 14000 is an international standard for environmental management which ensures that a certified firm has a formal environmental management system.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-03 Evaluate products using life cycle assessment.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 17) The "triple bottom line" suggests that efforts should be devoted to assessing the impact of activities on: A) People, profit, processes.

B) Profit, profit, profit.

C) People, planet, profit.

D) Profit, planet, processes.

Answer: C Explanation: The triple bottom line measures the impacts of the firm on the people, the planet, and profit.

Difficulty: 1 Easy Topic: The Triple Bottom Line Learning Objective: 16-01 Define sustainability using the triple bottom line and explain what this approach means for operations and supply chain management.

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18) Which of the following programs/initiatives strives to improve the lives of suppliers and their families?

A) ISO 14000 B) Responsible Care C) LEED D) Fair Trade Answer: D Explanation: The fair trade movement focuses on helping producers in developing countries by improving trading conditions and promoting sustainability.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 19) Which of the following is NOT a stakeholder, as considered from the P-People perspective of sustainability?

A) Customers B) Government C) Workers D) Investors Answer: B Explanation: Stakeholders in the People perspective include customers, suppliers, workers, and investors.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

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20) Which of the following sustainability issues has a significant impact on supply chain relationships?

A) Organizational culture B) Common usage of lean systems C) Location D) Government regulations and tariffs Answer: A Explanation: Organizational culture affects supply chain-related issues like trust and compliance.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 21) Which of the following best describes the effect of an organization's culture on sustainability?

A) Changing an organization's culture is easy if survival is at stake.

B) The elements of an organizaton's culture that impact its' performance are readily identified.

C) Organizational culture is less important than it once was due to mergers, downsizing and outsourcing.

D) A healthy, positive organizational culture is critical to long-term success in achieving sustainability goals.

Answer: D Explanation: Organizational culture plays a critical role in achieving sustainability goals.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

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22) Zanda Corp. has always operated within one country. It is contemplating opening production facilities in another country. Zanda should realize: A) Production processes used domestically should work well in a different country.

B) The means of motivating the workforce domestically may not work well in a different country.

C) The technology used domestically is often the best to use in a different country.

D) The same business model that is used domestically should apply to the foreign country.

Answer: B Explanation: Motivational processes that work well in one country may not work well in another.

Difficulty: 2 Medium Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 23) As technology and cultures evolve, the best approach for operations managers is to: A) Work harder.

B) Adapt their business models.

C) Retire.

D) Make their processes more efficient.

Answer: B Explanation: In preparing for the future, operations managers must anticipate and manage changes in the elements of their business models.

Difficulty: 1 Easy Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

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24) Which of the following terms best describes the impact of sustainability initiatives on the business model?

A) Sustainability affects primarily the capabilities offered by the supply chain.

B) Sustainability helps the firm to change its value proposition.

C) Sustainability impacts primarily the customers that we serve.

D) Sustainability affects the entire business model.

Answer: D Explanation: Adopting sustainability goals means that a corporations' entire business model must change if it is to maintain a sustainable competitive advantage.

Difficulty: 2 Medium Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 25) Which aspect of the business model is most affected by the recent advent of such companies as Fresh Now, M Tailor, Blue Apron, or Starbuck's Reserve?

A) Key customer.

B) Value Proposition.

C) Capabilities.

D) Environment.

Answer: B Explanation: Millennials want to be involved in the design and delivery of the product as an experience. This requires alteration of the traditional value proposition which related solely to the product. Increasingly, the experience of acquiring the product is important.

Difficulty: 2 Medium Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

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26) Which of the following statements best describes the role of sustainability measurement and reporting in many of today's firms?

A) Sustainability reporting is becoming more important, with its structure being determined by governmental regulations and requirements.

B) Sustainability reporting focuses on those issues where the reporting firm has the greatest degree of control.

C) Sustainability reporting is becoming more important with more metrics being provided by different organizations.

D) Sustainability reporting, while important, is plagued by problems involving its development and deployment and with concerns over appropriate standards.

Answer: C Explanation: Customers are increasingly sensitive to sustainability with metrics and measures developed by external organizations becoming more important.

Difficulty: 2 Medium Topic: Measuring and Reporting Sustainability through the Triple Bottom Line Learning Objective: 16-06 Understand the process by which the triple bottom line is transformed into appropriate measures, metrics, and standards.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 27) Smart phones communicating with each other and being used to collect, exchange, and analyze data is an example of which of the following developments?

A) Cyber Security.

B) Artificial Intelligence.

C) Smart Computing.

D) Internet of Things.

Answer: D Explanation: The internet of things enables companies and consumers to monitor what is happening in the supply chain.

Difficulty: 1 Easy Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

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28) Modules that plug into cars and enable insurance companies to monitor their customer's driving habits are using which of the following developments?

A) Cyber Security.

B) Artificial Intelligence.

C) Smart Computing.

D) Internet of Things.

Answer: D Explanation: The internet of things enables companies and consumers to monitor what is happening in the supply chain.

Difficulty: 1 Easy Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 29) When a company such as Patagonia makes sustainability a critical development and embeds it visibly in advertising or in its activities, we see an example of sustainability operating at which of the following levels?

A) Sustainability as Public Relations.

B) Sustainability as cost minimization.

C) Sustainability as a business model.

D) Sustainability as a company mantra.

Answer: C Explanation: Sustainability has become central to Patagonia's business model.

Difficulty: 2 Medium Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

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30) EPEAT is a method for rating and certifying the environmental performance and recyclability of which kind of products?

A) Children's toys B) Kitchen appliances C) Military aircraft D) Cell phones Answer: D Explanation: EPEAT (Electronic Product Environmental Assessment Tool) rates the environmental impact of electronic products including cell phones.

Difficulty: 1 Easy Topic: The First P—Planet Learning Objective: 16-02 Explain the reasons why operations managers are increasingly focusing on the environmental impact of their activities.

Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 31) The expectation of integrity in fulfilling obligations is held by which stakeholder group?

A) Customers B) Workers C) Suppliers D) Investors Answer: A Explanation: Integrity in fulfilling contracts and obligations is among the expectations held by the customer stakeholder group.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

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32) Which of the following could cause a firm to initiate changes in a product's value proposition?

A) A close competitor introduces an enticing new feature in their product B) Declining sales of one of your product families for three consecutive quarters C) A fast-growing consumer demographic responds to lifestyle appeals in preference to product appeals D) All of these E) None of these Answer: D Explanation: Firms frequently change or update their value propositions either leading or responding to customer or competitor changes. Any of these three causes could trigger a rethinking and/or revision of a product's value proposition.

Difficulty: 2 Medium Topic: The Third P—Profit and Long-Term Competitive Advantage Learning Objective: 16-05 Understand the challenges operations managers face as they seek to develop and maintain a sustainable competitive advantage.

Bloom's: Understand AACSB: Reflective Thinking Accessibility: Keyboard Navigation 33) The Global Reporting Initiative (GRI) produces a sustainability reporting framework to enable greater organizational transparency. Which of the following is not one of the criteria followed by GRI? A) Investment and procurement practices B) Equal remuneration for women and men C) Product and service labeling D) Emissions, effluents and waste E) Executive political affiliations Answer: E Explanation: GRI criteria do not include political affiliations or activity.

Difficulty: 2 Medium Topic: Measuring and Reporting Sustainability through the Triple Bottom Line Learning Objective: 16-06 Understand the process by which the triple bottom line is transformed into appropriate measures, metrics, and standards.

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34) What is the name of the social movement that seeks to help agricultural producers in developing countries by improving business conditions and promoting sustainability?

A) Free Farm Advocacy B) Fair Trade C) Fair Labor Association D) Ethical Consumer Answer: B Explanation: The Fair Trade movement focuses on helping producers in developing countries by improving trading conditions and promoting sustainability.

Difficulty: 1 Easy Topic: The Second P—People Learning Objective: 16-04 Discuss the approaches used by operations managers to ensure social responsibility.

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