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Chapter 1: Introduction to Operations Management 1)

Operations management encompasses all of the following EXCEPT:

A) buying materials. B) capacity planning. C) scheduling. D) motivating employees and training. E) preparing financial statements.

All of the following are reasons for studying operations management EXCEPT:

A) A large percentage of a company's expenses occur in the operations management activities that are at the core of all business organizations. B) Activities in all of the other areas of business organizations, such as accounting and marketing are interrelated with operations management activities. C) Many management jobs are in operations management-related areas, such as production planning, inventory management, and more. D) The study of operations management applies to manufacturing, however, it is of little use in service organizations. E) Operations innovations lead to marketplace and strategic benefits.

The three primary functions that exist in most business organizations are:

A) manufacturing, production, and operations. B) operations, marketing, and finance. C) operations, accounting, and marketing. D) operations, production, and finance. E) operations, sales and accounting

The three major functions of business organizations:

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A) perform differently but their functions and processes are similar. B) are related indirectly only. C) must work together, but not very closely. D) function independently of each other. E) perform similar and related activities.

Which of the following is not a type of service operations?

A) Retail trade B) Transportation and warehousing C) Fabrication of metals D) Banking E) Hotels and restaurants

6) Measurements taken at various points in the transformation process for control purposes are called:

A) plans. B) directions. C) controls. D) feedback. E) proposals.

7) Measuring process outputs at various points in order to compare outputs to previously established standards to determine if corrective action is needed is called:

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A) planning and directing. B) directing and conversion. C) feedback and control. D) controlling and leading. E) leading and transformation.

Value-added refers to:

A) the cost of inputs. B) the price of outputs. C) the difference between cost of inputs and the value or price of outputs. D) the extra profit obtained from increased productivity. E) the ratio of outputs compared to inputs.

9) Economic analysis of investment proposals, and provision of funds are activities associated with the:

A) operation function. B) marketing function. C) purchasing function. D) finance function. E) industrial engineering function.

10)

The marketing function's main concern is with:

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A) producing goods or providing services. B) assessing customer wants and needs. C) procuring materials, supplies, and equipment. D) performing economic analysis of investment proposals. E) securing monetary resources.

11)

Planning decisions are usually

and

term.

A) strategic; long B) tactical; medium C) forecasting; short D) strategic; short E) tactical; long

12)

Which of the following does not relate to system design?

A) Long term capacity B) Location of facilities C) Inventory management D) Process design E) Departmental layout

13) Tactical planning and control activities involve making decisions about all of the following EXCEPT:

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A) location of facilities. B) scheduling. C) material requirements planning. D) project management. E) inventory management.

14)

System capacity and location of facilities are examples of:

A) financial decisions. B) tactical decisions. C) systems design decisions. D) operational planning decisions. E) forecasting decisions.

15)

The responsibilities of operations managers classified as planning activities include:

A) inventory, production pace, quality, and costs. B) organizing departments, subcontracting, supplier contracts, and staffing. C) forecasting, planning, organizing, and directing. D) scheduling, job assignments, purchasing, and logistics. E) capacity, location, layout, and mix of products.

16) Which of the following responsibilities of operations managers is considered a directing activity rather than a planning or control activity?

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A) selecting production equipment B) product mix decisions C) scheduling workers D) inventory management E) layout of production facilities

17) Of the following, which aspect of the evolution of operations management is affiliated with Japanese manufacturing companies?

A) total quality management B) scientific management C) the human relations movement. D) the industrial revolution. E) craft production

18)

Which is not a significant difference between manufacturing and service operations?

A) Cost per unit B) Uniformity of output. C) Labour content of jobs. D) Amount of customer contact. E) Measurement of productivity.

19)

Which of the following is not a characteristic of service operations?

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A) Intangible output. B) High customer contact. C) High labour content. D) Easy measurement of productivity. E) Low uniformity of output.

20)

The responsibilities of operations managers classified as controlling activities are:

21)

Which of the following is not a general approach to decision-making?

A) Establishing priorities B) Subjective approach C) Analysis of trade-offs D) Systems approach E) Quantitative approaches

22) Which of the following is not a characteristic of models used to support decision making?

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A) They provide a simplified representation of a design problem. B) They ignore unimportant details, concentrating on the most important aspects of a situation. C) They may be based on mathematical representations or graphical schematics. D) They provide abstract representations of a design problem. E) They are limited to representations of objective quantitative factors.

23)

Which of the following is not true about the systems approach?

A) It recognizes the importance of taking into account the impact on all parts of the system. B) It emphasizes interrelationships among subsystems. C) It concentrates on efficiency within subsystems. D) It becomes essential whenever something is being redesigned or improved. E) The objectives of the whole take precedence over those of any one part.

24)

Which is not a quantitative technique to problem solving?

A) Linear programming B) Queuing techniques C) Statistical techniques D) Heuristic approach E) Forecasting techniques

25) Dealing with the fact that certain aspects of any management situation are more important than others is called:

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A) analysis of trade-offs. B) sensitivity analysis. C) establishing priorities. D) analysis of variance. E) decision analysis.

26) The fact that improvements in a few key areas of operations will have more impact than many improvements in less significant areas is referred to as the .

A) forecasting approach B) Pareto phenomenon C) productivity challenge D) analysis of trade-offs E) ethical dilemma

27) Which of the following developments related to the historical evolution of operations management is the oldest?

A) The human relations movement advocated by Mayo, Maslow, and Hertzberg. B) The introduction of the moving assembly line by Henry Ford. C) Scientific management principles espoused by Frederick Taylor. D) The principle of division of labour documented in Adam Smith's book The Wealth of Nations. E) The influence of Japanese management practices.

28)

Which of the following is not properly matched?

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A) Mathematical model for inventory management-Elton Mayo B) Division of labour-Adam Smith C) Scientific Management-F. W. Taylor D) Motion study-Frank and Lillian Gilbreth E) Moving assembly line-Henry Ford

29) Which of the following is not a major trend influencing the strategies of manufacturing organizations?

A) Globalization B) The Internet and e-commerce C) Introduction of mass production D) Supply chain management E) Technological advances

30)

Operating at minimum cost and time is referred to as

A) Value added B) Efficiency C) Effectiveness D) Trade-offs E) Economies of scale

31) Which of the following functions is mostly service based, as identified in the "goodsservice" continuum?

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A) Automotive assembly B) Automotive repair C) Restaurant meal D) Software development E) Teaching

32) The service industry in Canada has been growing. According to Statistics Canada, what percent of jobs are in services?

A) More than 29% B) More than 48% C) More than 58% D) More than 79% E) More than 84%

33)

A balance achieved between two incompatible features is referred to as (a)

A) Break even B) Quantitative technique C) Heuristic D) Trade-off E) Systems approach

34) In the Historical Evolution of Operations Management. Which of the following was emphasized during the Human Relations Movement era?

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A) Division of labour B) The importance of workers in work design. C) The use of economic incentives D) The transfer of control from workers to management E) The development of time and motion studies.

35) Many major trends affect operations. Disaster preparation and response falls under which major trend?

A) Technology B) Globalization C) Supply chains D) Internet and ecommerce E) Sustainability

36) The number of defective parts produced in a given time period would be measured and managed by which of the following performance metrics?

A) Forecast accuracy B) Quality C) Inventory D) Schedules E) Flexibility

37)

Moral principles that govern a person's behaviour are called what?

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A) Priorities B) Trade-Offs C) Work design D) Ethics E) Motivation

38)

The substitution of machine power for human power was an innovation specific to what?

A) The industrial revolution B) Scientific management C) The human relations movement D) The Japanese influence on manufacturing E) The division of labour

39) These software systems are used to coordinate sales, materials management, production and accounting/finance activities.

A) Material requirements planning (MRP) B) Electronic data interchange (EDI) C) Enterprise resource planning (ERP) D) Decision models (DM) E) Business analytics (BI)

40) This involves the sequencing of organizations involved in producing and delivering a product.

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A) Globalization B) Inventory control C) Logistics D) Supply chains E) Job assignments

41)

This refers to the reduced use of resources and harm to the environment.

A) Logistics B) Sustainability C) Material requirements planning D) Cost control E) Globalization

42)

Which of the following is NOT considered a Green initiative?

A) Reducing packaging B) Buying locally C) Expanding globalization D) Conserving water and energy use E) Recycling

43) As a service business, the operations management activities of an airline company have nothing in common with the operations management activities within a bicycle manufacturing company. ⊚ ⊚

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44) Operations managers are responsible for managing activities and resources that produce goods and/or provide services. ⊚ ⊚

true false

45) Effectiveness refers to achieving intended goals whereas efficiency refers to minimizing cost and time. ⊚ ⊚

true false

46) Operations, marketing, and finance function independently of each other in most organizations. ⊚ ⊚

47)

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The operations function exists only in firms that are goods-oriented. ⊚ ⊚

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48) Operations management pertains almost exclusively to the management of manufacturing operations. ⊚ ⊚

49)

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Value-added refers to the cost of the inputs required to produce goods and services.

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50) As long as a product is ready in advance of when customers demand it, the timing of when a product is manufactured does not influence the value-added. ⊚ ⊚

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51) Storing an item earlier than the scheduled delivery date is an example of a value adding activity. ⊚ ⊚

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52) Management information systems (MIS) are concerned with providing management with the information it needs to effectively manage. ⊚ ⊚

53)

Operations management involves both system design and planning/control decisions. ⊚ ⊚

54)

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System design decisions have very little impact on planning/control decisions. ⊚ ⊚

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55)

An example of an operations control decision is the choice of location. ⊚ ⊚

56)

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Scheduling jobs is a system design decision and not a planning decision. ⊚ ⊚

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57) Design decisions are usually strategic and long term, while planning decisions are tactical and medium term. ⊚ ⊚

58)

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Managing inventory levels is considered a planning/control operations decision area. ⊚ ⊚

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59) A basic difference between manufacturing and service organizations is that services are action-oriented and manufacturing is goods-oriented. ⊚ ⊚

60)

true false

Service involves a much higher degree of customer contact than the production of goods.

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true false

61) Service often requires a higher labour content, whereas the production of goods is more capital intensive. ⊚ ⊚

true false

62) Measurement of productivity in service is more straightforward than in goods production due to the high degree of uniformity of inputs. ⊚ ⊚

true false

63) Models are simplified representations of something and thus ignore important aspects of a situation. ⊚ ⊚

64)

true false

Quantitative techniques are often quick and practical techniques for many decisions. ⊚ ⊚

true false

65) A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts. ⊚ ⊚

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true false

66)

Queuing techniques are useful for analyzing situations in which waiting lines form. ⊚ ⊚

true false

67) It is essential to use the systems approach when something is being designed, redesigned, implemented, improved, or otherwise changed. ⊚ ⊚

true false

68) A systems approach is to concentrate on efficiency within a subsystem and thereby achieve overall efficiency. ⊚ ⊚

69)

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Many operations management decisions can be described as trade-offs. ⊚ ⊚

true false

70) The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management. ⊚ ⊚

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71) Operations managers, who usually use quantitative approaches, have no responsibility to make ethical decisions. ⊚ ⊚

true false

72) Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts. ⊚ ⊚

73)

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Frederick Taylor spearheaded the scientific management movement in America. ⊚ ⊚

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74) The Human Relations Movement, which emphasized the importance of the human element in job design, was replaced by the more technical aspects of Scientific Management. ⊚ ⊚

true false

75) The moving assembly line introduced by Henry Ford is an example of the development of mass production based on large volumes of standardized goods produced using low or semiskilled workers and highly specialized equipment. ⊚ ⊚

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76) The impact of globalization for manufacturing companies has seen reduced reliance on long international supply chains because of the increasing cost to ship components and finished goods to foreign markets. ⊚ ⊚

true false

77) The transformation process and feedback is useful in the control of manufacturing operations but does not apply to service operations. ⊚ ⊚

true false

78) One responsibility of marketing is to identify customer wants and needs and communication them to operations. ⊚ ⊚

true false

79) One important piece of information sales needs from operations is the manufacturing lead time in order to give customers realistic estimates of how long it will take to fill their orders. ⊚ ⊚

true false

80) Quality assurance is less challenging in services, as services primarily produce intangibles. ⊚ ⊚

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81) The operations manager has the ultimate responsibility for the creation of goods or performance of services. ⊚ ⊚

82)

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Business analytics uses software to build models which in turn support decision making. ⊚ ⊚

true false

83) North American management practices have had a significant impact on Japanese manufacturers. ⊚ ⊚

true false

84) Lean production systems operate with lower amounts of inventory, so emphasis is placed on anticipating when problems might occur before they arise. ⊚ ⊚

true false

85) Major trends that affect operations are only taken into account once strategies and tactics are in place. ⊚ ⊚

true false

86) Concerns about global warming and pollution have caused governments to impose stricter environmental regulations on businesses.

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87) The difference between goods and services is that goods are mostly intangible and services are mostly tangible. ⊚ ⊚

true false

88) There are only two professional associations involved in the field of operations management. ⊚ ⊚

89)

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Finance and operations cooperate by exchanging information and expertise. ⊚ ⊚

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90) Operations interfaces with supporting functions such as maintenance and human resources. ⊚ ⊚

91)

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Managers use performance metrics to manage and control operations. ⊚ ⊚

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92)

Worker and product safety fall under an operations manager's ethical issues. ⊚ ⊚

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Answer Key Test name: Chap 01_7ce 1) E 2) D 3) B 4) A 5) C 6) D 7) C 8) C 9) D 10) B 11) B 12) C 13) A 14) C 15) E 16) C 17) A 18) A 19) D 20) A 21) B 22) E 23) C 24) D 25) C 26) B Version 1

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

57) TRUE 58) TRUE 59) TRUE 60) TRUE 61) TRUE 62) FALSE 63) FALSE 64) FALSE 65) TRUE 66) TRUE 67) TRUE 68) FALSE 69) TRUE 70) TRUE 71) FALSE 72) TRUE 73) TRUE 74) FALSE 75) TRUE 76) FALSE 77) FALSE 78) TRUE 79) TRUE 80) FALSE 81) TRUE 82) TRUE 83) FALSE 84) TRUE 85) FALSE 86) TRUE Version 1

87) FALSE 88) FALSE 89) TRUE 90) TRUE 91) TRUE 92) TRUE

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Chapter 2: Competitiveness, Strategy, and Productivity 1)

Which of the following is not typically considered a cure for poor competitiveness?

A) Improve quality B) Recognize labour as a valuable asset and act to develop it. C) Minimize attention to the operations function D) Put less emphasis on short-term financial results. E) Remove communications barriers within organizations.

The key to successfully competing is understanding what customers want and then satisfy those wants.

A) finding suppliers who can B) designing products and services that C) hiring enough workers to D) finding the best way to E) training production workers to

Product variety is an example of:

A) a generic operations strategy. B) operations infrastructure. C) a process type. D) a dimension of flexibility. E) a key purchasing criteria.

4) Which of the following is not one of the competitive priorities organizations emphasize as the basis of competing with one-another?

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A) Cost B) Quality C) Product duplication D) Flexibility E) Delivery reliability

Which of the following is not a key purchasing criterion?

A) Price B) Variety C) Quality D) Timeliness E) Vendor relations

Characteristics that customers perceive as minimum standards of acceptability are called:

A) order winners. B) order qualifiers. C) core competencies. D) distinctive competencies. E) minimum attributes.

Which of the following determines where the organization desires to be in the future?

A) Mission statement B) Values statement C) Goals statement D) Vision statement E) Action plans

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8) Strategies have a(n) company.

impact on the general direction and basic character of a

A) long-term. B) medium-term. C) short-term. D) insignificant. E) tactical.

9) A firm pursuing a strategy based on customization and variety will tend to structure and manage its supply chain to accommodate more than a firm pursuing a strategy based on low cost and high volume.

A) variation B) quality C) capacity D) productivity E) streamlined flow

10) Of the following, which aspect of strategic planning involves medium or short-term projects to accomplish specific objectives?

A) Goals and objectives B) Functional strategies C) Action plans D) Forecasts E) Mission/vision statements

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11) Which of the following is a set of well-coordinated policies, objectives, and action plans, directly affecting the operations function, which is aimed at securing a long-term sustainable advantage over the competition?

A) Generic strategy B) Operations strategy C) Action plans D) Strategic planning E) Functional strategy

12) Which of the following is not a major decision-making category for operations policies and action plans?

A) Facility B) Capacity C) Process types and technology D) Human Resources E) Productivity

13)

What is the major difference between vertical integration and outsourcing?

A) Vertical integration is ownership of a part of the supply chain, outsourcing has no ownership. B) Outsourcing is ownership of a part of the supply chain, vertical integration has no ownership. C) Outsourcing uses external suppliers to perform some production/service functions while production/service functions through vertical integration are strictly in-house. D) Outsourcing is a long-term operations strategy where vertical integration is short term. E) Vertical integration is usually limited to services, where as outsourcing usually deals with production of goods.

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14)

Which of the following is not a step for formulating an operations strategy?

A) Link the organizational goals to the operations strategy. B) Conduct an audit to determine the strengths/weaknesses of the current operations strategy. C) Define the mission and values of the organization. D) Assess the degree of focus at each plant. E) Segment the customers into types.

15) Segmenting customers into types is part of formulating an Operations Strategy. Which of the following is not one of the four competitive priorities used in segmentation?

A) Cost B) Quality C) Delivery D) Location E) Flexibility

16) The generic operations strategy that reduces the time needed to add new product and process designs and allows volume and design changes and product variety is referred to as .

A) low labour cost strategy B) scale-based strategy C) focused factories strategy D) outsourcing E) flexible factories strategy

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17) The generic operations strategy that emphasizes capital-intensive methods to achieve higher labour productivity and lower unit costs is referred to as .

A) low labour cost strategy B) scale-based strategy C) focused factories strategy D) outsourcing E) flexible factories strategy

18) Radical process redesign based on process re-orientation, breaking down functional silos and integrating operations into customer-focused processes are tactics associated with what generic operations strategy?

A) Low labour cost strategy B) Scale-based strategy C) Focused factories strategy D) Business process reengineering E) Flexible factories strategy

19)

Time-Based strategies do not focus on:

A) the time to deliver a product. B) maintaining quality. C) planning time. D) production design time. E) changeover time.

20) Which of the following is not one of the major components of the Balanced Scorecard framework?

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A) Financial B) Human resources C) Internal business processes D) Learning and growth E) Customer

21)

Which of these factors would be least likely to affect productivity?

A) workers B) management C) product mix D) advertising E) methods and technology

22) What is the productivity for a production line where 10 workers assembled 320 products in 8 hours?

A) 0.25 B) 4 C) 32 D) 40 E) 320

23) A measure of productivity which reflects a combination of some, or all of the resources used to obtain a certain output is:

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A) labour productivity. B) machine productivity. C) multifactor productivity. D) materials productivity. E) overhead productivity.

24) Canvalves Company produces cast bronze valves on an assembly line. It currently produces 800 valves each 8-hour shift. If the production is increased to 1,200 valves each shift, the productivity increases by:

A) 50% B) 33% C) 25% D) 67% E) 75%

25) In an assembly operation at a furniture factory, six employees assembled an average of 450 standard dining chairs per 5-day week. What is the labour productivity of this operation?

A) 90 chairs/worker/day B) 20 chairs/worker/day C) 15 chairs/worker/day D) 75 chairs/worker/day E) 50 chairs/worker/day

26) The weekly output of a fabrication process is shown below together with data for labour and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labour cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per linear foot. What is the average multifactor productivity? Week

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Output

# Workers

Material (feet)

392

2720

408

2790

A) 1.463 B) 1.457 C) 1.431 D) 1.422 E) 1.475

27)

Which of the following is not true of productivity measures?

A) Productivity is mainly used for manufacturing and not used for services. B) Productivity measures can track performance over time. C) Labour productivity is used in labour wage negotiations. D) Productivity measures can be used to measure the performance of an organization or an entire country. E) Productivity contributes to organizational competitiveness.

28)

Which of the following is not a factor that affects productivity?

A) Use of computers in an office. B) Design of the workspace. C) Use of Internet and e-mail. D) Standardizing work process. E) Analysis of competitors.

29)

Which of these factors does not affect productivity?

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A) Methods and management B) Capital equipment C) Technology D) Labour E) Hiring policies

30)

Which of the following is not a general factor that affects productivity?

A) B) C) D)

31)

Methods and management Equipment and technology Competitors Labour

Which of the following is not a measure of labour productivity?

A) Units of output per labour hour B) Value-added per labour hour C) Units of output per shift D) Units of output per machine hour E) Dollar value of output per labour hour

32) Service productivity measurement is more problematic than manufacturing due to which of the following issues?

A) Output is tangible B) Low degree of variability C) Involves intellectual activities D) Inputs are consistent E) Output has a low degree of variability

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33) A company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 25% with less material, but one additional worker required. Under the old process, five workers could produce 60 units per hour. Labour costs are $12/hour, and material input was previously $16/unit. For the new process, material is now $10/unit. Overhead is charged at 1.6 times direct labour cost. Finished units sell for $31 each. What increase in productivity is associated with the process improvement?

34) The manager of a carpet store is trying to determine optimal installation crew size. He has tried various crew sizes with the results shown below. Compute the average labour productivity for each crew size. Which crew size do you recommend? Before:

60(31) 5(12) + 60(16) + 1.6(5)(12)

1,860/hr 1,116/hr

= 1.667

After:

60(1.25)(31) 6(12) + 75(10) + 1.6(6)(12)

2,325/hr 937.2/hr

= 2.481

Productivity increase = (2.481 – 1.667) × 100 1.667

= 48.83%

35) The weekly output of a production process is shown below, together with data for labour and material inputs. The standard inventory value of the output is $125 per unit. Overhead is charged weekly at the rate of $1500 plus .5 times direct labour cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per running foot. Compute the average multifactor productivity for this process. Week

Output

# Workers

Material (ft.)

412

2840

364

2550

392

2720

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408

2790

36) The variety of models and options available to customers is an example of key purchasing criteria that establishes the basis of competition. ⊚ ⊚

37)

true false

Competitiveness relates to the profitability of an organization in the marketplace. ⊚ ⊚

true false

38) Competitiveness means how effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services, which depends on its capabilities and performance in its market. ⊚ ⊚

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39) The purchasing criteria of quality and timeliness of delivery are order winners for all companies. ⊚ ⊚

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40) Flexibility or the ability to produce a variety of goods and services is one of the factors of competitive priorities.

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41) Order qualifiers are defined as the characteristics that distinguish the product or service from others to be more competitive and better for a customer and win the customer's purchase. ⊚ ⊚

true false

42) A mission statement should provide a guide for the formulation of strategies for the organization. ⊚ ⊚

43)

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Mission is where the organization desires to be in the future. ⊚ ⊚

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44) Focus on environmentally friendly and energy-efficient operations is an example of a strategy in an organization. ⊚ ⊚

45)

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Goals are the methods and actions used to accomplish strategies. ⊚ ⊚

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46) An example of a tactical operations management decision is determining employment levels. ⊚ ⊚

true false

47) The hierarchy of planning and decision-making is: mission/vision, goals, strategies, tactics, and action plans. ⊚ ⊚

true false

48) Visions are more specific than strategies, and they provide guidance and direction for carrying out actual operations, which need the most specific and detailed plans and decision making in an organization. ⊚ ⊚

true false

49) Operations strategy is a set of well-coordinated policies, objectives, and action plans, directly affecting the operations function, which is aimed at securing a long-term sustainable advantage over the competition. ⊚ ⊚

true false

50) Vertical integration is defined as letting a supplier perform some of the production/service function, by buying goods or services instead of producing or providing them in-house

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⊚ ⊚

true false

51) Expanding a business by acquiring of a major part or the whole of a supply chain is called "Outsourcing". ⊚ ⊚

true false

52) The major difference between productivity and efficiency is: Productivity is a narrower concept that means getting the most out of a fixed set of resources; however, efficiency is a broader concept that means better use of overall resources. ⊚ ⊚

true false

53) Time-based strategies focus on reducing the time required to accomplish certain activities, such as new product development or delivery to the customer. ⊚ ⊚

true false

54) Typically, a manufacturing firm would not consider Enterprise Resource Planning (ERP) software as part of the organization's operations strategy. ⊚ ⊚

true false

55) A sustainability strategy specifies how to cooperate with the organization's supply chain (including suppliers, distributors, and customers) to achieve supply chain goals and to be competitive.

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56) A global strategy moves the company toward standardization of its products around the world to take advantage of economies of scale with efficient operations. ⊚ ⊚

57)

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Vision and strategy are at the centre of the Balanced Scorecard framework. ⊚ ⊚

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58) Even though labour cost as a proportion of total cost has been decreasing in manufacturing companies, labour productivity is still the main measure being used to gauge the performance of individuals and plants. ⊚ ⊚

59)

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Productivity is defined as the ratio of input to output. ⊚ ⊚

true false

60) Tracking productivity measures over time enables managers to judge organizational performance and to decide where improvements are needed. ⊚ ⊚

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61)

Productivity is directly related to competitiveness. ⊚ ⊚

62)

Machine productivity can be measured by units of output per machine hour ⊚ ⊚

63)

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Labour costs are included as one of the inputs in all productivity measures. ⊚ ⊚

true false

64) Variability of the output of services makes it more difficult to measure service productivity. ⊚ ⊚

true false

65) Service productivity is easier to measure than manufacturing productivity because it is more labour intensive. ⊚ ⊚

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Answer Key Test name: Chap 02_7ce 1) C 2) D 3) E 4) C 5) E 6) B 7) D 8) A 9) A 10) C 11) B 12) E 13) A 14) C 15) D 16) E 17) B 18) D 19) B 20) B 21) D 22) B 23) C 24) A 25) C 26) B Version 1

27) A 28) E 29) E 30) C 31) D 32) C 36) TRUE 37) FALSE 38) TRUE 39) FALSE 40) TRUE 41) FALSE 42) TRUE 43) FALSE 44) TRUE 45) FALSE 46) TRUE 47) TRUE 48) FALSE 49) TRUE 50) FALSE 51) FALSE 52) FALSE 53) TRUE 54) FALSE 55) FALSE 56) TRUE 57) TRUE 58) TRUE 59) FALSE Version 1

60) TRUE 61) TRUE 62) TRUE 63) FALSE 64) TRUE 65) FALSE

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Chapter 3; Demand Forecasting 1)

Forecasts can help a manager to do all of the following EXCEPT:

A) reduce uncertainty in planning. B) design the system. C) plan the medium-term use of the system. D) schedule the short-term use of the system. E) predict the future precisely.

In operations, forecasts are the basis for all of the following EXCEPT:

A) capacity planning B) project management C) inventory planning D) work assignments and workloads E) pricing and promotion

All of the following are true about forecasts EXCEPT:

A) become less accurate with longer time horizons. B) are less accurate for individual items than for groups of items. C) are always perfect. D) managers must be alert to the business environment and be ready to override forecasts. E) assume the same underlying causal system in the future as the past.

Which would not generally be considered a feature common to all forecasts?

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A) B) C) D)

An assumption of a stable underlying causal system. Actual results will differ somewhat from predicted values. Historical data is available on which to base the forecast. Forecasts for groups of items tend to be more accurate than forecasts for individual

items. E) Accuracy decreases as the time horizon increases.

Which of the following is not a step in the forecasting process?

A) Determine the purpose of the purpose. B) Eliminate any assumptions and rely solely on verifiable factual data. C) Establish a forecasting horizon. D) Select a forecasting technique. E) Monitor the forecast.

Which of the following is not part of determining the purpose of the forecast?

A) The level of detail required in the forecast B) The amount of personnel that can be justified C) The level of accuracy required D) The forecasting time interval E) The amount of dollars that can be justified

The two general approaches to forecasting are:

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A) mathematical and statistical. B) qualitative and mathematical C) judgmental and quantitative. D) historical and associative. E) judgmental and associative.

Which of the following is not necessarily an element of a good forecast?

A) The degree of accuracy is stated. B) Time horizon long enough so forecast results can be used. C) Expressed in meaningful units. D) Low cost to complete. E) Technique is simple to understand and use.

Which of the following is not a requirement of a properly prepared forecast?

A) Timely B) Accurate C) Reliable D) Simple to understand and use E) Inexpensive

10)

Which of the following is not a type of judgmental forecasting?

A) Executive opinions B) Sales force opinions C) Consumer surveys D) Expert opinions E) Time series analysis

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11)

Which of the following steps is considered the last step in the forecasting process?

A) Gather and analyze relevant historical data. B) Determine the purpose of the forecast. C) Monitor the forecast. D) Prepare the forecast. E) Establish a time horizon.

12) Which of the following would be an advantage of using opinions of a sales force to develop a demand forecast?

A) The sales staff is least affected by changing customer needs. B) The sales force can easily distinguish between customer desires and probable actions. C) The sales staff is often aware of customers' future plans. D) Salespeople are least likely to be influenced by recent events. E) Salespeople are least likely to be biased by sales quotas.

13)

Which phrase most closely describes the Delphi technique?

A) Associative forecast B) Consumer survey C) Series of questionnaires D) Double smoothing E) Historical data

14) A network security company is securing input from information technology managers trying to anticipate when Wi Fi networks might be available in at least half of their client's businesses. Which method are they most likely to use?

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A) The Delphi method B) Consumer surveys C) Regression models D) Naive method E) Trend models

15) The forecasting method which uses anonymous questionnaires to achieve a consensus forecast is:

A) sales force opinions. B) consumer surveys. C) the Delphi method. D) time series analysis. E) executive opinions.

16)

One reason for using the Delphi method in forecasting is:

A) responses are anonymous. B) to achieve a high degree of accuracy. C) to maintain accountability and responsibility. D) to be able to replicate results. E) the ability to directly meet with customers

17)

Time series data may exhibit all but which of the following behaviours?

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A) Trend B) Seasonality C) Cycles D) Irregularities E) Identification of variables.

18)

Persistent upward or downward movement in time series data is called:

A) seasonal variation. B) cycles. C) irregular variation. D) trend. E) random variation.

19)

The primary difference between seasonality and cycles is:

A) the duration of the repeating patterns. B) the magnitude of the variation. C) the ability to attribute the pattern to a cause. D) There is more forecasting "noise" in a cycle. E) There is less forecasting "noise" in a cycle.

20)

Averaging forecasting techniques are useful for:

A) distinguishing between random and non-random variations B) forecasting cyclical time series C) smoothing out fluctuations in data D) forecasting seasonal indexes E) identifying variables in the demand

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21)

Disadvantages of naive forecasts include:

A) time-consuming to prepare B) it is expensive to use C) the technique is difficult to understand D) inability to provide highly accurate forecasts E) time to develop a forecast is lengthy

22)

Which of the following is not a characteristic of Naive forecasting methods

A) are quick and easy to prepare. B) are easy for users to understand. C) can serve as an accuracy standard for other techniques. D) able to quickly identify changes in demand. E) have virtually no cost.

23)

Using the latest observation in a sequence of data to forecast the next period is:

A) a moving average forecast. B) a naive forecast. C) an exponentially smoothed forecast. D) an associative forecast. E) a judgmental forecast.

24) For the data given below, if the time series was assumed to be stable, what would the naive forecast be for the next period?

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Period

Demand

A) 58 B) 62 C) 59.5 D) 61 E) 60.5

25) Given the following historical data, what is the simple three-period moving average forecast for period 6? Period

Value

Period

Value

A) 67 B) 115 C) 69 D) 68 E) 68.67

26) Given the following historical data and weights of .5 for the most recent period, .3 for the next most recent, and .2 for the next after that, what is the weighted three-period moving average forecast for period 5?

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Period

Value

Period

Value

138

148

142

144

A) 144.20 B) 144.80 C) 144.67 D) 143.00 E) 144.00

27)

Moving average forecasting techniques:

A) immediately reflect changing patterns in the time series. B) lead changes in the time series. C) smooth variations in the time series. D) exhibit more variability than the original data. E) are best used when demand shows a steady increase.

28)

Which is not a characteristic of simple moving averages applied to time series data?

A) Smooths random variations in the data B) Weights each historical value equally C) Lags changes in the data D) Has minimal reliance on historical data E) Smooths real variations in the data

29) In order to increase the responsiveness of a forecast made using the moving average technique, the number of data points in the average should be:

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A) decreased. B) increased. C) multiplied by a larger alpha. D) multiplied by a smaller alpha. E) divided by alpha.

30)

As compared to a simple moving average, the weighted moving average is:

A) easier to compute. B) more reflective of the most recent periods. C) smoother. D) less reflective of the most recent periods. E) more readily able to identify random variations.

31)

A forecast based on the previous forecast plus a percentage of the forecast error is:

A) a naive forecast. B) a simple moving average forecast. C) a centred moving average forecast. D) an exponentially smoothed forecast. E) an associative forecast.

32)

Which is not a characteristic of exponential smoothing?

A) Smooths random variations in the data B) Weights each historical value equally C) Provides an easily altered weighting scheme D) Directly accounts for forecast error E) Smooths real variations in the data

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33) Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast?

A) 0 B) .01 C) 1 D) 5 E) 1.0

34) Simple exponential smoothing is being used to forecast demand. The previous forecast of 66 turned out to be 3 units less than actual demand. The next forecast is 66.6, implying a smoothing constant, alpha, equal to:

A) 0.01 B) 0.10 C) 0.15 D) 0.20 E) 0.60

35) Given an actual demand of 57, a previous forecast of 62, and an alpha of .3, what would the forecast for the next period be using simple exponential smoothing?

A) 36.9 B) 57.5 C) 60.5 D) 62.5 E) 65.5

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36) Given an actual demand of 105, a predicted value of 97, and an alpha of .4, the simple exponential smoothing forecast for the next period would be:

A) 80.8 B) 93.8 C) 100.2 D) 101.8 E) 108.2

37) Which of the following possible values of alpha would cause exponential smoothing to respond the most quickly to forecast errors?

A) 0 B) .01 C) .05 D) .10 E) .15

38) A manager uses the following equation to predict monthly receipts: Yt = 40,000 + 150 t. What is the forecast for December if t = 0 for the month of April?

A) 40,050 B) 41,050 C) 41,200 D) 41,300 E) 41,500

39)

In trend-adjusted exponential smoothing, the trend adjusted forecast (TAF) consists of:

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A) an exponentially smoothed forecast and a smoothed trend factor. B) an exponentially smoothed forecast and an estimated trend value. C) the old forecast adjusted by a trend factor. D) the old forecast and a smoothed trend factor. E) a moving average and a trend factor.

40) In the "additive" model for seasonality, seasonality is expressed as a adjustment to the average; in the multiplicative model, seasonality is expressed as a adjustment to the average.

A) quantity; proportion B) proportion; quantity C) quantity; quantity D) proportion; proportion E) index; quantity

41)

Which technique is useful in computing seasonal relatives?

A) Double smoothing B) Delphi technique C) MSE D) Centred moving average E) Exponential smoothing

The following equation is used to predict quarterly demand: Y t = 350 - 2.5 t, where t 42) = 0 in the second quarter of last year. Quarter relatives are Q1 = 1.5; Q2 = 0.8; Q3 = 1.1; and Q4 = 0.6. What is the forecast for the last quarter of this year?

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A) 201 B) 335 C) 268 D) 199.5 E) 266

43)

Which of the following might be used to forecast the cyclical component of a time series?

A) An associated leading variable B) Centred moving average (CMA) C) Delphi technique D) Exponential smoothing E) Seasonal relatives

44)

The primary method for associative forecasting is:

A) Naïve method B) Regression analysis C) Simple moving averages D) Centred moving averages E) Exponential smoothing

45)

Which term most closely describes what associative forecasting techniques are based on?

A) Time series data B) Linear relationships C) The Delphi technique D) Consumer survey E) Predictor variables

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46)

Which of the following corresponds to the predictor variable in simple linear regression?

A) Regression coefficient B) Dependent variable C) Independent variable D) Predicted variable E) Demand

47)

Use of simple linear regression analysis assumes that:

A) Variations around the line are non-random. B) Deviations around the line are not normally distributed. C) Predictions can be made outside the range of observed values of the predictor variable. D) A straight line will be determined that maximizes the sum of deviations of the data points. E) Predictions are to be made only within the range of observed values of the predictor variable.

48)

The mean absolute deviation (MAD) is used to:

A) estimate the trend line. B) eliminate forecast errors. C) measure forecast accuracy. D) seasonally adjust the forecast. E) measure average data.

49)

All of the following are used to measure forecast errors EXCEPT?

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A) B) C) D)

50)

Mean absolute difference (MAD) Mean weighted moving average (MWMA) Mean absolute percentage error (MAPE) Mean squared error (MSE)

MAPE measures the:

A) mean actual produced error. B) mean absolute percent error. C) main accuracy percent evaluation. D) mean absolute produced error. E) mean average percent error.

51)

Positive forecast errors mean that the forecast:

A) was too high. B) was too low. C) was accurate. D) was irregular. E) is where the predictor variable indicated.

52)

Given forecast errors of 4, 8, and -3, what is the mean absolute deviation?

A) 4 B) 3 C) 5 D) 6 E) 12

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53)

MSE weighs errors according to .

and MAPE weighs according to

A) squared values; mean absolute values B) absolute values; absolute percentage error C) absolute percentage error; squared values D) squared values; their actual values E) absolute error; average error

54)

Given forecast errors of 5, 0, -4, and 3, what is the mean absolute deviation (MAD)?

A) 4 B) 3 C) 2.5 D) 2 E) 1

55)

Given forecast errors of -5, -10, and +15, what is the mean absolute deviation (MAD)?

A) 0 B) 10 C) 30 D) 175 E) 7.5

56)

The actual demand and the forecasted demand for a product were as follows:

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period:

actual:

286

255

275

forecast:

280

290

295

Compute the MAPE.

A) 0.77% B) 7.7% C) 0.23 D) 23 E) 6.9%

57)

Which of the following is used for constructing a control chart for forecast errors?

A) Mean absolute deviation (MAD) B) Mean absolute percentage error (MAPE) C) Tracking signal (TS) D) Actual - forecast E) None of the choices are correct.

58)

The two most important factors in choosing a forecasting technique are:

A) cost and time horizon. B) accuracy and time horizon. C) cost and accuracy. D) accuracy and buy-in. E) cost and ease of use.

59) Which of the following factors is generally not a consideration at the time of selecting an appropriate forecasting method to use?

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A) Amount of historical data available B) Forecast horizon C) Mean square error in the forecast D) Evidence of a pattern in time series data E) Preparation time (cost)

60) Sales for a product have been fairly consistent over several years, although showing a steady upward trend. The company wants to understand what drives sales. The best forecasting technique would be:

A) trend models. B) judgmental methods. C) moving averages. D) regression models. E) exponential smoothing techniques.

61) Which of the following techniques are most likely to be used for forecasting demand for new products and services?

A) Trend models B) Judgmental methods C) Moving averages D) Regression models E) Exponential smoothing techniques

62) Which of the following are most likely to be used for forecasting demand for the longer term?

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A) Regression trend models B) Judgmental methods C) Delphi method D) Simple exponential smoothing E) Naïve method

63) An automobile company is trying to forecast demand for minivans over the next 10 years. Which method of forecasting are they most likely to use?

A) Regression trend models B) Moving averages C) Delphi method D) Simple exponential smoothing E) Naïve method

64) A company is conducting long-term planning of which types of services they should offer. Which of the following forecasting techniques are they most likely to use?

A) Trend models B) Executive opinion C) Regression models D) Simple exponential smoothing E) Naïve method

65)

A managerial approach toward forecasting which seeks to actively influence demand is:

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A) reactive. B) proactive. C) reflexive. D) protracted. E) retroactive.

66)

Which of the following is not an accurate statement concerning bias in forecasts?

A) Bias is calculated based on the mean absolute percent error (MAPE). B) Persistent negative bias implies forecasting frequently overstating actual values. C) Bias is the sum of forecast errors. D) Persistent positive bias implies frequently underestimating actual values. E) Bias may indicate a shift in the demand pattern.

67) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using a four-year simple moving average?

A) 18,750 B) 19,500 C) 21,000 D) 22,650 E) 22,800

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68) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using exponential smoothing with alpha = 0.5, if the forecast for two years ago was 16,000?

A) 18,750 B) 19,500 C) 21,000 D) 22,650 E) 22,800

69) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using trend adjusted (double) smoothing with alpha(1) =.05 and alpha(2) = 0.3, if the forecast for last year was 21,000, the forecast for two years ago was 19,000, and the trend estimate for last year's forecast was 1,500?

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A) 18,750 B) 19,500 C) 21,000 D) 22,650 E) 22,800

70) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using the least squares trend line for these data?

A) 18,750 B) 19,500 C) 21,000 D) 22,650 E) 22,800

71) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand for manual typewriters based on the following historical data:

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TIME PERIOD

DEMAND

5 years ago

900

4 years ago

700

3 years ago

600

2 years ago

500

Last year

300

What is the forecast for this year using the naive approach?

A) 163 B) 180 C) 100 D) 420 E) 510

72) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand for manual typewriters based on the following historical data: TIME PERIOD

DEMAND

5 years ago

900

4 years ago

700

3 years ago

600

2 years ago

500

Last year

300

What is the forecast for this year using a three-year weighted moving average with weights of .5, .3, and .2?

A) 163 B) 180 C) 300 D) 420 E) 510

73) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand for manual typewriters based on the following historical data:

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TIME PERIOD

DEMAND

5 years ago

900

4 years ago

700

3 years ago

600

2 years ago

500

Last year

300

What is the forecast for this year using exponential smoothing with alpha = .4, if the forecast for TWO years ago was 750?

A) 16.6 B) 180 C) 300 D) 420 E) 510

74) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand for manual typewriters based on the following historical data: TIME PERIOD

DEMAND

5 years ago

900

4 years ago

700

3 years ago

600

2 years ago

500

Last year

300

What is the forecast for this year using trend adjusted (double) smoothing with alpha(1) = .03 and alpha(2) = 0.2, if the forecast for last year was 518.40, the forecast for two years ago was 560.00, and the trend estimate for last year's forecast was -23.6?

A) 416.18 B) 542.00 C) 100.00 D) 200.00 E) 426.12

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75) The business analyst for Ace Business Machines, Inc. wants to forecast this year's demand for manual typewriters based on the following historical data: TIME PERIOD

DEMAND

5 years ago

900

4 years ago

700

3 years ago

600

2 years ago

500

Last year

300

What is the forecast for this year using the least squares trend line for these data?

A) 163 B) 180 C) 300 D) 420 E) 510

76) Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data: a trend has been identified in the data series. WEEK

# STUDENTS

6 weeks ago

5 weeks ago

110

4 weeks ago

3 weeks ago

2 weeks ago

Last week

What is this week's forecast using the naive approach?

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A) 35 B) 50 C) 52 D) 65 E) 78

77) Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data: WEEK

# STUDENTS

6 weeks ago

5 weeks ago

110

4 weeks ago

3 weeks ago

2 weeks ago

Last week

What is this week's forecast using a three-week simple moving average?

A) 49 B) 50 C) 52 D) 65 E) 78

78) Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data:

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WEEK

# STUDENTS

6 weeks ago

5 weeks ago

110

4 weeks ago

95 27

3 weeks ago

2 weeks ago

Last week

What is this week's forecast using exponential smoothing with alpha = .2, if the forecast for two weeks ago was 90?

A) 49 B) 50 C) 52 D) 65 E) 78

79) Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data: WEEK

# STUDENTS

6 weeks ago

5 weeks ago

110

4 weeks ago

3 weeks ago

2 weeks ago

Last week

What is this week's forecast using trend adjusted (double) smoothing with alpha(1) = 0.5 and alpha(2) = 0.1, if the forecast for last week was 65, the forecast for two weeks ago was 75, and the trend estimate for last week's forecast was -5?

A) 49 B) 50 C) 55 D) 65 E) 78

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80) Professor Z needs to allocate time among several tasks next week to include time for students' appointments. Thus, he needs to forecast the number of students who will seek appointments. He has gathered the following data: WEEK

# STUDENTS

6 weeks ago

5 weeks ago

110

4 weeks ago

3 weeks ago

2 weeks ago

Last week

What is this week's forecast using the least squares trend line for these data?

A) 49 B) 50 C) 52 D) 65 E) 78

81) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

What is this year's forecast using the naive approach?

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A) 22,000 B) 20,000 C) 18,000 D) 15,000 E) 12,000

82) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

What is this year's forecast using a two-year weighted moving average with weights of .7 and .3?

A) 19,400 B) 18,600 C) 19,000 D) 11,400 E) 10,600

83) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:

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YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

What is this year's forecast using exponential smoothing with alpha = .2, if last year's smoothed forecast was 15,000?

A) 20,000 B) 19,000 C) 17,500 D) 16,000 E) 15,000

84) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

What is this year's forecast using the least squares trend line for these data?

A) 20,000 B) 21,000 C) 22,000 D) 23,000 E) 24,000

85) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:

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YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

The previous trend line had predicted 18,500 for two years ago, and 19,700 for last year. What was the mean absolute deviation (MAD) for these forecasts?

A) 100 B) 200 C) 400 D) 500 E) 800

86) An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data: YEAR

QUANTITY SOLD

Four years ago

10,000

Three years ago

12,000

Two years ago

18,000

Last year

20,000

The previous trend line had predicted 18,500 for two years ago, and 19,700 for last year. What was the mean absolute percent error (MAPE) for these forecasts?

A) 0.21 B) 2.14 C) 4.28 D) 100 E) 400

87) The dean of a school of business is forecasting total student enrolment for this year's summer session classes based on the following historical data:

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YEAR

TOTAL ENROLMENT

Four years ago

2,000

Three years ago

2,200

Two years ago

2,800

Last year

3,000

What is this year's forecast using the naive approach?

A) 2,000 B) 2,200 C) 2,800 D) 3,200 E) 3,000

88) The dean of a school of business is forecasting total student enrolment for this year's summer session classes based on the following historical data: YEAR

TOTAL ENROLMENT

Four years ago

2,000

Three years ago

2,200

Two years ago

2,800

Last year

3,000

What is this year's forecast using a three-year simple moving average?

A) 2,667 B) 2,600 C) 2,500 D) 2,400 E) 2,333

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89) The dean of a school of business is forecasting total student enrolment for this year's summer session classes based on the following historical data: YEAR

TOTAL ENROLMENT

Four years ago

2,000

Three years ago

2,200

Two years ago

2,800

Last year

3,000

What is this year's forecast using exponential smoothing with alpha = .4, if last year's smoothed forecast was 2600?

A) 2,600 B) 2,760 C) 2,800 D) 3,840 E) 3,000

90) The dean of a school of business is forecasting total student enrolment for this year's summer session classes based on the following historical data: YEAR

TOTAL ENROLMENT

Four years ago

2,000

Three years ago

2,200

Two years ago

2,800

Last year

3,000

What is the annual rate of change (slope) of the least squares trend line for these data?

A) 0 B) 200 C) 400 D) 180 E) 360

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91) The dean of a school of business is forecasting total student enrolment for this year's summer session classes based on the following historical data: YEAR

TOTAL ENROLMENT

Four years ago

2,000

Three years ago

2,200

Two years ago

2,800

Last year

3,000

What is this year's forecast using the least squares trend line for these data?

A) 3,600 B) 3,500 C) 3,400 D) 3,300 E) 3,200

92) The owner of Leisure Boutique in a local mall is forecasting this month's (October's) demand for one of her best-selling products based on the following historical data: the series displays a trend. MONTH

QUANTITY SOLD

April

100

May

140

June

110

July

150

August

120

September

160

What is this month's forecast using the naive approach?

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A) 100 B) 200 C) 130 D) 140 E) 120

93) The owner of Leisure Boutique in a local mall is forecasting this month's (October's) demand for one of her best-selling products based on the following historical data: MONTH

QUANTITY SOLD

April

100

May

140

June

110

July

150

August

120

September

160

What is this month's forecast using a four-month weighted moving average with weights of .4, .3, .2, and .1?

A) 120 B) 129 C) 141 D) 135 E) 140

94) The owner of Leisure Boutique in a local mall is forecasting this month's (October's) demand for one of her best-selling products based on the following historical data:

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MONTH

QUANTITY SOLD

April

100

May

140

June

110

July

150

August

120

September

160

What is this month's forecast using exponential smoothing with alpha = .2, if August's forecast was 145?

A) 144 B) 140 C) 142 D) 148 E) 163

95) The owner of Leisure Boutique in a local mall is forecasting this month's (October's) demand for one of her best-selling products based on the following historical data: MONTH

QUANTITY SOLD

April

100

May

140

June

110

July

150

August

120

September

160

What is the monthly rate of change (slope) of the least squares trend line for these data?

A) 320 B) 102 C) 8 D) -0.4 E) -8

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96) The owner of Leisure Boutique in a local mall is forecasting this month's (October's) demand for one of her best-selling products based on the following historical data: MONTH

QUANTITY SOLD

April

100

May

140

June

110

July

150

August

120

September

160

What is this month's forecast using the least squares trend line for these data?

A) 1,250 B) 128.6 C) 102 D) 158 E) 164

97) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using the naive approach?

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A) 18,750 B) 19,500 C) 21,000 D) 22,000 E) 22,800

98) The president of Northern University wants to forecast student enrolments for this academic year based on the following historical data: YEAR

ENROLMENTS

5 years ago

15,000

4 years ago

16,000

3 years ago

18,000

2 years ago

20,000

Last year

21,000

What is the forecast for this year using a three period moving average?

A) 16,333 B) 17,250 C) 18,000 D) 19,667 E) 21,000

99)

When forecasting over the long-term what type of data is typically used?

A) Weekly B) Monthly C) Quarterly D) Semi-annual E) Annual

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100)

When forecasting over the medium-term what type of data is typically used?

A) Weekly B) Monthly C) Quarterly D) Semi-annual E) Annual

101)

Judgemental methods would be used in which of the following situations?

A) When there is data on past sales. B) When forecasting services. C) When introducing new products. D) Forecasting for established products. E) When an identifiable trend is present.

102)

Judgemental methods would NOT be used in which of the following situations?

A) When introducing new products. B) When redesigning existing products. C) Using sales promotions. D) When an identifiable trend is present. E) When redesigning existing services.

103)

Who is typically involved in the forecasting process when executive opinions are used?

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A) Upper-level managers B) All managers C) Sales staff D) Customers or potential customers E) Experts

104)

The use of consumer surveys enables organizations to

consumer opinions.

A) determine B) solidify C) sway D) sample E) question

105)

Historical analogies are best suited for which of the following?

A) When forecasting established products. B) When forecasting new services. C) When an identified trend is present. D) When there is seasonality in demand. E) When forecasting new but similar products.

106) The demand for cranberry-apply drink can be used to forecast the demand for cranberrygrape drink. Which judgemental method is this?

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A) Executive opinions. B) Historical analogies. C) Consumer surveys D) Expert opinions E) Time series analogy.

107)

Averaging methods seek to minimize variations in the data.

variations and tend to lag in identifying

A) old, new B) seasonal, cyclical C) random, real D) simple, complex E) inaccurate, accurate

108)

Which of the following averaging methods of forecasting utilizes a smoothing constant?

A) Naive B) Moving average C) Weighted moving average D) Exponential smoothing E) Trend

109)

When examining historical data, the Trend component may be

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A) rising, falling B) seasonal, cyclical C) averaged, multiplied D) linear, nonlinear E) dependant, independent

110)

A positive slope indicates the amount the forecast will

each time period.

A) increase B) decrease C) average D) predict E) yield

111)

When is it most appropriate to use a nonlinear trend to forecast?

A) When there is stable demand. B) When there is a steady decrease in demand. C) When there is a steady increase in demand. D) During the growth phase of a product life cycle. E) In the early or final phases of a product life cycle.

112)

Which of the following would be considered a seasonal variation?

A) Demand for products or services during the growth phase of the life cycle. B) When a leading variable can be identified. C) A restaurant that experiences higher demand on weekends. D) Demand during the maturity phase of the life cycle. E) Demand for products and services when a new government is elected.

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113) Linear regression uses a predictor and predicted variable. What is another name for these two terms?

A) Dependent, slope B) Independent, deviations C) Intercept, slope D) Independent, dependent E) Coefficients, indicators

114) The objective of linear regression is to obtain an equation of a straight line. That is this line called?

A) Trend line B) Life cycle line C) Line of slope D) Relationship line E) Least squares line

115)

In the least squares equation what does the a value represent?

A) relatives B) y intercept C) Average demand D) Slope E) coefficients

116)

In the least squares equation what does the b value represent?

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A) Slope B) Plot angle C) Average demand D) coefficients E) y intercept

117) When using correlation coefficient which of the following indicates a strong positive linear relationship?

A) +1.00 B) -1.00 C) +2.00 D) -2.00 E) 0.00

118) When using correlation coefficient which of the following indicates a strong negative linear relationship?

A) +1.00 B) +2.00 C) -1.00 D) -2.00 E) .000

119)

Which of the following is NOT a basic assumption of simple linear regression analysis?

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A) Variations around the line are random. B) Predictions are made only within the range of observed values. C) No patterns should be apparent. D) Predictions are made outside of the range of observed values. E) Deviations around the average line are normally distributed.

120)

Which forecasting model should be used when more than one predictor variable exists?

A) Linear regression B) Multiple correlation C) Simple linear regression D) Correlation coefficient E) Multiple regression

121) What is the term for the difference between the value that actually occurs and the value that was forecast?

A) Forecast deviation B) Forecast error C) Forecast delay D) Forecast variation E) Mean absolute deviation

122)

What is the best way to determine if a forecast is performing adequately?

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A) Contact customers to see if they are satisfied. B) Make multiple forecasts for the same product. C) Track forecast errors and analyse them. D) Use a variety of smoothing constants when forecasting. E) Compare sales from different periods of time.

123)

Which of the following would NOT be a source of forecast error?

A) The omission of an important variable. B) A change or shift in the variable. C) Random variations D) Variables that are known and stable. E) Severe weather or some type of natural phenomena.

124)

Values of the tracking signal can be either

A) statistical, nominal B) averaged, forecast C) statistical, averaged D) positive, negative E) cumulative, individual

125) A value falls outside of the acceptable range of the tracking signal. What does this indicate?

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A) Bias in the forecast B) The forecast is performing as expected C) The limits need to be adjusted D) The forecast model is correct E) Another method of determining error needs to be determined

126)

A manager can take either a

or a

approach to a forecast.

A) probable, statistic B) reactive, proactive, C) past, future D) averaging, trend E) regression, causal,

127)

What is the biggest benefit to using computers in preparing forecasts?

A) B) C) D)

To check the validity of manual forecast calculations. To be used as a back-up in case the manual system fails. The ability to develop and revise forecasts quickly. Computers are not widely used to create forecasts as the data required must be

timely. E) Computers will not identify forecasts that are inaccurate or misleading.

128) Develop a forecast for the next period, given the data below, using a 3-period moving average.

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Period

Demand

129)

Consider the data below: Period

Demand

(i) Determine a naive forecast for period 14. (ii) Using exponential smoothing with a = .2, and F 12 = 80, what would the forecast for period 14 be?

130) A company has been using exponential smoothing with an alpha of .2 to forecast weekly truck sales. Given the data below, would a naive forecast have provided greater accuracy? Explain. Assume an initial exponential forecast of 60 units in period 2 (i.e., no forecast for period 1).

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Period

Demand

131)

Demand for the last four months was: Month

Mar

Apr

May

Jun

Demand

(i) Predict demand for July using each of these methods: (1) a 3-period moving average (2) exponential smoothing with alpha equal to .20. Use the naïve approach to determine the forecast for April. (ii) If the naive approach had been used to predict demand for April through June, what would MAD have been for those months?

132) Given the data below, develop a forecast for the following period using a three-period weighted moving average and weights of .5, .3, and .2. Period

Demand

133) A manager is using exponential smoothing to predict merchandise returns at a suburban branch of a department store chain. Given a previous forecast of 140 items, an actual number of returns of 148 items, and a smoothing constant equal to .15, what is the forecast for the next period?

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134)

A manager is using the equation below to forecast quarterly demand for a product:

Y t = 6,000 + 80t where t = 0 at Q2 of last year Quarter relatives are Q1 = .6, Q2 = .9, Q3 = 1.3, and Q4 = 1.2. What forecasts are appropriate for the last quarter of this year and the first quarter of next year?

135) Develop a linear trend equation for the data on bread deliveries shown below. Forecast deliveries for period 11 through 14. Period

Dozen deliveries

648

590

631

769

745

856

760

962

990

1100

136) A manager uses this equation to predict demand: Yt = 20 + 4t. Over the past 8 periods, demand has been as follows. Are the results acceptable? Explain. Period, t

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Demand

137) Over the past five years, a firm's sales have averaged 250 units in the first quarter of each year, 100 units in the second quarter, 150 units in the third quarter, and 300 units in the fourth quarter. What are appropriate quarter relatives for this firm's sales? Hint: Only minimal computations are necessary.

138)

A firm has been using the following equation to predict annual demand for helix gears:

Y t = 55 + 4t Demand for the past few years is shown below. Is the forecast performing as well as it might? Explain. Year

Demand

139) Use linear regression to develop a predictive model for demand for ironing board covers based on sales of irons. Year

Sales of Irons (000)

Demand for Covers (000)

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(i) Develop the equation. (ii) What is the coefficient of correlation for this data?

140)

141)

Given the following data, develop a linear regression model for y as a function of x. X

142) A manager has been using a certain technique to forecast demand for units of web publishing software for the past six periods. Actual and predicted amounts are shown below. Would a naive forecast have produced better results? Version 1

Period

Demand

Forecast

143) A manager wants to choose one of two forecasting alternatives. Each alternative was tested using historical data. The resulting forecast errors for the two are shown in the table. Analyze the data and recommend a course of action to the manager. Period, t

Alt. #1

-2

-1

Alt. #2

-3

-1

144) Time Period

Demand

7 years ago

6 years ago

5 years ago

4 years ago

3 years ago

2 years ago

Last year

What is this year's forecast using a four-year simple moving average?

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145) Time Period

Demand

7 years ago

6 years ago

5 years ago

4 years ago

3 years ago

2 years ago

Last year

What is this year's forecast using exponential smoothing with alpha = .25, if last year's smoothed forecast was 45?

146)

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Time Period

Demand

7 years ago

6 years ago

5 years ago

4 years ago

3 years ago

2 years ago

Last year

What is this year's forecast using trend adjusted (double) smoothing with alpha(1) = 0.2 and alpha(2) = 0.1, if the forecast for last year was 56, the forecast for two years ago was 46, and the trend estimate for last year's forecast was 7?

147) Time Period

Demand

7 years ago

6 years ago

5 years ago

4 years ago

3 years ago

2 years ago

Last year

What are this and next year's forecasts using the least squares trend line for these data?

148) Season YEAR

SPRING

SUMMER

FALL

WINTER

Three years ago

Two years ago

Last year

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What is the linear regression trend line for these data (t = 1 for spring, three years ago)?

149) Season YEAR

SPRING

SUMMER

FALL

WINTER

Three years ago

Two years ago

Last year

What is the centred moving average for each season?

150) Season YEAR

SPRING

SUMMER

FALL

WINTER

Three years ago

Two years ago

Last year

What is the seasonal relative for each season?

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151) Season YEAR

SPRING

SUMMER

FALL

WINTER

Three years ago

Two years ago

Last year

What is this year's seasonally adjusted forecast for each season?

152) Since a primary goal of operations management is to match supply to demand, forecasts become a basic input to the decision process because they provide information on past demand. ⊚ ⊚

true false

153) Forecasting techniques generally assume that the same causal system that existed in the past will continue to exist in the future. ⊚ ⊚

154)

true false

Forecasts are rarely perfect. ⊚ ⊚

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true false

155) Generally the responsibility for preparing demand forecasts for finished goods or services lies with operations rather than marketing or sales departments. ⊚ ⊚

true false

156) Forecasts for groups of items tend to be less accurate than forecasts for individual items because forecasts for individual items are not subject to as many influencing factors. ⊚ ⊚

true false

157) Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts. ⊚ ⊚

158)

true false

Forecast accuracy tends to increase as the time horizon increases. ⊚ ⊚

true false

159) The purpose of the forecast should be established first so that the level of detail, amount of resources, and accuracy level can be indicated. ⊚ ⊚

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true false

160) Time series techniques involve identification of explanatory variables that can be used to predict future demand. ⊚ ⊚

true false

161) A consumer survey is an easy and sure way to obtain direct, in person, input from existing customers. ⊚ ⊚

true false

162) The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast. ⊚ ⊚

163)

Forecasts based on time series (historical) data are referred to as associative forecasts. ⊚ ⊚

164)

true false

As a forecasting technique, the Delphi technique is useful for technological forecasting. ⊚ ⊚

true false

165) One weakness of the Delphi method is that there is a high risk that one person's opinion will prevail.

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⊚ ⊚

true false

166) Forecasting techniques that are based on time series data assume that future values of the series will duplicate past values. ⊚ ⊚

true false

167) The primary difference between irregular and random variations is the ability to attribute variations to a specific cause. ⊚ ⊚

true false

168) Increasing the number of data points included in a moving average will result in a forecast that is smoother but less responsive to changes. ⊚ ⊚

169)

The naive approach to forecasting requires a linear trend line. ⊚ ⊚

170)

true false

The naive forecast is limited in its application to series that reflect no trend or seasonality. ⊚ ⊚

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true false

171) The naive forecast can serve as a standard of comparison against which to judge the cost and accuracy of other techniques. ⊚ ⊚

true false

172) A moving average forecast tends to be more responsive to changes in the data series when more data points are included in the average. ⊚ ⊚

true false

173) In order to update a moving average forecast, the values of each data point in the average must be known. ⊚ ⊚

true false

174) A simple moving average assigns equal weight to each data point that is represented by the average. ⊚ ⊚

true false

175) An advantage of a weighted moving average is that more recent experience is given more weight than less recent experience. ⊚ ⊚

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true false

176)

Exponential smoothing is a form of weighted averaging. ⊚ ⊚

true false

177) A smoothing constant of .1 will cause an exponential smoothing forecast to react more quickly to a sudden change than a value of .3 will. ⊚ ⊚

true false

178) In exponential smoothing, an alpha of .30 will cause a forecast to react more quickly to a large error than will an alpha of .20. ⊚ ⊚

179)

Trend-Adjusted Exponential Smoothing is also called double exponential smoothing. ⊚ ⊚

180)

true false

Trend adjusted exponential smoothing requires selection of two smoothing constants. ⊚ ⊚

true false

181) An advantage of "trend adjusted exponential smoothing" over the "linear trend equation" is its ability to adjust over time to changes in the trend.

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⊚ ⊚

true false

182) A seasonal relative (or seasonal indexes) is expressed as a percentage of the average or trend in a time series. ⊚ ⊚

183)

true false

In order to compute seasonal relatives, the trend of past data must be computed or known. ⊚ ⊚

true false

184) Removing the seasonal component from a data series (deseasonalizing) can be accomplished by dividing each data point by its appropriate seasonal relative. ⊚ ⊚

true false

185) Centred moving averages (CMA) is a better way to compute seasonal relatives than using a simple moving average if there is a linear trend in a time series. ⊚ ⊚

186)

true false

Correlation measures the strength and direction of a relationship between variables. ⊚ ⊚

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true false

187) Multiple regression procedures permit us to extend associative models to relationships that involve more than one predictor variable. ⊚ ⊚

true false

188) The forecast error is the difference between the actual value and the forecast value for a given period. ⊚ ⊚

true false

189) Positive forecast errors, the case when the forecast is low relative to the actual value, are preferable to negative forecast errors, the case when the forecast is higher than the actual value ⊚ ⊚

190)

true false

MAD is equal to the square root of MSE. ⊚ ⊚

true false

191) The MSE is the best measure to use in a control chart to monitor if forecast error is randomly distributed around a mean value of 0. ⊚ ⊚

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true false

192) The square root of MSE is used to estimate the sample standard deviation of forecast errors. ⊚ ⊚

193)

A control chart involves setting control limits to monitor cumulative forecast error. ⊚ ⊚

194) zero.

true false

The use of a control chart assumes that errors are normally distributed about a mean of

⊚ ⊚

true false

195) When error values fall outside the limits of a control chart, this signals a need for corrective action ⊚ ⊚

true false

196) Using control charts to monitor forecast error are best suited for forecasting applications involving a single forecast rather than applications involving a series of forecasts (e.g. monthly sales). ⊚ ⊚

true false

197) A random pattern of errors within the limits of a control chart signals a need for corrective action.

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⊚ ⊚

true false

198) When all the forecast errors plotted on a control chart are either all positive, or all negative, this shows that the forecasting technique is performing adequately. ⊚ ⊚

199)

true false

The best forecast is always the one that is the most accurate. ⊚ ⊚

true false

200) Moving average and exponential smoothing forecasting techniques are used for long range forecasts. ⊚ ⊚

true false

201) A proactive approach to forecasting views forecasts as probable descriptions of future demand, assuming actions can be taken to meet that demand. ⊚ ⊚

true false

202) A proactive approach to forecasts might involve advertising or other attempts to influence the demand level. ⊚ ⊚

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true false

203)

For production planners to utilize a forecast it should be expressed in sales dollars. ⊚ ⊚

true false

204) Forecasts over the medium-term typically involve a mix of judgemental and quantitative methods. ⊚ ⊚

true false

205) When forecasting using executive opinions there is a risk that one person's view will prevail. ⊚ ⊚

true false

206) The current level of customer inventory can be useful when a sales force opinion forecast is being used. ⊚ ⊚

207)

Analysis of a trend involves developing an equation that will describe the trend. ⊚ ⊚

208)

true false

The slope is the amount the forecast will change each time period.

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⊚ ⊚

true false

209) A nonlinear trend is not appropriate for products during the early or final phases of the product life cycle. ⊚ ⊚

210)

true false

Seasonal variations are regularly repeating wavelike movements in time series data. ⊚ ⊚

true false

211) Cycles are wavelike movements in demand that are similar to seasonal variations but over a shorter duration. ⊚ ⊚

true false

212) When using linear regression analysis the dependent variable should be plotted versus time to determine if a pattern is present. ⊚ ⊚

true false

213) It is possible to use two forecasts. One to predict what will happen under expected conditions and one based on a "what-if" approach. ⊚ ⊚

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true false

214) The use of computers in forecasting does NOT allow managers to revise forecasts quickly. ⊚ ⊚

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true false

Answer Key Test name: Chap 03_7ce 1) E 2) E 3) C 4) C 5) B 6) D 7) C 8) D 9) E 10) E 11) C 12) C 13) C 14) A 15) C 16) A 17) E 18) D 19) A 20) C 21) D 22) D 23) B 24) D 25) D 26) B Version 1

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

57) D 58) C 59) C 60) D 61) B 62) A 63) A 64) B 65) B 66) A 67) A 68) B 69) D 70) E 71) C 72) D 73) E 74) A 75) B 76) A 77) D 78) E 79) C 80) A 81) A 82) A 83) D 84) E 85) C 86) B Version 1

87) D 88) A 89) B 90) E 91) C 92) B 93) C 94) A 95) C 96) D 97) D 98) D 99) E 100) B 101) C 102) D 103) A 104) D 105) E 106) B 107) C 108) D 109) D 110) A 111) E 112) C 113) D 114) E 115) B 116) A Version 1

117) A 118) C 119) D 120) E 121) B 122) C 123) D 124) D 125) A 126) B 127) C 152) FALSE 153) TRUE 154) TRUE 155) FALSE 156) FALSE 157) TRUE 158) FALSE 159) TRUE 160) FALSE 161) FALSE 162) TRUE 163) FALSE 164) TRUE 165) FALSE 166) FALSE 167) TRUE 168) TRUE 169) FALSE 170) FALSE Version 1

171) TRUE 172) FALSE 173) TRUE 174) TRUE 175) TRUE 176) TRUE 177) FALSE 178) TRUE 179) TRUE 180) TRUE 181) TRUE 182) TRUE 183) TRUE 184) TRUE 185) TRUE 186) TRUE 187) TRUE 188) TRUE 189) FALSE 190) FALSE 191) FALSE 192) TRUE 193) FALSE 194) TRUE 195) TRUE 196) FALSE 197) FALSE 198) FALSE 199) FALSE 200) FALSE Version 1

201) FALSE 202) TRUE 203) FALSE 204) TRUE 205) TRUE 206) TRUE 207) TRUE 208) TRUE 209) FALSE 210) TRUE 211) FALSE 212) TRUE 213) TRUE 214) FALSE

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Chapter 4S: Reliability 1) The probability that a product will perform its intended function under prescribed conditions is:

A) reliability. B) failure. C) functionality. D) redundancy. E) manufacturability.

2) A system is comprised of two separate units which must both function in order for the system to perform as intended. The reliability of one is .4, and the reliability of the other is .5. The overall system reliability is:

A) .90 B) .30 C) .20 D) .10 E) .02

3) An electronic product consists of three components in a series design. One component has a reliability of .90. The two others each has a reliability of .98. What is the overall product reliability?

A) 0.8644 B) 0.882 C) 0.945 D) 0.97 E) 0.998

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4) A product comprised of two components whose failure probabilities are .9 each, has a reliability of:

A) 1.80 B) 90 C) 81 D) 80 E) 20

5) An early warning security fence has three major components which must each perform in order for the system to perform. Their reliabilities are .4, .3, and .2. The system reliability is equal to:

A) .024 B) .076 C) .100 D) .336 E) .900

6) One of the solar instruments on a satellite has three major parts which must all operate. Two have reliabilities of .7, and the other has a reliability of .9. In case the system fails, there is an identical backup system for each component which kicks on automatically. The overall reliability of the system, including the backups, is closest to:

A) .40 B) .50 C) .60 D) .70 E) .80

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What is the reliability of the following system?

A) 0.504 B) 0.70 C) .7207 D) 0.8 E) .9901

What is the probability of failure of the following system?

A) .2793 B) .3152 C) .496 D) .4550 E) .5

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What is the probability of success of the following system?

A) 0.994 B) 0.96 C) 0.7611 D) 0.6012 E) 0.4536

10)

What is the probability of failure of the following system?

A) 0.7613 B) 0.6012 C) 0.5464 D) 0.4389 E) 0.3988

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11) A garage door opener has three sections, which have reliabilities of .9, .8, and .9. The lowest of these has an identical backup which automatically goes on if the original fails. All three parts must operate to perform its intended function. The system reliability is closest to:

A) .40 B) .50 C) .60 D) .70 E) .80

12) A system is composed of two parts which must both operate in order for the system to perform as intended. The parts have reliabilities of .6 and .5. There is an identical backup for each part. The backup system is connected to the main system by a switch which has a reliability of .9. The probability that the overall system will operate is closest to:

A) .30 B) .40 C) .50 D) .60 E) .70

13) A system is comprised of three separate components A, B, and C which must all function in order for the system to perform as intended. The reliability of A is .7, the reliability of B is .9 and the reliability of the C is .8. What is the probability of failure of the overall system?

A) .2793 B) .3152 C) .496 D) .4550 E) .5

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14) A system is comprised of three separate components A, B, and C which must all function in order for the system to perform as intended. The reliability of A is .7, the reliability of B is .9 and the reliability of the C is .8. In case the system fails, there is an identical backup for component A and an identical backup for component B which kick on automatically. What is the reliability of the overall system including the backups?

A) 0.504 B) 0.70 C) .7207 D) 0.8 E) .9901

15) A system is comprised of three separate components A, B, and C which must all function in order for the system to perform as intended. The reliability of A is .7, the reliability of B is .9 and the reliability of the C is .8. In case the system fails, there is an identical backup for component A and an identical backup for component B which kick on automatically. What is the probability of failure of the overall system including the backups?

A) .2793 B) .3152 C) .496 D) .4550 E) .5

16) An electrical appliance will not work unless component QK does. Component QK's reliability is 0.95. Every other part of the appliance is 100 percent reliable. What would the reliability of the appliance be if a backup QK were added?

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A) .95 B) .9975 C) .9025 D) .9205 E) .9795

17) A new missile is comprised of three components: a gyroscope, which has a random failure rate of 3 in every 10 launches; a computer, which has a random failure rate of 2 in every 10 launches; and a rocket motor, which has a random failure of 1 in every 10 launches. What is the probability that the gyroscope will perform reliably during a launch?

A) 0.300 B) 0.504 C) 0.700 D) 0.889 E) 0.910

18) A new missile is comprised of three components: a gyroscope, which has a random failure rate of 3 in every 10 launches; a computer, which has a random failure rate of 2 in every 10 launches; and a rocket motor, which has a random failure of 1 in every 10 launches. What is the probability of success during a launch?

A) 0.300 B) 0.504 C) 0.700 D) 0.889 E) 0.910

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19) A new missile is comprised of three components: a gyroscope, which has a random failure rate of 3 in every 10 launches; a computer, which has a random failure rate of 2 in every 10 launches; and a rocket motor, which has a random failure of 1 in every 10 launches. If they were to connect an identical, backup gyroscope with a perfectly reliable switch to the primary gyroscope, what would be the reliability of the gyroscope function during a launch?

A) 0.3 B) 0.504 C) 0.7 D) 0.889 E) 0.91

20) A calculator is perfectly reliable except for two parts: its microchip, which has a failure rate of one in every twenty hours of operation; and its battery, which has a failure rate of one in every ten hours of operation. Assuming that a new battery has just been installed, what is the probability that the battery will perform reliably during one-hour of operation?

A) 0.05 B) 0.10 C) 0.20 D) 0.90 E) 0.95

21) A calculator is perfectly reliable except for two parts: its microchip, which has a failure rate of one in every twenty hours of operation; and its battery, which has a failure rate of one in every ten hours of operation. Assuming that a new battery has just been installed, what is the probability that the calculator will perform reliably during one-hour of operation?

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A) 0.800 B) 0.855 C) 0.900 D) 0.950 E) 1.850

22) A calculator is perfectly reliable except for two parts: its microchip, which has a failure rate of one in every twenty hours of operation; and its battery, which has a failure rate of one in every ten hours of operation. Assuming that a new battery has just been installed and one spare battery is available, what is the probability that the calculator will perform reliably during onehour of operation?

A) 0.89775 B) 0.9405 C) 0.987525 D) 0.99 E) 0.9975

23) A calculator is perfectly reliable except for two parts: its microchip, which has a failure rate of one in every twenty hours of operation; and its battery, which has a failure rate of one in every ten hours of operation. Also, on average the battery will fail in five hours, with a standard deviation of 30 minutes. What is the probability that a new battery will fail within six hours?

A) 0.0228 B) 0.4772 C) 0.5 D) 0.9544 E) 0.9772

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24) A calculator is perfectly reliable except for two parts: its microchip, which has a failure rate of one in every twenty hours of operation; and its battery, which has a failure rate of one in every ten hours of operation. Also, on average the battery will fail in five hours, with a standard deviation of 30 minutes. What service life should the manufacturer specify in order to have a .8413 probability that a battery will not fail within that amount of time?

A) 3.5 hours B) 4 hours C) 4.5 hours D) 5 hours E) 5.5 hours

25) The plant manager for the local electric utility company wants to know the reliability of one of his small hydroelectric power generating systems. This system is comprised of two components: a generator which has a random failure rate of one in every two years of operation; and a transformer which has a random failure rate of one in every five years of operation. What is the probability that this system will perform reliably for a period of one year?

A) 0.4 B) 0.5 C) 0.8 D) 0.9 E) 1.3

26) The plant manager for the local electric utility company wants to know the reliability of one of his small hydroelectric power generating systems. This system is comprised of two components: a generator which has a random failure rate of one in every two years of operation; and a transformer which has a random failure rate of one in every five years of operation. If he were to add just a backup generator, with the same failure rate, what would be the probability that this system would perform reliably for a period of one year?

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A) 0.48 B) 0.60 C) 0.72 D) 0.75 E) 0.96

27) The plant manager for the local electric utility company wants to know the reliability of one of his small hydroelectric power generating systems. This system is comprised of two components: a generator which has a random failure rate of one in every two years of operation; and a transformer which has a random failure rate of one in every five years of operation. If he were to add both a backup generator and a backup transformer, with the same failure rates, what would be the probability that this system would perform reliably for a period of one year?

A) 0.48 B) 0.60 C) 0.72 D) 0.75 E) 0.96

28) The plant manager for the local electric utility company wants to know the reliability of one of his small hydroelectric power generating systems. This system is comprised of two components: a generator which has a random failure rate of one in every two years of operation; and a transformer which has a random failure rate of one in every five years of operation. If the transformer has a mean time to wear-out of 20 years with a standard deviation of 2 years, what is the probability that it will fail within 19 years?

A) 0.1915 B) 0.3085 C) 0.383 D) 0.5 E) 0.6915

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TEST BANK for Operations Management (Canadian Edition) 7th Edition by William Stevenson, Hydeh Motta