Introduction to Operations Management Exam
Questions
Course Introduction
Introduction to Operations Management explores the foundational principles and practices involved in the design, operation, and improvement of the systems that create and deliver a firms products and services. Students will examine key topics such as process analysis, capacity planning, inventory management, quality control, supply chain management, and lean operations. The course emphasizes both strategic and tactical decision-making and illustrates how effective operations management contributes to organizational efficiency and competitiveness in a global market. Through case studies, real-world examples, and analytical tools, students will develop practical skills for identifying and solving operational challenges in diverse industries.
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OM 5 5th Edition by David Alan Collier
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Page 2
Chapter 1: Goods, Services, and Operations Management
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Q1) Ensuring that a credit card has accurate customer information and is delivered quickly to the customer is an example of inventory management in operations management (OM).
A)True
B)False
Answer: False
Q2) Which of the following statements is FALSE concerning the discussion of the Zappos case study?
A) An example of a primary process at Zappos is "order entry."
B) The value of a loyal customer is an important part of Zappos' strategy because of its emphasis on more repeat customers through word of mouth.
C) Zappos' first core value is "Deliver WOW through service."
D) Zappos' call center is the gateway to its business and represents a support process. Answer: D
Q3) The ability to download music onto a cell phone is considered a primary service.
A)True
B)False
Answer: False
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3
Chapter 2: Value Chains
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Q1) Global purchasing can be a difficult process to manage when sources of supply, regional economies, and even governments remain constant over time.
A)True
B)False
Answer: False
Q2) A value chain describes the flow of customer information through a production system.
A)True
B)False
Answer: False
Q3) General Electric would be considered a multinational enterprise because it sources, markets, and produces its goods in several countries.
A)True
B)False
Answer: True
Q4) Forward integration might include acquiring a customer.
A)True
B)False
Answer: True
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Chapter 3: Measuring Performance in Operations
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Q1) Which of the following categories in Baldrige model of organizational performance addresses how an organization designs, manages, and improves its work systems to deliver customer value?
A) Leadership
B) Workforce focus
C) Customer focus
D) Operations focus
Answer: D
Q2) Which of the following is the best way to use the $100,000 in improvement funds?
A) Do nothing (stay with base case).
B) Improve option (a)-increase the contribution margin to 0.58.
C) Improve option (b)-reduce the defection rate to 15%.
D) Improve option (c)-increase the repurchase frequency to 4.
E) Two improvement options have equal VLC dollars, so split the funds between the two tied improvement options.
Answer: D
Q3) The customer defection rate is expressed as 1/customer retention rate.
A)True
B)False
Answer: False
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Chapter 4: Operations Strategy
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Q1) Identify a true statement about the role of quality in gaining a competitive advantage.
A) Quality is unrelated to return on investment for most kinds of market situations.
B) A strategy of quality improvement is usually accompanied by increased short-run profitability.
C) Producers of high-quality goods usually charge low prices.
D) Businesses offering premium-quality goods usually have large market shares.
Q2) What do managers need to understand in order to create a sustainable competitive advantage?
Q3) With regard to the three types of attributes customers use in evaluating the quality of goods and services, medical diagnosis would best be classified as high in _____.
A) variant attributes
B) experience attributes
C) credence attributes
D) search attributes
Q4) Explain how sustainability is related to operations strategy.
Q5) Explain core competencies with examples.
Q6) Explain the concepts of search, experience, and credence attributes.
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Chapter 5: Technology and Operations Management
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Q1) A firm must make a choice between a manual and a semi-automatic production process for a new product line. Following are the costs for each process: \(\begin{array}{|l|c|c|}
\hline \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \\
\hline \text { Manual } & \$ 200,000 & \$ 85.00 \\
\hline \text { Semi-Automatic } & \$ 500,000 & \$ 55.00 \\
\hline
\end{array}\)
a.Above what breakeven production quantity would the semi-automatic alternative be preferred?
b.Which process is more economical for an annual production volume of 5,000 units?
c.Which process is more economical for an annual production volume of 9,000 units?
Q2) Which of the following is NOT an activity handled by a return facilitator?
A) Recommending a new supplier
B) Repairing the manufactured good
C) Requesting money back for a customer
D) Invoking the service guarantee
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) The roof of the House of Quality shows the relationship matrix structure between the voice of the customer and the technical features.
A)True
B)False
Q2) Determine the system reliability if the individual component reliabilities are A = 0.92, B = 0.94, C = 0.95, D = 0.80, and E = 0.86, where A, B, and C are series components, D and E are parallel components.
Q3) Assume the specifications for a part (in inches) are 5.00 ± 0.37, and the Taguchi loss function is estimated to be L(x) = 9,300 (x - T)<sup>2</sup>. Determine the estimated loss if the quality characteristic under study takes on a value of 5.50 inches.
A) $4,650.00
B) $3,441.00
C) $9,300.00
D) $2,325.00
Q4) In designing a service-delivery system, a good job and process design can usually overcome a poor location.
A)True
B)False
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Page 8
Chapter 7: Process Selection, Design, and Analysis
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Q1) Explain each axis of the product-process matrix. Where is the most appropriate match? Also, discuss the importance of the matrix to a company's life cycle.
Q2) In service operations, significant volume increases can and frequently are made without changes in the service process, as would be expected in manufacturing. A)True B)False
Q3) For a Marriott hotel call center the expected service rate was 2.0 minutes per telephone call per customer service representative (CSR). With 3 telephone CSRs on duty during the 6:30 to 7:00 a.m. time period, and assuming a 90% target CSR labor utilization rate, how many telephone calls can these 3 CSRs handle during this time period?
Q4) A car rental company at a major airport has 80% of its fleet of 200 cars rented each day on average. Cars are rented for an average of 5 days. How many rentals are processed each day on average?
Q5) Differentiate between custom, option, and standard goods and services. Also, give a goods and a service example of each.
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Page 9
Chapter 8: Facility and Work Designs
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Q1) Which one of the following statements is TRUE regarding the BankUSA: Cash Movement case study?
A) The cycle time for the outgoing wire process was less than 2.0 minutes per wire.
B) Commercial (business) outgoing wires used a separate process different from the one for individual customer tractions.
C) Outgoing wire error rate data was not available in the case study.
D) The current assembly line for outgoing wires was understaffed based on assembly-line balancing (ALB) analysis.
Q2) Explain the sociotechnical approach to job design and some ways to implement it.
Q3) The production of large goods such as airplanes is best accomplished using a _____ layout.
A) product
B) process
C) cellular
D) fixed-position
Q4) Differentiate between product layout, process layout, cellular layout, and fixed-position layout. State the advantages and disadvantages of each.
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Chapter 9: Supply Chain Design
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Q1) Responsiveness is measured by order fulfillment lead time or by perfect delivery fulfillment.
A)True
B)False
Q2) Explain about a supply chain.
Q3) Using the following information about material volume shipped from a plant to four retail outlets, which of the following is a TRUE statement about the center of gravity for the best location of the plant? \(\begin{array}{rrr}\text { Reta1 Outlet }&\text { Location Coordinates } \mathrm{X}, \mathrm{Y}&\text { Material Movement }\\
1 & 18,6 & 1,500 \\
2 & 12,15 & 2,100 \\
3 & 7,10 & 1,900 \\
4 & 7,20 & 1,200 \end{array}\)
A) The x-axis and the y-axis are less than 10.0.
B) The x-axis is less than 10.0, and the y-axis is more than 10.0.
C) The x-axis is more than 10.0, and the y-axis is less than 10.0.
D) The x-axis and the y-axis are more than 10.0.
Q4) Describe some common supply chain metrics used to evaluate performance.
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Chapter 10: Capacity Management
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Sample Questions
Q1) An assembly line normally operates two shifts a day, five days per week. The planned capacity of the assembly line is 380 units/shift. Determine the average safety capacity if 700 items are assembled a day, on average.
Q2) How many administrative clerks should be hired to do Stage A work, assuming a target utilization of 85 percent?
A) One
B) Two
C) Three
D) Four
Q3) What is the current labor utilization of the coders at Stage B if two coding specialists are currently on duty?
A) Less than 90 percent
B) More than 90% but less than or equal to 95%
C) More than 95% but less than or equal to 100%
D) More than 105 percent
Q4) The Theory of Constraints is focused on eliminating all bottlenecks in a process.
A)True
B)False
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Chapter 11: Forecasting and Demand Planning
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Sample Questions
Q1) All of the following are important criteria in choosing a forecasting method EXCEPT:
A) the smoothing constant ( ).
B) the time span for which the forecast is made.
C) the data requirements.
D) the quantitative skills needed.
Q2) The sales forecast for the 11<sup>th</sup> week of the summer if the price per gallon is estimated to be $3.00 is:
A) less than or equal to 15,000.
B) more than 15,000 but less than or equal to 15,500.
C) more than 15,500 but less than or equal to 16,000.
D) more than 16,000 but less than or equal to 16,500.
Q3) Explain how forecasting is used at different levels of an organization.
Q4) Long-range forecasts expressed in sales dollars are more meaningful to top managers than to managers at the operations level.
A)True
B)False
Q5) Explain judgmental forecasting, including grass roots forecasting and the Delphi Method.
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Chapter 12: Managing Inventories
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Sample Questions
Q1) Discuss the two types of stockouts.
Q2) Setup costs depend on the number of items manufactured.
A)True
B)False
Q3) The current ordering policy for the candy store is 360 boxes so the average inventory level (i.e., cycle inventory) is:
A) less than or equal to 100 boxes.
B) more than 100 but less than or equal to 150 boxes.
C) more than 150 but less than or equal to 200 boxes.
D) more than 200 but less than or equal to 250 boxes.
Q4) In the fixed-period system, managers must make two key decisions: the time interval between reviews and the replenishment level.
A)True
B)False
Q5) Explain the different types of inventories maintained throughout a value chain.
Q6) An airline seat is an example of an asset held for future use or sale.
A)True
B)False
Q7) Explain the difference between independent demand and dependent demand.
Page 14
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Chapter 13: Resource Management
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Q1) Determine the net requirement for E if the gross requirement for A is still 250, and current on-hand inventory balance for A is 40, D is 200, E is 300, and F is 600.
A) Less than or equal to 1,000 units
B) Greater than 1,000 but less than or equal to 1,500 units
C) Greater than 1,500 but less than or equal to 2,000 units
D) Greater than 2,000 but less than or equal to 2,500 units
Q2) The primary output of a materials requirements planning (MRP) system is a time-phased report that gives all of the following EXCEPT:
A) the facilities managers a detailed schedule for acquiring additional factory space.
B) the accounting and financial functions production information that drives cash flow, budgets, and financial needs.
C) the production managers a detailed schedule for manufacturing the product and controlling manufacturing inventories.
D) the purchasing department a schedule for obtaining raw material and purchased items.
Q3) What are the components of a materials requirements planning (MRP) record?
Q4) Define resource management and list its key objectives.
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Chapter 14: Operations Scheduling and Sequencing
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Q1) Compare and contrast the advantages and disadvantages of the shortest processing time (SPT) and the earliest due date (EDD) sequencing rules.
Q2) Rescheduling rarely occurs unless customers change their requested due dates.
A)True
B)False
Q3) Using Johnson's rule to sequence these patients, the makespan is _____.
A) less than or equal to 5 hours
B) more than 5 but less than or equal to 10 hours
C) more than 10 but less than or equal to 15 hours
D) more than 15 but less than or equal to 20 hours
Q4) Using the first come, first served (FCFS) rule to sequence these jobs, the average waiting (flow) time is _____.
A) more than 20 but less than or equal to 30 minutes
B) more than 30 but less than or equal to 40 minutes
C) more than 40 but less than or equal to 50 minutes
D) more than 50 minutes
Q5) Scheduling applies to all aspects of the value chain.
A)True
B)False
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Chapter 15: Appendix: Quality Management
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Sample Questions
Q1) Normal time needs to be adjusted for personal time and avoidable delays.
A)True
B)False
Q2) An employee was observed over an extended period of time for a work-sampling study with the following results:
\(\begin{array}{lll}&& \text { Performance } \\
\text { Activity } & \text { Percentage of Time } & \text { Rating Factor }\\
\text { On the Phone } & 30 & 1.15 \\ \text { Filing } & 35 & 0.70 \\
\text { Face-to-Face with Customer } & 25 & 1.10 \\ \text { Idle } & 10 & \ldots . . . \end{array}\) While doing her job in a 40-hour workweek, the employee helped 120 face-to-face, walk-in customers. Determine the standard time in minutes that it took her to help each customer.
Q3) A manufacturer made a commitment to supply 20 units of a product. The first unit took 1,200 hours to make, the second unit took 900 hours, and the third unit took 768 hours. How many hours should it take to make the 20th unit?
Q4) Describe an experience curve.
Q5) How are predetermined time standards useful?
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Chapter 15: Quality Management
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Q1) A Pareto diagram helps to understand the relationships between two variables and to verify possible cause and effect hypotheses.
A)True
B)False
Q2) Which of the following is NOT a part of Philip Crosby's philosophy of quality?
A) Quality means conformance to requirements, not elegance.
B) The only performance standard that matters is profits.
C) There is no such thing as a quality problem.
D) The only performance measurement is the cost of quality, which is the expense of nonconformance.
Q3) Costs of recalls and warranty claims are classified as internal failure costs.
A)True
B)False
Q4) A flash drive that fits only one way into an e-device is an example of an application of the _____.
A) kaizen blitz
B) poka-yoke concept
C) Pareto analysis
D) Six Sigma concept
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Chapter 16: Quality Control and Spc
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Q1) Given that 20 samples are taken in a control chart initiative, the probability that 5 consecutive samples are below the center line in an R- or x-bar chart is _____.
A) 0.02500
B) 0.03125
C) 0.06250
D) 0.25000
Q2) A supplier is producing a machined part for the transmission of a vehicle. The upper specification limit is 0.125 cm, and the lower specification limit is 0.085. The process standard deviation for the process that makes this part is 0.008, and the process average is 0.105. What conclusion can be drawn from these process capability data?
A) The process is centered and capable.
B) The process is not centered and capable.
C) The process is centered and not capable.
D) The process is not centered and not capable.
Q3) It generally costs more to correct an error or defect at the design stage than after it has reached the customer.
A)True
B)False
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Chapter 16: Appendix: Queuing Analysis
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Q1) A sandwich shop near a college has a special counter, open from 11 am to 1 pm, which is used exclusively for selling pre-made sandwiches. This is much faster than making sandwiches-to-order at lunch time. The clerk can handle a customer in about one minute. Customers arrive at a rate of 40 per hour on average.
a. How long (in minutes) does a customer have to wait?
b. What percentage of the time is the employee working?
c. What is the average number of customers waiting in line?
d. What is the probability of there being 3 or more customers in the system?
Q2) Queuing models:
A) yield optimal solutions.
B) are generally deterministic.
C) cannot be used in manufacturing.
D) use formulas only when arrivals and service times follow certain distributions.
Q3) Which of the following variables is ordinarily NOT an output of waiting-line analysis?
A) The waiting cost per hour per passenger
B) The hourly cost associated with each server
C) The total cost per minute
D) The number of servers
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Chapter 17: Appendix: Modeling Using Linear Programming
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Q1) The transportation problem is a special type of linear programming that arises in planning the distribution of goods and services from only one supply point to several demand locations.
A)True
B)False
Q2) Since price is usually set by market conditions, the blending problem's use of linear programming attempts to meet the demand at a minimum cost.
A)True
B)False
Q3) If a company has a demand of 1,600 units for the month of May and a beginning of 900 units, and if X<sub>m</sub> = production in May and L<sub>m</sub> = the number of lost sales in May, which of the following equations represents the material-balance constraint?
A) X<sub>m</sub> - I<sub>m</sub> + 900 + L<sub>m</sub> = 1,600
B) X<sub>m</sub> + I<sub>m</sub> - 900 + L<sub>m</sub> = 1,600
C) X<sub>m</sub> - I<sub>m</sub> + 900 - L<sub>m</sub> = 1,600
D) -X<sub>m</sub> - I<sub>m</sub> + 900 - L<sub>m</sub> = 1,600
Q4) Differentiate between a feasible solution and an optimal solution.
Q5) Explain the essence of a transportation problem.
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Chapter 17: Lean Operating Systems
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Q1) Lean Six Sigma is simply the union of lean approaches with quality improvement techniques, each of which has been used independently in other applications.
A)True
B)False
Q2) Production Kanbans trigger the movement of parts.
A)True
B)False
Q3) Synchronization of the value chain is a lean approach to increasing speed and response.
A)True
B)False
Q4) In a just-in-time (JIT) system, the computer inventory data is the interface and control point between customers and supply cycles.
A)True
B)False
Q5) Compare and contrast a push system and a pull system.
Q6) Contrast batching with single-piece flow.
Q7) Discuss the seven major categories of waste as defined by Toyota Motor Company.
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Q8) How does total productive maintenance (TPM) affect lean operating systems?
Chapter 18: Appendix: Simulation
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Q1) When would an analytical queuing model be used? When would a simulation model be used?
Q2) A computer implementation free from logical errors and bugs refers to:
A) verification.
B) validation.
C) customization.
D) estimation.
Q3) There is no single test to prove that a model is 100 percent valid.
A)True
B)False
Q4) Explain the major differences between a fixed-time and a next-event simulation model.
Q5) Differentiate between verification and validation. Discuss the most objective and scientific means of validation.
Q6) Discuss a simulator. Provide appropriate examples.
Q7) A disadvantage of a simulation model is that its structuring is highly dependent on the expertise of the modeler.
A)True
B)False
Page 23
Q8) Discuss two advantages and three disadvantages of simulation models.
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Chapter 18: Project Management
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Q1) Using the table for the advertising and promotion project, which activity has the largest slack, and how large is that slack?
A) Activity C; 5 weeks
B) Activity A; 6 weeks
C) Activity B; 4 weeks
D) Activity E; 3 weeks
Q2) Which activity should one crash to complete the project two weeks earlier than the original project completion time to minimize total crash costs?
A) Activity G by 1 week
B) Activity G by 1 week and activity D by 1 week
C) Activity D by 2 weeks
D) Activity D by 1 week and activity F by 1 week
Q3) Explain the stages of the project life cycle and what types of decisions are normally made at each stage.
Q4) The most likely activities to share resources with critical path activities are:
A) Activities A and B.
B) Activities E and A.
C) Activities A and C.
D) Activities B and D.
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Chapter 19: Appendix: Decision Analysis
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Q1) Which of the following is NOT a similarity between the elements of a decision problem and a decision tree?
A) Time
B) States of nature
C) Alternatives
D) Probabilities
Q2) In a decision tree, event nodes are denoted by _____.
A) rectangles
B) ovals
C) squares
D) circles
Q3) A numerical value associated with a decision coupled with some event is called a decision tree.
A)True
B)False
Q4) Differentiate between uncertainty and risk.
Q5) Decision problems can be depicted graphically using the expected-value approach.
A)True
B)False
Q6) Explain the structure and purpose of a decision tree.
Page 25
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