Operations Management
Chapter Exam Questions
Course Introduction
Operations Management is a course that explores the principles, practices, and strategies essential to producing goods and delivering services efficiently within an organization. Students learn how to design, analyze, and improve operational processes, manage supply chains, balance quality and cost considerations, forecast demand, schedule resources, and leverage technology for enhanced productivity. The course covers both manufacturing and service contexts, emphasizing decision-making techniques and the integration of operations with broader business objectives to achieve competitive advantage and organizational success.
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OM 5 5th Edition by David Alan Collier
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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) A network of processes that creates value for customers is known as a _____.
A) process network
B) value network
C) customer value
D) value chain
Answer: D
Q3) Which of the following jobs requires the most service management skills and knowledge?
A) Airplane mechanic
B) Usher at sports stadium
C) Restaurant cook
D) Airline Flight attendant
Answer: D
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Chapter 2: Value Chains
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Q1) _____ is the process of having suppliers provide goods and services that were previously provided internally.
A) Outsourcing
B) Horizontal integration
C) Reshoring
D) Vertical integration
Answer: A
Q2) Third-party "system integrators" are often used for vertical integration strategies.
A)True
B)False
Answer: False
Q3) Decentralizing value chain activities lessens the control that a firm has over cost, quality, and other important business metrics, and often leads to higher levels of risk.
A)True
B)False
Answer: True
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Chapter 3: Measuring Performance in Operations
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Q1) Explain the concepts underlying the Service-Profit Chain model.
Answer: The model is based on a set of cause-and-effect linkages between internal and external performance, and in this fashion, defines the key performance measurements on which service-based firms should focus. Because much of the value created in service processes is at the service-encounter level, the Service-Profit Chain focuses on employees or service-providers. Healthy, motivated, well-trained, and loyal employees demonstrate higher levels of satisfaction that result in higher retention and productivity. This leads to higher levels of external service value to customers. External service value is created by service providers mainly at the service-encounter level. Buyers of services focus on outcomes, results, and experiences. Ultimately, good value creates higher customer satisfaction and loyalty, which in turn leads to higher revenue growth and profitability.
Q2) The primary purpose of the Malcolm Baldrige National Quality Award Program is to provide a framework for performance excellence through self-assessment to understand an organization's strengths and weaknesses, thereby setting priorities for improvement.
A)True
B)False
Answer: True
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Chapter 4: Operations Strategy
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Q1) A firm's ability to achieve market and financial superiority over competitors is called strategic planning.
A)True
B)False
Q2) What are competitive priorities? Provide some examples of how OM influences the five major types of competitive priorities.
Q3) An operations strategy provides the direction on which corporate strategy is based.
A)True
B)False
Q4) Apple's primary competitive priority would probably be innovation, while Dell's would be flexibility.
A)True
B)False
Q5) Explain core competencies with examples.
Q6) To correctly identify what customers expect requires being "close to the customer." Discuss.
Q7) Explain the difference between an order qualifier and an order winner. Provide some examples.
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Chapter 5: Technology and Operations Management
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Q1) Database systems, artificial intelligence programs, and voice-recognition software are examples of _____.
A) hard technology
B) soft technology
C) computer numerical software
D) integrated operating software
Q2) Computer-integrated manufacturing systems combine hardware, software, database management, and communications to automate and control a broad range of production activities.
A)True
B)False
Q3) Apple computer would best be described as what type of company?
A) Business to business (B2B)
B) Business to customer (B2C)
C) Customer to customer (C2C)
D) Government to customer (G2C)
Q4) Discuss the components, hardware, and software of a computer-integrated manufacturing system (CIMS).
Q5) List some of the key issues that organizations face in using technology.
Q6) Explain the concept of industrial robots.
Page 7
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Chapter 6: Goods and Service Design
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Q1) The goal-post model of conforming to specifications by specifying a nominal dimension and a tolerance is the basis for calculating the Taguchi loss function.
A)True
B)False
Q2) The design of a customer benefit package (CBP) focuses on the operational choices that a firm must make in order to provide the CBP.
A)True
B)False
Q3) A quality characteristic has a specification (in cm) of 0.400 ± 0.03. If the value of the quality characteristic exceeds 0.400 by the tolerance of 0.030 on either side, the product will require a $180.00 repair. What is the appropriate Taguchi loss function?
Q4) High-customer-contact systems would most commonly be found in:
A) distribution systems.
B) process designs.
C) front office operations.
D) back office operations.
Q5) Briefly describe any four elements of a service-delivery system.
Q6) Discuss the concept of Design for Environment (DfE).
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Chapter 7: Process Selection, Design, and Analysis
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Q1) The work activity that effectively limits throughput of a process is known as a _____.
A) process boundary
B) service blueprint
C) bottleneck
D) process map
Q2) A custom good or service is produced in anticipation of demand.
A)True
B)False
Q3) The decisions for the product-process matrix include all the following EXCEPT: A) volume of demands.
B) range of products.
C) pathways.
D) type of goods.
Q4) Service facilities have a greater range of resource utilization than manufacturing.
A)True
B)False
Q5) Give three examples of goods or services associated with each of the process types: project, job shop, flow shop, and continuous flow.
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Chapter 8: Facility and Work Designs
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Q1) An assembly-line balancing minimizes the number of workstations for a given production rate or maximizes the production rate for a given number of workstations.
A)True
B)False
Q2) For a given cycle time in line balancing, assembly-line efficiency can be increased by _____.
A) speeding the assembly line
B) slowing the assembly line
C) decreasing the number of workstations
D) increasing the number of workstations
Q3) _____ occurs whenever one stage completes work and no units from the previous stage are awaiting processing.
A) Flow-blocking delay
B) Lack-of-work delay
C) Buffer delay
D) Propagation delay
Q4) The facility layout in a library would most likely be a process layout.
A)True
B)False
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Chapter 9: Supply Chain Design
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Q1) _____ is a manufactured good recovery option in which a physical good is disassembled and the parts or the scrap materials are sold to other suppliers.
A) Refurbishing
B) Repairing
C) Recycling
D) Cannibalizing
Q2) Describe how supply chains should be designed for multisite management situations.
Q3) Walmart uses a push supply chain.
A)True
B)False
Q4) In the supply chain operations reference (SCOR) model, the "make" step involves managing orders, transportation, and distribution to provide goods and services.
A)True
B)False
Q5) Explain the typical structure of a supply chain.
Q6) Explain the difference between an efficient and a responsive supply chain, and the business context for which each works best.
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Chapter 10: Capacity Management
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Q1) Long-term capacity planning must be closely tied to the strategic direction of an organization.
A)True
B)False
Q2) Reservations reduce the uncertainty for both the good or service provider and the customer.
A)True
B)False
Q3) An unsold broadcast advertising space is an example of a perishable asset.
A)True
B)False
Q4) Complementary goods or services balance seasonal demand cycles and therefore use excess capacity available.
A)True
B)False
Q5) The ideas and methods surrounding nonbottleneck work activity are often called yield management.
A)True
B)False
Q6) What is safety capacity? Discuss reasons for using it.
Page 12
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Chapter 11: Forecasting and Demand Planning
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Q1) Judgmental forecasting should only be used if no historical data are available.
A)True
B)False
Q2) Using the data in Table 6 the forecast for sales in year 6 using the simple regression equation is:
A) less than 20.
B) more than 20 but less than or equal to 25.
C) more than 25 but less than or equal to 30.
D) more than 30 but less than or equal to 35.
Q3) Random variation is the unexplained deviation of a time series from a predictable pattern, such as a trend, seasonal, or cyclical pattern.
A)True
B)False
Q4) Explain the difference between statistical forecasting and judgment forecasting.
Q5) Forecasts are never 100% accurate because of random variations.
A)True
B)False
Q6) In practice, managers rely almost exclusively on statistical forecasts.
A)True
B)False
Page 13
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Chapter 12: Managing Inventories
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Q1) Inventory management does not involve supplies and replacement parts.
A)True
B)False
Q2) Define the economic order quantity (EOQ) model and explain its major assumptions.
Q3) In a fixed order quantity (FOQ) system, which of the following is TRUE when interest rates increase and all other costs remain the same?
A) Cycle inventory decreases
B) Order quantity increases
C) Order costs increase
D) Safety stock quantity increases
Q4) Explain the difference between independent demand and dependent demand.
Q5) What are the four categories of inventory costs?
Q6) Stochastic demand inventory models are easier to analyze and solve than deterministic models.
A)True
B)False
Q7) Explain the ABC inventory classification.
Q8) What is inventory management and why is it important?
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Q9) Explain the different types of inventories maintained throughout a value chain.
Chapter 13: Resource Management
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Q1) An electronics company wants to develop an MRP schedule for one of its key components, a specialized chip. The lot size is 600, the lead time is 2 weeks, there are 900 units on hand with 300 of those as safety stock and 500 already allocated. There are gross requirements for 2000 units in Week 3 and 1500 units in Week 5. There are 600 units scheduled to be received in Week 1.
a.What is the number of units available in Week 3?
b.What is the planned order receipt for Week 5?
Q2) Using the information given in Table 1, determine how many employees would be needed to meet the peak demand in Quarter 3.
A) 32
B) 21
C) 50
D) 42
Q3) Resource management deals primarily with managing inventories in a value chain.
A)True
B)False
Q4) What are the components of a materials requirements planning (MRP) record?
Q5) Explain the three levels of resource planning.
Q6) What is capacity requirements planning (CRP)?
Page 15
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Chapter 14: Operations Scheduling and Sequencing
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Q1) Using the shortest processing time (SPT) rule, the average flow time for the five jobs is _____.
A) less than or equal to 10 days
B) more than 10 but less than or equal to 20 days
C) more than 20 but less than or equal to 30 days
D) more than 30 but less than or equal to 40 days
Q2) High flow times reduce work-in-process (WIP) inventory.
A)True
B)False
Q3) The numerical difference between the completion time and the due date is called:
A) flow time
B) lateness
C) makespan
D) tardiness
Q4) The chief disadvantage of the shortest processing time (SPT) rule is:
A) it maximizes the average flow time.
B) it maximizes the number of jobs in the system.
C) long-duration jobs may have excessive completion times.
D) average job lateness and average job tardiness are excessive.
Q5) Differentiate between scheduling and sequencing.
Page 16
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Chapter 15: Appendix: Quality Management
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Q1) Personal fatigue and delay allowances are added to _____ to arrive at _____.
A) standard time; normal time
B) standard time; desired time
C) normal time; desired time
D) normal time; standard time
Q2) A company manufactures computer parts. They have received an order for 100 custom disc drives. It is estimated that the first drive will take 20 hours of shop time and an 80 percent learning curve is expected. The labor rate is $15.00, and the pricing policy is to charge 3 times the labor cost.
a. How many hours will the 100th disc drive take?
b. How many hours will the entire order take?
c. What is the price of the entire order?
d. What is the price per unit?
Q3) How are predetermined time standards useful?
Q4) For a time study, it is assumed that distribution of task times follows a Poisson distribution.
A)True
B)False
Q5) Define work sampling. Give examples of both manufacturing and service applications.
Page 17
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Chapter 15: Quality Management
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Q1) 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
Q2) A _____ stratifies the data to more detailed levels at each step eventually isolating the most significant problems.
A) flowchart
B) Pareto diagram
C) cause-and-effect diagram
D) scatter diagram
Q3) W. Edwards Deming believed that higher quality leads to higher costs and even higher market share.
A)True
B)False
Q4) Define poka-yoke, and provide some examples.
Q5) Explain the four components of the cost of quality.
Q6) Define root cause and describe root cause analysis.
Q7) List the three principles of total quality.
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Chapter 16: Quality Control and Spc
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Q1) With good management, all variability of output from any goods- or service-producing process can be eliminated.
A)True
B)False
Q2) An R-chart is always analyzed first because the control limits in the R-chart depend on the mean of the data.
A)True
B)False
Q3) Larger sample sizes allow smaller changes in process characteristics to be detected with higher probability.
A)True
B)False
Q4) Using Table 1, for the X-chart, what is the value of UCL<sub>X</sub>?
A) Less than or equal to 3.0
B) Greater than 3.0 but less than or equal to 4.0
C) Greater than 4.0 but less than or equal to 5.0
D) Greater than 5.0
Q5) Discuss the three basic quality control practices used in manufacturing.
Q6) Find the control limits for a c-chart with c-bar= 7.
Page 19
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Chapter 16: Appendix: Queuing Analysis
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Q1) Compare and contrast wait cost with server cost. Which is harder to estimate?
Q2) Describe at least four queue disciplines.
Q3) The multiple-server queuing model assumes that the mean service rate, \(\mu\), varies from server to server.
A)True
B)False
Q4) _____ is the use of a criterion that allows new arrivals to displace members of the current queue and become the first to receive service.
A) Shortest Processing Time (SPT)
B) A random queue discipline
C) Preemption
D) Reservation
Q5) Which of the following is NOT a key assumption of the multiple-server queuing model?
A) The waiting line has two or more identical servers.
B) The arrivals wait in two or more lines.
C) The mean service rate, \(\mu\) is the same for each server.
D) No balking or reneging is allowed.
Q6) What are the seven key assumptions for the multiple-server waiting line model?
Page 20
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Chapter 17: Appendix: Modeling Using Linear Programming
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Q1) A company has normal capacity for 2,500 units a month. If, x<sub>11</sub> and x<sub>21</sub> represent the production decisions variables, which of the following equations represents the occurrence of change?
A) x<sub>11</sub> + x<sub>21</sub> 2500
B) x<sub>11</sub> x<sub>21</sub> 2500
C) x<sub>12</sub> x<sub>21</sub> 2500
D) x<sub>12</sub> + x<sub>21</sub> 2500
Q2) Explain the essence of a transportation problem.
Q3) Explain the essence of a blending problem.
Q4) Any particular combination of decision variables is referred to as a(n) _____.
A) objective
B) solution
C) constraint
D) coefficient
Q5) The constraint that requires the ending inventory from previous month plus current production minus ending inventory of this month equals this month's demand is known as a demand requirement.
A)True
B)False
Q6) Differentiate between a feasible solution and an optimal solution.
Page 21
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Chapter 17: Lean Operating Systems
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Q1) Explain the concept of Single Minute Exchange of Dies (SMED).
Q2) ABC Manufacturing Inc. uses a Kanban system for a component. The daily demand is 800 units. Each container has a combined waiting and processing time of 0.34 days. If the container size is 50 and efficiency (safety) factor is 9 percent, how many Kanban card sets should be authorized?
A) 5 sets
B) 6 sets
C) 7 sets
D) 8 sets
Q3) Contrast batching with single-piece flow.
Q4) Compare and contrast a push system and a pull system.
Q5) Kanban is the Japanese term for elimination of waste.
A)True
B)False
Q6) Lean principles are always transferrable to front-office services that involve high customer contact and service encounters.
A)True
B)False
Q7) Explain the 5Ss.
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Chapter 18: Appendix: Simulation
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Q1) A _____ traces the detailed logic or actions that occur in a system in a step-by-step fashion over time.
A) current-event time model
B) variable-time-increment model
C) system simulation model
D) static regression model
Q2) Needing the actual time of arrival and actual time of serving relates best with:
A) fixed-time-increment simulation models.
B) next-event simulation models.
C) random numbers.
D) queuing formulas.
Q3) With regard to a simulation model for inventory management, all of the following are correct EXCEPT:
A) it results in an optimal solution with a large simulation.
B) many days of simulation run are needed to obtain meaningful results.
C) lead time can vary.
D) it assumes that a specific reorder point and order quantity have been selected.
Q4) Discuss a simulator. Provide appropriate examples.
Q5) Define simulation and give some operations management examples.
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Chapter 18: Project Management
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Q1) Explain the stages of the project life cycle and what types of decisions are normally made at each stage.
Q2) Strong leadership is an impediment to project management success because of the team-based nature of most projects.
A)True
B)False
Q3) Which of the following is NOT a stage in the project life cycle?
A) Define
B) Organize
C) Improve
D) Close
Q4) List at least six principal factors (contributors) to project success.
Q5) Project managers need to be specialists, not generalists.
A)True
B)False
Q6) The slack for an activity is equal to its latest finish time minus its earliest start time.
A)True
B)False
Q7) Explain the role of project managers and some principles for success.
Page 24
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Chapter 19: Appendix: Decision Analysis
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Q1) Making decisions in an emergency room of a hospital is an example of a decision analysis situation.
A)True
B)False
Q2) Risk is a form of uncertainty associated with an unexpected good.
A)True
B)False
Q3) Given the following table, calculate the expected value of perfect information. \(\begin{array}{c|ccc|c}\hline &\text { Low } & \text { Medium } & \text { High } & \text { Expected } \\
&\text { Demand } & \text { Demand } & \text { Demand } & \text { Value } \\
\hline \text { Small } \mathrm{d}_{1} & \$ 400 & \$ 400 & \$ 400 & \$ 400 \\
\text { Medium } \mathrm{d}_{2} & \$ 100 & \$ 600 & \$ 600 & \$ 500 \\
\text { Large } \mathrm{d}_{3} & \$ 300 & \$ 300 & \$ 900 & \$ 450 \\
\hline \text { Probability } & 0.20 & 0.35 & 0.45 & \\
\hline \end{array}\)
Q4) Decision analysis situations often have multiple objectives. A)True B)False
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