Operations Strategy
Exam Practice Tests
Course Introduction
Operations Strategy focuses on the formulation and implementation of strategies that enhance the competitive advantage of organizations through their operations function. The course explores how companies align their operations with overall business objectives, utilizing key concepts such as process design, capacity planning, supply chain management, and technology adoption. Students will analyze case studies to learn how operational decisions impact long-term performance, develop frameworks for operational excellence, and assess the role of innovation and sustainability in shaping effective operations strategies across diverse industries.
Recommended Textbook
Operations Management 12th Edition by William J. Stevenson
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Chapter 1: Introduction to Operations Management
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Sample Questions
Q1) Which of the following does not relate to system design?
A) altering the system capacity
B) location of facilities
C) inventory management
D) selection and acquisition of equipment
E) physical arrangement of departments
Answer: C
Q2) Which one of the following would not generally be classified under the heading of transformation?
A) assembling
B) teaching
C) staffing
D) farming
E) consulting
Answer: C
Q3) Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services.
A)True
B)False
Answer: False
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Chapter 2: Competitiveness, Strategy, and Productivity
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Sample Questions
Q1) Time-based approaches of business organizations focus on reducing the time to accomplish certain necessary activities. Time reductions seldom apply to:
A) product/service design time.
B) processing time.
C) delivery time.
D) response time for complaints.
E) internal audits.
Answer: E
Q2) An example of a tactical operations management decision is determining employment levels.
A)True
B)False
Answer: True
Q3) A business that is rated highly by its customers for service quality will tend to be more profitable than a business that is rated poorly.
A)True
B)False
Answer: True
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4
Chapter 3: Forecasting
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Sample Questions
Q1) The owner of Darkest Tans Unlimited in a local mall is forecasting this month's (October's) demand for the one new tanning booth based on the following historical data: \[\begin{array} { l l }
\text { Month } & \text { Number of Visits } \\
\hline \text { April } & 100 \\
\text { May } & 140 \\
\text { June } & 110 \\
\text { July } & 150 \\
\text { August } & 120 \\
\text { September } & 160
\end{array}\] What is the monthly rate of change (slope) of the least squares trend line for these data?
A) 320
B) 102
C) 8
D) -.4
E) -8
Answer: C
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Page 5
Chapter 4: Product and Service Design
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Sample Questions
Q1) Standardization can at times lead to serious difficulties and competitive struggles, particularly when systems are running under different conditions.
A)True
B)False
Q2) Reliability can be improved by the use of backup components.
A)True
B)False
Q3) Which of the following is not a reason for redesigning a product or service?
A) to reduce labor or material cost
B) to increase the level of employee satisfaction
C) to increase the level of customer satisfaction
D) to attract and increase customer demand
E) to increase quality
Q4) The process of dismantling and inspecting a competitor's product to discover product improvement is called benchmarking.
A)True
B)False
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Chapter 4: Extension: Reliability
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Sample Questions
Q1) If the average amount of time a product goes without failing decreased by some amount, that product's availability could nevertheless be maintained at previous levels by __________ its __________.
A) increasing; reliability
B) reducing; time required for repair
C) reducing; reliability
D) reducing; reparability
E) increasing; time required for repair
Q2) Availability cannot be increased without improving the time between breakdowns.
A)True
B)False
Q3) Product reliability involves both short-term and long-term perspectives.
A)True
B)False
Q4) If a system depends on two subsystems functioning when activated, the reliability of that system is equal to that of the less reliable subsystem.
A)True
B)False
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Chapter 5: Strategic Capacity Planning for Products and Services
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Sample Questions
Q1) Given the following data for a make-or-buy decision: \[\begin{array} { l l l }
\text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \\
\hline \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \\
\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit } \end{array}\] What would be your cost savings for the preferred alternative, for 32,000 units per year, compared to the other alternative?
Q2) Consider the following information: \[\begin{array} { l l }
\text { Fixed Costs: } & \$ 15,000 \text { per year } \\
\text { Variable Costs: } & \$ 1.00 \text { per unit } \\
\text { Revenue: } & \$ 1.60 \text { per unit } \\
\text { Design Capacity: } & 45,000 \text { units per year } \\
\text { Effective Capacity: } & 40,000 \text { units per year } \\
\text { Anticipated Output: } & 36,000 \text { units per year } \end{array}\] What are total costs for the break-even quantity?
Q3) Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.
A)True
B)False
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Chapter 5: Extension: Decision Theory
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Sample Questions
Q1) The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: \(\begin{array}{|l|l|l|l|}
\hline\text {SIZE}\\
\text {OF}&\text {DEMAND}\\
\hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\
\hline \text { Small } & \$ 1,000 && 1,000 \\
\hline \text { Medium } & 500 && 2,500 \\
\hline \text { Large } & 0 && 3,000 \\
\hline
\end{array}\) For what range of probability that demand will be high, will she decide to lease the small facility?
A) 0-.25
B) 0-.33
C) .25-.5
D) .33-1
E) .5-1
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Chapter 6: Process Selection and Facility Layout
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Sample Questions
Q1) Key aspects of the process selection challenge include _________ and __________.
A) information technology; marketing strategy
B) process flexibility; marketing strategy
C) capital intensity; process flexibility
D) marketing strategy; operations strategy
E) capacity planning; marketing strategy
Q2) Layout planning is required because of:
(I) efficient operations.
(II) accidents or safety hazards.
(III) new products or services.
(IV) morale problems.
A) I and II
B) II and IV
C) I and III
D) II, III, and IV
E) I, II, III, and IV
Q3) An idle percentage of zero means a line is perfectly balanced.
A)True
B)False
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Chapter 7: Work Design and Measurement
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Sample Questions
Q1) A methods and measurements analyst needs to develop a time standard for a certain task. In a preliminary study, he observed one of his workers perform this task five times, with the following results: \[\begin{array} { l r r r r r }
\text { Observation } & 1 & 2 & 3 & 4 & 5 \\
\hline \text { Time (seconds) } & 84 & 76 & 80 & 84 & 76
\end{array}\] What is the standard time for this task if the employee worked at a 25 percent faster pace than average and an allowance of 20 percent of job time is used?
A) 80 seconds
B) 96 seconds
C) 100 seconds
D) 120 seconds
E) 125 seconds
Q2) Determining the number of cycles to observe is an element of:
A) stopwatch time study.
B) standard elemental times.
C) predetermined time standards.
D) work sampling.
E) MTM tables.
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Chapter 7: Extension: Learning Curves
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Sample Questions
Q1) On a log-log graph, learning curves appear as:
A) upward-curving lines.
B) downward-curving lines.
C) straight lines.
D) lines which increase at a decreasing rate.
E) lines which decrease at a decreasing rate.
Q2) A company is preparing a bid on a government contract for 40 units of a certain product. The operations manager estimates the assembly time required for the first two units to be 10.4 hours and 8.8 hours. If a contract for 30 units is canceled after the first 20 units, approximately how much of the expected total direct labor will have been expended to that point?
A) 73 percent
B) 55 percent
C) 61 percent
D) 50 percent
E) It is impossible to say without additional information.
Q3) A learning percentage of 95 percent indicates greater learning than a percentage of 90 percent.
A)True
B)False
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Chapter 8: Location Planning and Analysis
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Sample Questions
Q1) Consider the following information about sites A, B, and C: \[\begin{array} { l r l }
\text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\
\hline \text { A } & \$ 100,000 & \$ 10 \\
\mathrm {~B} & \$ 120,000 & \$ 8 \\
\text { C } & \$ 150,000 & \$ 7
\end{array}\] For what quantity would you be indifferent between selecting site A or site B?
Q2) Consider the following information about sites A, B, and C: \[\begin{array} { l r l }
\text { Site } & \text { FC (annual) } & \text { VC (per unit) } \\
\hline \text { A } & \$ 100,000 & \$ 10 \\
\mathrm {~B} & \$ 120,000 & \$ 8 \\
\text { C } & \$ 150,000 & \$ 7
\end{array}\] What are total costs for site B for a quantity of 5,000 units per year?
Q3) Web-based, retail businesses should be located near the customer to reduce their long distance phone charges.
A)True
B)False
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Chapter 8: Extension: The Transportation Model
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Sample Questions
Q1) The transportation model assumes similar, homogeneous goods.
A)True
B)False
Q2) Which of the following are assumptions or requirements of the transportation method?
(I) Goods are the same, regardless of source.
(II) There must be multiple sources.
(III) Minimum quantities must be shipped from each source.
(IV) Shipping costs per unit do not vary with the quantity shipped.
A) I and IV
B) II and III
C) I, II, and IV
D) I and III
E) I, II, III, and IV
Q3) The transportation model assumes shipping cost per unit is the same regardless of the number of units shipped (there are no quantity discounts).
A)True
B)False
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14
Chapter 9: Management of Quality
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Sample Questions
Q1) When considering service quality, convenience often is a major factor.
A)True
B)False
Q2) Quality of design refers to the degree to which goods and services achieve the intent of the designers based on marketing and other information.
A)True
B)False
Q3) The dimensions of quality are important for products but are not applicable in service organizations.
A)True
B)False
Q4) Your benchmark organization must be chosen from your industry in order for its methods to be applicable to your business.
A)True
B)False
Q5) A quality circle is a cross-functional team focused on quality.
A)True
B)False
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Chapter 10: Quality Control
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Sample Questions
Q1) The variation of a sampling distribution is tighter than the variation of the underlying process distribution.
A)True
B)False
Q2) Process capability compares process variability to the tolerances.
A)True
B)False
Q3) The following data occurs chronologically from left to right: \[\begin{array} { l
15.2 & 19.7 & 16.0 & 11.1 & 14.8 & 14.5 \end{array}\] The number of runs with respect to the sample median is:
A) 2.
B) 3.
C) 4.
D) 5.
E) none of these.
Q4) A lower control limit must by definition be a value less than an upper control limit.
A)True
B)False
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Chapter 10: Extension: Acceptance Sampling
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Sample Questions
Q1) A good sampling plan will occasionally reject a lot with very good quality.
A)True
B)False
Q2) Acceptance sampling is most useful when the cost consequences of passing defectives are low.
A)True
B)False
Q3) Sampling plans typically specify:
A) lot size.
B) sample size.
C) number of samples to be taken.
D) acceptance/rejection criteria.
E) all choices are correct.
Q4) Acceptance sampling plans must specify the lot size, the sample size, and the acceptance/rejection criteria.
A)True
B)False
Q5) Suppose a batch is of unacceptable quality. There is a 10 percent chance that it will be accepted. Thus, ________ is 10 percent.
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Chapter 11: Aggregate Planning and Master Scheduling
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Sample Questions
Q1) Inventory information for firm ABC: \[\begin{array} { l l }
\text { Inventory at the end of April, 2008: } & 200 \text { units } \\
\text { Expected demand during April, 2008: } & 50 \text { units } \\
\text { Production expected during April, 2008: } & 100 \text { units }
\end{array}\] What is the expected inventory at the end of April 2008?
A) 350
B) 250
C) 150
D) 50
E) 80
Q2) In the master production schedule, production is planned for the next period whenever the available-to-promise quantity becomes negative.
A)True
B)False
Q3) Which of the following is not an input to the aggregate planning process?
A) resources available
B) demand forecast
C) policies on workforce changes
D) master production schedules
E) cost information
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Chapter 12: MRP and ERP
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Sample Questions
Q1) An effort to expand the scope of production resource planning by involving other functional areas in the planning process has been:
A) material requirements planning.
B) capacity requirements planning.
C) manufacturing resources planning.
D) just-in-time planning.
E) multifunctional relationships planning.
Q2) Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following?
A) gross requirements
B) net requirements
C) economic order quantity
D) gross requirements and net requirements
E) net requirements and amount on hand
Q3) The gross requirements at one level of an MRP plan determine the gross requirements at the next lower level continuing on down to the lowest levels shown on the bill of material.
A)True
B)False
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Page 19
Chapter 13: Inventory Management
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Sample Questions
Q1) The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. What is the economic order quantity for resin?
A) 50 kilograms
B) 100 kilograms
C) 250 kilograms
D) 500 kilograms
E) 1,000 kilograms
Q2) In the A-B-C classification system, items which account for 15 percent of the total dollar volume for a majority of the inventory items would be classified as:
A) A items.
B) B items.
C) C items.
D) A items plus B items.
E) B items plus C items.
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Chapter 14: Jit and Lean Operations
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Sample Questions
Q1) Preventive maintenance is additional maintenance done immediately after a breakdown has occurred to help prevent any further breakdowns.
A)True
B)False
Q2) The kaizen philosophy applies to:
A) employee development.
B) safety stock.
C) waste.
D) supply chain management.
E) MRP III.
Q3) Preventive maintenance will eliminate the need to carry supplies of spare parts.
A)True
B)False
Q4) Lean operations cannot easily handle changes of output or product mix.
A)True
B)False
Q5) A real advantage of the lean philosophy is the reduction of coordination effort required.
A)True
B)False
Page 21
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Chapter 14: Extension: Maintenance
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Sample Questions
Q1) Breakdown maintenance includes activities such as equipment inspection and adjustment.
A)True
B)False
Q2) The frequency of breakdown of a piece of equipment per month is shown in the following table. The cost of a breakdown is $1,000, and the cost of preventive maintenance is $2,000 per month. Assume that the equipment breakdown can be avoided if preventive maintenance is performed. Should the manager use preventive maintenance, or would it be better to fix the equipment when it breaks down?
\[\begin{array} { l c c c c c c }
\text { Number of breakdowns } & 0 & 1 & 2 & 3 & 4 & 5 \\
\text { Probability } & 0.10 & 0.15 & 0.20 & 0.30 & 0.15 & 0.10
\end{array}\]
[COMP: Delete zeros before decimals in table.]
Q3) Pareto analysis (using the 80/20 rule) is one method of determining when preventive maintenance activities should be performed.
A)True
B)False
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Chapter 15: Supply Chain Management
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Sample Questions
Q1) The website and order fulfillment are essential features of:
A) delayed differentiation.
B) e-commerce.
C) Internet service providers.
D) inventory balancing.
E) market segmentation.
Q2) Centralized or decentralized purchasing is directly related to the size of an organization.
A)True
B)False
Q3) Returned goods are part of reverse logistics.
A)True
B)False
Q4) Our organization can obtain visibility to potential trading partners on the Internet by using:
A) C2C.
B) B2C.
C) B2B.
D) C2B.
E) 2BC.
Page 23
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Chapter 16: Scheduling
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Sample Questions
Q1) There are three jobs to be done and three resources with which to do them. Each resource will cost a specific amount to do each job, as shown in the following table:
\[\begin{array} { l c c c }
& &{ \text { Machine } } \\
\text { Job } & \text { A } & \text { B } & \text { C } \\
\hline 1 & \$ 6 & 9 & 4 \\
2 & 4 & 4 & 3 \\
3 & 8 & 7 & 4
\end{array}\] What is the optimum assignment of jobs to machines?
Q2) Which of the following is not a measure for judging the effectiveness of a schedule sequence?
A) average number of jobs at the work center
B) total number of jobs at the work center
C) average completion (flow) time
D) average job tardiness
E) total number of work centers per job
Q3) The assignment model seeks an optimum matching of tasks and resources.
A)True
B)False
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Page 24
Chapter 17: Project Management
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Sample Questions
Q1) Consider the following work breakdown structure: \(\begin{array}{r}
\text { Duration Estimate (Days) }\quad \quad \quad \quad \\ \begin{array}{lccccc}
& \text { Start } & \text { Finish } \\
\text { Activity } & \text { Node } & \text { Node } & \text { Optimistic } & \text { Most Likely } & \text { Pessimistic } \\
\hline \text { A } & 1 & 2 & 9 & 15 & 21 \\
\text { B } & 1 & 3 & 13 & 21 & 23 \\
\text { C } & 2 & 4 & 6 & 9 & 18 \\
\text { D } & 2 & 5 & 23 & 35 & 47 \\
\text { E } & 3 & 5 & 19 & 26 & 27 \\
\text { F } & 4 & 6 & 23 & 29 & 41 \\
\text { G } & 5 & 6 & 14 & 20 & 26 \\
\text { H } & 6 & 7 & 2 & 5 & 8 \end{array}\end{array}\) What is the estimated standard deviation (in weeks) for the critical path completion time?
Q2) Good project management is especially important with virtual teams.
A)True
B)False
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Chapter 18: Management of Waiting Lines
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Sample Questions
Q1) Which of the following would reduce perceived waiting times most dramatically in a doctor's office?
A) putting all clocks out of sight
B) removing couches
C) having the patient fill out forms
D) implementing a "no-cell-phone" policy
E) keeping expected waiting times from the patients
Q2) The goal of queuing analysis is to minimize:
A) the sum of customer waiting costs and capacity costs.
B) the sum of customer waiting time and service time.
C) capacity costs.
D) customer waiting time.
E) idle servers.
Q3) The goal of queuing analysis is to balance the cost of providing a level of service capacity with the possible loss of business due to customers leaving the line or refusing to wait.
A)True
B)False
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Chapter 19: Linear Programming
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Sample Questions
Q1) Nonbinding constraints are not associated with the feasible solution space; i.e., they are redundant and can be eliminated from the matrix.
A)True
B)False
Q2) The term range of optimality refers to a constraint's right-hand-side quantity.
A)True
B)False
Q3) A manager must decide on the mix of products to produce for the coming week. Product A requires three minutes per unit for molding, two minutes per unit for painting, and one minute per unit for packing. Product B requires two minutes per unit for molding, four minutes per unit for painting, and three minutes per unit for packing. There will be 600 minutes available for molding, 600 minutes for painting, and 420 minutes for packing. Both products have profits of $1.50 per unit.
(A) What combination of A and B will maximize profit?
(B) What is the maximum possible profit?
(C) How much of each resource will be unused for your solution?
Q4) The equation 5x + 7y = 10 is linear.
A)True
B)False
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