Operations Strategy
Test Preparation
Course Introduction
Operations Strategy explores the principles and practices involved in shaping the long-term direction and capabilities of an organizations operations. This course examines how operational resources, processes, and technologies can be aligned with overall business objectives to gain competitive advantage. Students will analyze real-world case studies to understand the formulation and implementation of operations strategies in various industries, with an emphasis on topics such as capacity planning, innovation, supply chain management, sustainability, and performance measurement. By the end, students will be equipped with frameworks and analytical tools to make informed operations-related decisions that support organizational success.
Recommended Textbook
Foundations of Operations Management 3rd Canadian Edition by Larry P. Ritzman
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Page 2
Chapter 1: Creating Customer Value through Operations
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Sample Questions
Q1) The first step of needs assessment is market analysis.
A)True
B)False
Answer: False
Q2) An organization is only as effective as its ________. Answer: processes
Q3) Relative to strategic decisions,tactical decisions are less structured and have longer-term consequences.
A)True
B)False Answer: False
Q4) Measuring the number of square metres of carpet installed per day by an installer working for a flooring company is example of a multifactor measure of productivity. A)True
B)False Answer: False
Q5) ________ is an index of the output per person or hour worked. Answer: Labour productivity
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Chapter 2: Supply Chain Management
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Sample Questions
Q1) Which one of the following statements about the relation between financial and supply chain performance measures is TRUE?
A) Longer delivery times require higher levels of working capital.
B) Shorter new product development time decreases revenue.
C) Higher inventory turns call for higher working capital requirement.
D) Lower aggregate inventory value means higher current assets.
Answer: A
Q2) ________ seeks to synchronize a firm's processes and those of its suppliers to match the flow of materials,services,and information with customer demand.
Answer: Supply-chain management
Q3) Green purchasing involves identifying,assessing,and managing the flow of environmental waste and finding ways to reduce it and minimize its impact on the environment.
A)True
B)False
Answer: True
Q4) ________ is an inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost.
Answer: Weeks of supply
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Chapter 3: Process Configuration
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Sample Questions
Q1) Capital intensity is the mix of equipment and human skills in the process.
A)True
B)False
Answer: True
Q2) ________ trace the flow through a process graphically.
Answer: Flow diagrams
Q3) When a service is delivered to the customer,client,or patient by appointment,decisions involving the location become part of process design.
A)True
B)False
Answer: True
Q4) Which one of the following statements about reengineering is TRUE?
A) It does not require much time or resources to implement.
B) It can be done easily for any process.
C) It only requires improving cross-functional processes.
D) It is not appropriate for all organizations and all processes.
Answer: D
Q5) A(n)________ is a table that lists and categorizes the steps in the process.
Answer: process chart
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Chapter 4: Capacity
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Sample Questions
Q1) Which one of the following statements concerning capacity cushions is best?
A) Large-capacity cushions are utilized more often when future demand is level and known.
B) Small-capacity cushions are used extensively in capital-intensive firms.
C) Capacity cushions are used primarily in manufacturing organizations, not in service organizations.
D) Small cushions are used in organizations where the products and services produced often change.
Q2) Using the information in Table 4.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0),how much would pretax cash flow in year 5 increase because of this expansion?
A) less than $7000
B) more than $7000 but less than $10,000
C) more than $10,000 but less than $13,000
D) more than $13,000
Q3) Explain the distinction between input and output measures of capacity.
Q4) The ________ time for a specific item as it moves through a process can be found by adding the operations,movement and wait times.
Q5) Define each of the following capacity strategies: expansionist,and wait-and-see.
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Chapter 5: Inventory Management
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Sample Questions
Q1) On-hand inventory of an item is only 10 units,and the reorder point R is 135.There are no backorders,and an open order of 110 units is scheduled to arrive next week.Which one of the following statements is TRUE?
A) There is no need to order at the present time.
B) A new order should be issued now.
C) The current inventory position for this item is 125 units.
D) The current inventory position for this item is 110 units.
Q2) Use the information in Table 5.4.What is the desired safety stock level if the company has a policy of maintaining a 90 percent cycle-service level?
A) less than or equal to 50 units
B) greater than 50 units but less than or equal to 100 units
C) greater than 100 units but less than or equal to 150 units
D) greater than 150 units
Q3) One of the ways that poorly managed inventory creates environmental waste is through scrapping of obsolescent inventory.
A)True
B)False
Q4) Customer orders waiting to be processed are called ________.
Q5) The ________ determines the frequency and quantity to order.
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Chapter 6: Quality and Process Improvement
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Sample Questions
Q1) How can "quality be free"?
Q2) Historically,the average diameter of the holes drilled has been 0.25 cm and the average range has been 0.1 cm.Determine the central line and upper and lower control limits for an \(\bar { X }\) - and an R-chart,assuming samples of size 8 will be taken.Use Table 6.1.For the \(\bar { X }\) -chart,what is the value of the LCL \(\bar { X }\) ?
A) less than or equal to 0.10
B) greater than 0.10 but less than or equal to 0.19
C) greater than 0.19 but less than or equal to 0.29
D) greater than 0.29
Q3) Which one of the following statements about benchmarking is TRUE?
A) Benchmarking is only useful when a company compares itself against other companies.
B) Because of the power of benchmarking, specific plans of action are not necessary.
C) Benchmarking is the same as the plan-do-check-act cycle in continuous improvement.
D) Benchmarking focuses on setting quantitative goals for continuous improvement.
Q4) What is the fishbone chart?
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8
Chapter 7: Lean Systems
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Sample Questions
Q1) Since the service organizations have limited use of inventory,JIT concepts are a relevant.
A)True
B)False
Q2) Which of the following is not an example of the pull method of material flows?
A) replenishing inventory in a retail outlet based on forecast demand
B) selecting the toppings for a pizza based on specific customer orders
C) a flooring contractor that only stocks samples of products, ordering supplies from manufacturers once customers place orders
D) Dell Computers make-to-order system for fulfilling orders placed through its on-line retailing site
Q3) Discuss supplier relations as they pertain to lean systems.
Q4) Comment on structuring a facility with a flexible workforce.
Q5) How can managers mitigate employee concerns and stress with the implementation of lean systems with ties to statistical process controls?
Q6) A kanban is a card used to control the flow of production in many just-in-time systems.
A)True
B)False
Page 9
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Chapter 8: Managing Projects
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Sample Questions
Q1) What characteristics should project manager possess?
Q2) In controlling projects,the term close out refers to the decision to terminate a project because the actual time required to complete the project was going to exceed the completion date established in the original project plan.
A)True
B)False
Q3) Using Table 3.4,what is the latest finish time for activity D?
A) 4 weeks
B) 6 weeks
C) 8 weeks
D) 10 weeks
Q4) Deviations from the project plan are often referred to as ________.
Q5) In a network diagram,an "activity"
A) is the largest unit of work effort consuming both time and resources that a project manager can Schedule and control.
B) is the smallest unit of work effort consuming both time and resources that a project manager can schedule and control.
C) should always be something the company has had experience with.
D) must always have a single, precise estimate for the time duration.
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Chapter 9: Location and Layout
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Sample Questions
Q1) Use the information from Table 9.13.All things equal,which two departments should be located closest together?
A) D and F
B) B and F
C) B and C
D) A and B
Q2) Which of the following usually is an advantage of on-site expansion,compared to building a new facility?
A) reduced construction time and costs
B) focused facility
C) simplified production control
D) reduced transportation cost
Q3) Use the information in Table 9.5.If a plant is located at a center of gravity,what is the load-distance score,assuming rectilinear distance?
A) less than or equal to 500
B) more than 500 but less than or equal to 550
C) more than 550 but less than or equal to 600
D) more than 600
Q4) A(n)________ allocates space and indicates placement of each department.
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Chapter 10: Managing Demand and Forecasting
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Sample Questions
Q1) The sample ________ coefficient measures the direction and strength of the relationship between the independent and dependent variables in a linear regression equation.
Q2) What is a tracking signal?
Q3) ________ methods use historical data on independent variables to predict demand.
Q4) A(n)________ is a measure that indicates whether a method of forecasting is accurately predicting actual changes in demand.
Q5) Why are forecasts for product families typically more accurate than forecasts for the individual items within a product family?
Q6) Delphi forecasting refers to a change in the forces that have acted on demand in the past.
A)True
B)False
Q7) Use the information in Table 10.8.Forecast the demand for the machine for month 7,using the three-month moving average method.
A) less than or equal to 56
B) greater than 56 but less than or equal to 58
C) greater than 58 but less than or equal to 61
D) greater than 61
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Chapter 11: Operations Planning and Scheduling
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Sample Questions
Q1) A business plan is a schedule that specifies the timing and size of production quantities for each product in the product families.
A)True
B)False
Q2) Complementary products are actions that attempt to modify demand and,consequently,resource requirements.
A)True
B)False
Q3) The amount of overtime and the number of employees in the workforce are both adjustable elements of capacity when implementing aggregate planning.
A)True
B)False
Q4) The planning horizon for aggregate plans is always one year.
A)True
B)False
Q5) The ________ strategy tries to maintain a constant workforce level or constant output rate during the planning horizon.
Q6) Compare the chase versus level strategy options.
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Chapter 12: Resource Planning
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Sample Questions
Q1) The ability of one piece of software to interact with others is called ________ .
Q2) In a dependent demand environment,explained why MRP does a better job of estimating the need to replenish inventory items than does a fixed order quantity system.
Q3) An end item is an item that has at least one parent and at least one component.
A)True
B)False
Q4) Which one of the following statements concerning MRP is TRUE?
A) One of the main prerequisites for implementing an MRP system is to have products with few BOM levels.
B) The scheduled receipts for a parent item are used to calculate the gross requirements for components of that parent.
C) Some of the key inputs to a computerized MRP system are inventory records, updated bills of material, and a valid master production schedule.
D) Benefits of a successful MRP implementation typically include a decrease in the number of inventory turns, and an increase in the number of expediters.
Q5) ________ are orders that have been placed,but not yet completed.
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Page 14
Chapter 13: Decision Making
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Sample Questions
Q1) Why should a decision maker engage in sensitivity analysis?
Q2) The decision rule in decision making under uncertainty that would be best for the manager who has high expectations would be
A) maximin.
B) maximax.
C) Laplace.
D) minimax regret.
Q3) List and describe decision rules that are used for decision making under uncertainty.
Q4) Demron is in serious negotiations to purchase a welding machine that will enable them to perform their own welding.They currently have their welding outsourced at a cost of $1.50 per weld and a fixed cost of $45,000.Their marketing team feel that they can sustain an annual sales volume sufficient to require 35,000 welds.If a fancy new welding rig costs $13,500 what is the maximum variable cost per weld that Demron should be willing to pay in order to bring this process in-house?
A) $3.00 per weld
B) $2.40 per weld
C) $2.00 per weld
D) $1.45 per weld
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Page 15
Chapter 14: Financial Analysis
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Sample Questions
Q1) Which of the following is an accelerated depreciation method?
A) Straight-line depreciation
B) MACRS
C) Net present value
D) After-tax cash flow
Q2) The term ________ is often used to describe the common U.S.business practice of focusing on short-term results from low-risk projects via analysis by NPV or IRR calculations.
Q3) What are the problems and advantages of managing by the numbers?
Q4) Since 1986,the only acceptable accelerated depreciation method is the ________.
Q5) Projects with the greatest strategic impact are likely to be riskier and have qualitative benefits that cannot easily be quantified.
A)True
B)False
Q6) ________ is the cash that will flow into and out of the organization.
Q7) Depreciation is not a legitimate cash flow.
A)True
B)False
Q8) Explain the time-value-of-money concept.
Page 16
Q9) ________ is an allowance for the consumption of capital.
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Page 17
Chapter 15: Work Measurement
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Sample Questions
Q1) Using the ________,the analyst divides each work element into a series of micro-motions common to a variety of tasks.
Q2) Use the information in Table H.1.What is the select time for work element 2?
A) Fewer than 12 seconds
B) Greater than or equal to 12 seconds but fewer than 13 seconds
C) Greater than or equal to 13 seconds but fewer than or equal to 14 seconds
D) Greater than or equal to 14 seconds
Q3) A predetermined data approach to time standards can be completed before actual production begins.
A)True
B)False
Q4) What are the advantages and disadvantages of establishing and enforcing work standards?
Q5) A manager is interested in setting a time standard for a machining operation.Which one of the following is LEAST likely to be of use?
A) Time-study method
B) Elemental standard data approach
C) Predetermined data approach
D) Work sampling method
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Chapter 16: Learning Curve Analysis
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Sample Questions
Q1) How are learning curves useful in financial planning?
Q2) The mathematical model that is used to generate a learning curve is ________.
Q3) The first unit produced in 15 hours has an estimated learning rate of 90 percent.At what level of output will the average production time per unit fall below 11 hours?
A) Fewer than or equal to 15 units
B) Greater than 15 units but fewer than or equal to 17 units
C) Greater than 17 units but fewer than or equal to 19 units
D) Greater than 19 units
Q4) The learning rate depends on factors such as ________ and ________.
Q5) Which one of the following is an assumption of learning curves?
A) The cumulative time of production decreases as production increases.
B) Time reduction per unit increases as cumulative production increases.
C) The same learning curve should be used when a company increases its level of automation.
D) The reduction in time per unit follows an exponential curve.
Q6) An industrial engineer observes a brand new process and develops time standards for several of the manual components of the production line.What are the implications of learning effects on the time standards and the line balance? What could be done to address this situation?
Page 19
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Chapter 17: Computer-Integrated Manufacturing
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Sample Questions
Q1) A(n)________ provides a way for a manufacturer to synchronize activities and maximize utilization by automatically handling and machine loading materials at computer-controlled workstations.
Q2) A(n)________ integrates the design and manufacturing functions by translating final design specifications into detailed machine instructions for manufacturing an item.
Q3) Computer numerically controlled (CNC)machines are stand-alone pieces of equipment controlled by a central microprocessor.
A)True
B)False
Q4) Which of the following is NOT a movement of a robot's arm?
A) Yaw
B) Roll
C) Pitch
D) Reach
Q5) ________ are versatile,computer-controlled machines programmed to perform various tasks.
Q6) ________ are large machine tools programmed to produce small- to medium-sized batches of intricate parts.
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Chapter 18: Acceptance Sampling Plans
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Sample Questions
Q1) Replacing all defective items in a rejected lot and all defective items in a sample with good items is called ________ inspection.
Q2) A(n)________ is when the consumer randomly selects items from the lot and inspects them one by one.
Q3) A lot of 2,000 items has just arrived.A single sampling calls for a sample size of 100 and c = 3.What is the average outgoing quality limit,assuming that all defectives in the entire lot are replaced if it is rejected and all defectives are replaced in the sample if it is accepted? Table I.1 is appended to this exam.
A) Less than or equal to 0.0150
B) Greater than 0.0150 but less than or equal to 0.0175
C) Greater than 0.0175 but less than or equal to 0.0200
D) Greater than 0.0200
Q4) A double-sampling plan has n? = 50,n? = 100,c? = 2,and c? = 4.Suppose on the first sample,one defective item was discovered.What should be done?
A) Reject the entire lot.
B) Take a second sample of 100 units.
C) Accept the entire lot.
D) Repair the defective units, and accept the entire lot.
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Chapter 19: Simulation
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Sample Questions
Q1) Why is simulation considered the method of last resort?
Q2) A number that has the same probability of being selected as any other number is a(n)________.
Q3) What are the differences between decision variables and uncontrolled variables?
Describe the differences and provide an example from a simulation model.
Q4) ________ is a feature of simulation models that allows them to obtain operating-characteristic estimates in much less time than is required to gather the same operating data from a real system.
Q5) ________ occurs when the simulation is repeated over enough time that the average results for performance measures remain constant.
Q6) Which one of the following statements regarding simulation analysis is FALSE?
A) Simulation analysis is a form of hypothesis testing.
B) Analysis of variance is a commonly used statistical method for simulation analysis.
C) Statistical methods require the replication of simulation runs.
D) Each time a simulation model is run for a given set of decision variables, the same random numbers must be used.
Q7) The two approaches to data collection for simulation are ________ and ________.
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Chapter 20: Special Inventory Models
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Sample Questions
Q1) A production manager uses the economic lot size approach to determine the batch size for a product with an annual demand of 20,000 units per year.The setup cost for each batch is $50 and once the setup is complete,the product may be produced at the rate of 800 units per day.There is a holding cost of $2 per unit per year and the plant operates on a 250-day production year.If the machine used to produce this product is needed for another item and it takes one day to set up regardless of product,how many production days are available for production of the new item?
Q2) Which of these statements about the one-period model is best?
A) Purchasing a quantity with the highest expected payoff will result in a positive payoff regardless of demand during the period.
B) The loss per unit cannot exceed the profit per unit.
C) If demand exceeds the purchased quantity then the payoff exceeds the expected payoff.
D) The expected payoff is always less than the actual payoff.
Q3) When facing quantity discounts,the EOQ found with the lowest price level is the lowest total cost plan.
A)True
B)False
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Chapter 21: Linear Programming
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Sample Questions
Q1) ________ is the amount by which the left-hand side falls short of the right-hand side in a linear programming model.
Q2) The ________ represents all permissible combinations of the decision variables in a linear programming model.
Q3) Only corner points should be considered for the optimal solution to a linear programming problem.
A)True
B)False
Q4) The ________ is an expression in linear programming models that states mathematically what is being maximized or minimized.
Q5) A binding constraint is the amount by which the left-hand side falls short of the right-hand side.
A)True
B)False
Q6) ________ is useful for allocating scarce resources among competing demands.
Q7) Provide three examples of operations management decision problems for which linear programming can be useful,and why.
Q8) Each coefficient or given constant is known by the decision maker with ________.
Page 24
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Chapter 22: Waiting Lines
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Sample Questions
Q1) Use the information in Scenario C.6.What is the average utilization of the refurbishing machine?
A) Less than or equal to 40 percent
B) Greater than 40 percent but less than or equal to 50 percent
C) Greater than 50 percent but less than or equal to 60 percent
D) Greater than 60 percent
Q2) India Sisson wants to grab a latte before heading to her marketing class,knowing that the jolt of a double tall mocha is the only thing that can possibly keep her eyes open during today's presentation on the four Ps.The barista is slower than molasses in January and India notes that the pace of the line won't permit her to grab her favorite seat in the back row of her class.She decides to risk marketing without a latte and leaves the line before getting served.India's behaviour is best described as A) balking.
B) blocking.
C) reneging.
D) queuing.
Q3) ________ is a fundamental law that relates the number of customers in a waiting-line system to the waiting time of customers.
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