CHAPTER 1 1) Which of the following is a reason for studying operations and supply chain management (OSCM)? A) OSCM is essential for understanding organizational behavior. B) Most business graduates do OSCM work regardless of their job title. C) All managers should understand the basic principles that guide the design of transformation processes. D) OSCM is a required course in all business degree programs. E) OSCM is the most rigorous business discipline.
2)
Which of the following sets of categories the Goods-Services Continnuum consists of? A) No goods, some goods, even mix, some service, no service. B) Pure goods, core goods, core services, pure services. C) No service, some service, good service, excellent service. D) Self-service, help desk service, face-to-face service, service-with-a-smile. E) None of these.
3)
Which of the following are defined as core goods? A) Chemicals. B) Airlines. C) Data storage systems. D) Hotels. E) None of these.
4)
Current issues in OSCM do not include _____________blank.
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A) coordinating relationships between organizations B) making senior management aware that OSCM can be a competitive weapon C) managing customer touch points D) increasing global supply chain employment
5)
Which of the following are not listed in the text as jobs in OSCM? A) Department store manager. B) Project manager. C) Hospital administrator. D) Data center manager. E) Call center manager.
6)
Which of the following is not a characteristic that distinguishes services from goods? A) Service jobs are unskilled. B) A service is intangible. C) Services are perishable. D) Services are heterogeneous. E) None of these.
7) Which of the following is not a way that operations and supply processes are categorized? A) Planning. B) Returning. C) Delivering. D) Selecting. E) Making.
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8)
One of the "package of features" that makes up a service is _____________blank. A) appearance. B) facilitating goods. C) packaging. D) cost. E) implied use.
9) Which of the following is not a measure of operations and supply chain management efficiency used by Wall Street? A) Inventory turnover. B) Days inventory. C) Receivable turnover. D) Earnings per share. E) Asset turnover.
10) Which of the following is a measure of operations and supply management efficiency used by Wall Street? A) Dividend payout ratio. B) Current ratio. C) Receivables turnover. D) Earnings per share growth. E) Financial leverage.
11) Managing customer touch points becomes a concern under current issues in OCSM when _____________blank.
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A) complaints arise about shaking hands with customers in cultures that is frowned upon B) firms striving to become superefficient begin to scrimp on staffing and training customer support personnel C) a firm has a workforce trained in specifically diverse situations and the correct level of service may be hard to discern D) firms market global products E) senior executives fail to recognize the contribution OCSM can make to their success
12)
When considering the concept of value, how is quality defined? A) By the price of the product. B) By the producer’s reputation in the industry. C) By the weight of the product. D) By the attractiveness of the product, considering its features and durability. E) By the product’s uniqueness relative to other similar products.
13) All other things remaining the same, if the revenue or sales decreases, asset turnover ratio will _____. A) decrease B) increase C) stay the same D) will decrease, but the amount of change will depend on the profit margin E) decrease and will decrease, but the amount of change will depend on the profit margin
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14) Which of the following is the most appropriate regarding inventory turnover? A. Inventory turnover increases as average inventory decreases, while other things remain the same. B. Inventory turnover is an efficiency measure. C. Inventory turnover is unaffected by changes in annual sales.
A) Choice A B) Choice B C) Choice C D) Choices A and B only E) Choices A, B and C will hold
15) Identify the most appropriate answer regarding cash conversion cycle. A. Is also known as cash-to-cash cycle. B. Cash conversion cycle goes down if payable period goes up. C. Cash conversion cycle goes up if average inventory goes up.
A) Choice A B) Choice B C) Choice C D) Choices A and B are correct E) Choices A, B and C are all correct
16)
Efficiency means doing the right things to create the most value for the company. ⊚ true ⊚ false
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17)
Effectiveness means doing the right things to create the most value for the company. ⊚ true ⊚ false
18) A doctor completes a surgical procedure on a patient without error. The patient dies anyway. In operations management terms, we could refer to this doctor as being efficient but not effective. ⊚ true ⊚ false
19)
A worker can be efficient without being effective. ⊚ true ⊚ false
20)
A process can be effective without being efficient. ⊚ true ⊚ false
21) Operations and supply chain management is defined as the design, operation, and improvement of the systems that create and deliver the firm's primary products and services. ⊚ true ⊚ false
22) The term "value" refers to the relationship between quality and the price paid by the consumer. ⊚ true ⊚ false
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23) Attempting to balance the desire to efficiently use resources while providing a highly effective service may create conflict between the two goals. ⊚ true ⊚ false
24) Central to the concept of operations strategy are the concepts of operations focus and trade-offs. ⊚ true ⊚ false
25) OSCM is concerned with management of the trickiest parts of the system that produces a good or delivers a service. ⊚ true ⊚ false
26)
OSCM is a functional field of business with clear line management responsibilities. ⊚ true ⊚ false
27) The supply network can be thought of as a pipeline through which cash, material, and information flow. ⊚ true ⊚ false
28)
Supply networks cannot be constructed for every product or service. ⊚ true ⊚ false
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29) "Operations" refers to manufacturing and service processes used to transform resources employed by a firm into products desired by customers. ⊚ true ⊚ false
30) "Supply Chain" refers to processes that move information and material to and from the manufacturing and service processes of the firm. ⊚ true ⊚ false
31)
"Supply Chain" includes only inbound freight and inventory. ⊚ true ⊚ false
32) It is critical that a sustainable strategy meet the needs of shareholders and employees. It is also highly desirable that it preserves the environment. ⊚ true ⊚ false
33) Planning is where a firm must determine how anticipated demand will be met with available resources. ⊚ true ⊚ false
34) Although planning involves determining how the various supply chain processes (sourcing, making, delivering, and returning) will be met, planning itself is not considered a supply chain process. ⊚ true ⊚ false
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35) The supply chain processes mentioned in the textbook are: planning, sourcing, delivering, and returning only. ⊚ true ⊚ false
36) All managers should understand the basic principles that guide the design of transformation processes. ⊚ true ⊚ false
37) Operations and supply management changes constantly because of the dynamic nature of competing in global business and the constant evolution of information technology. ⊚ true ⊚ false
38)
Internet technology has made the sharing of reliable real-time information expensive. ⊚ true ⊚ false
39) Capturing information directly from the source through such systems as point-of-sale, radio-frequency identification tags, bar-code scanners, and automatic recognition has had little impact on Operations and Supply Chain Management. ⊚ true ⊚ false
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40) Use of systems like point-of-sale, radio-frequency identification tags, bar-code scanners, and automatic recognition has made it more difficult to understand what all the information is saying. ⊚ true ⊚ false
41) Operations and supply chain processes can be conveniently categorized as planning, sourcing, making, and delivering only. ⊚ true ⊚ false
42) A major aspect of planning involves developing a set of metrics to monitor the supply chain. ⊚ true ⊚ false
43) Returning involves processes for receiving worn-out, defective, and excess products back from customers but does not involve support for customers who have problems with the product. ⊚ true ⊚ false
44) Delivering is not considered in supply chain analysis when outside carriers are contracted to move products to customers. ⊚ true ⊚ false
45)
Services are intangible processes that cannot be weighed or measured. ⊚ true ⊚ false
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46)
Service innovations can be patented. ⊚ true ⊚ false
47)
Services are homogeneous. ⊚ true ⊚ false
48)
Services are defined and evaluated as a package of features that affect the five senses. ⊚ true ⊚ false
49)
Automobiles and appliances are classified as "pure goods." ⊚ true ⊚ false
50)
Core service providers integrate tangible goods into their product. ⊚ true ⊚ false
51) "Product-service bundling" refers to a company building service activities into its product offerings for its customers. ⊚ true ⊚ false
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52) In contrast to careers in finance and marketing, careers in OSCM include hands-on involvement with people and processes. ⊚ true ⊚ false
53)
A bank branch manager position is not an OSCM job. ⊚ true ⊚ false
54)
A supply chain manager is an OSCM job while a purchasing manager is not. ⊚ true ⊚ false
55) Just-in-time (JIT) production was a major breakthrough in manufacturing philosophy pioneered by the Japanese. ⊚ true ⊚ false
56)
Lean manufacturing refers to just-in-time production coupled with total quality control. ⊚ true ⊚ false
57) The Baldrige National Quality Award was started under the direction of the National Institute of Standards and Technology. ⊚ true ⊚ false
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58) The approach that advocates making revolutionary changes as opposed to evolutionary changes is called creation theory. ⊚ true ⊚ false
59) The approach that advocates making revolutionary changes as opposed to evolutionary changes is called "Business Process Reengineering." ⊚ true ⊚ false
60) Business Process Reengineering, which seeks revolutionary change, is contrasted with total quality management which commonly advocates incremental change. ⊚ true ⊚ false
61) The "triple bottom line" relates to the economic, employee, and environmental impact of a firm's strategy. ⊚ true ⊚ false
62)
Sustainability is the ability to maintain profits in a system. ⊚ true ⊚ false
63) Raising senior management awareness of OSCM as a competitive weapon is not an important issue. ⊚ true ⊚ false
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64) Green and Black Belt Programs teach Six-Sigma quality tools to managers at many corporations. ⊚ ⊚
true false
65) The central idea of supply chain management is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer. ⊚ true ⊚ false
66) The term "electronic commerce" refers to the buying and selling of electronic products and devices. ⊚ true ⊚ false
67) The term "electronic commerce" refers to the use of the Internet as an essential element of business activity. ⊚ true ⊚ false
68) "Business Analytics" involves the analysis of data through a unique combination of linear programming, game theory, and queuing theory to better solve business problems. ⊚ true ⊚ false
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69) The mathematical results of Business Analytics are used to automate decision making and eliminate the decision maker. ⊚ true ⊚ false
70) Operations and supply chain strategy are not important issues to investors who tend to focus on growth, dividends, and earnings per share. ⊚ true ⊚ false
71) Investors pay close attention to efficiency and productivity measures like net income per employee because they are interested in how well the firm manages its workforce relations. ⊚ true ⊚ false
72) During a recession, efficient firms often have an opportunity to increase market share while maintaining profitability. ⊚ true ⊚ false
73) Wall Street analysts are not particularly concerned with how efficient companies are from an operations and supply management view. ⊚ true ⊚ false
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Answer Key Test name: Chap 01_6e 1) C 2) B 3) C 4) D 5) D 6) A 7) D 8) B 9) D 10) C 11) B 12) D 13) A 14) D 15) E 16) FALSE 17) TRUE 18) TRUE 19) TRUE 20) TRUE 21) TRUE 22) TRUE 23) TRUE 24) TRUE 25) FALSE 26) TRUE Version 1
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27) FALSE 28) FALSE 29) TRUE 30) TRUE 31) FALSE 32) FALSE 33) TRUE 34) FALSE 35) FALSE 36) TRUE 37) TRUE 38) FALSE 39) FALSE 40) FALSE 41) FALSE 42) TRUE 43) FALSE 44) FALSE 45) TRUE 46) FALSE 47) FALSE 48) TRUE 49) FALSE 50) TRUE 51) TRUE 52) TRUE 53) FALSE 54) FALSE 55) TRUE 56) TRUE Version 1
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57) TRUE 58) FALSE 59) TRUE 60) TRUE 61) TRUE 62) FALSE 63) FALSE 64) TRUE 65) TRUE 66) FALSE 67) TRUE 68) FALSE 69) FALSE 70) FALSE 71) FALSE 72) TRUE 73) FALSE
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CHAPTER 2 1) Which of the following is not a major strategic operational competitive dimension that forms a company's competitive position? A) Management acumen. B) Coping with changes in demand. C) Cost or price. D) Delivery speed. E) Delivery reliability.
2) Which of the following major competitive dimension forms a company's strategic operational competitive position in their strategic planning? A) Cost or price. B) Focus. C) Automation. D) Straddling. E) Activity-system mapping.
3) When developing an operations and supply chain strategy, which of the following is an important product-specific criterion to consider? A) Technical liaison. B) Learning curve. C) Competitor's product performance. D) Production lot-size. E) Total quality management.
4) In development of an operations and supply chain strategy, which of the following may be an important product-specific criterion to consider?
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A) Focus. B) Production lot-size. C) Supplier after-sale support. D) Learning curve. E) Total quality management.
5) A company seeks to match the benefits of a successful position while maintaining its existing position in offering customers a variety of differing services. How is this process called? A) Operations capability analysis. B) Straddling. C) Order qualifying. D) Order winning. E) Inter-functional analysis.
6)
Which of the following is an activity-system map? A) A network guide to route airlines. B) A listing of activities that make up a project. C) A diagram that shows how a company's strategy is delivered to customers. D) A facility layout schematic noting what is done where. E) A timeline displaying major planned events.
7) Which of the following is a partial measure of productivity? A. Output / Materials B. Output / (Labor + Capital + Energy) C. Output / All resources used D. Output / Inputs
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A) Choice A B) Choice B C) Choice C D) Choice D E) All of these
8) Which of the following is a multifactor measure of productivity? A. Output / (Materials) B. Output / (Labor + Capital + Energy) C. Output / All resources used D. Output / Inputs
A) Choice A B) Choice B C) Choice C D) Choice D E) All of these
9) Which of the following is a total measure of productivity? A. Output / Materials B. Output / (Labor + Capital + Energy) C. Output / Labor D. Output / Inputs
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A) Choice A B) Choice B C) Choice C D) Choice D E) All of these
10) If all you knew about a production system was that total daily output was 400 units and the total labor necessary to produce the 400 units was 350 hours, what kind of productivity measure could you use to compute productivity? A. Partial measure B. Multifactor measure C. Total measure D. Global measure
A) Choice A B) Choice B C) Choice C D) Choice D E) All of these
11) If all you knew about a production system was that total daily output was 400 units and the total labor necessary to produce the 400 units was 350 hours, and the total materials used were 425 units, what kind of productivity measure could you use to compute productivity? A. Partial measure B. Multifactor measure C. Total measure
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A) Choice A B) Choice B C) Choice C D) Choice A and B E) Choice B and C
12) The total output from a production system in one day is 500 units and the total labor necessary to produce the 500 units is 350 hours. Using the appropriate productivity measure, which of the following numbers represents the resulting productivity ratio? A) 1.000 B) 1.429 C) 0.700 D) 0.411 E) None of these
13) The total output from a production system in one day is 900 units and the total labor necessary to produce the 900 units is 900 hours. Using the appropriate productivity measure, what is the resulting productivity ratio? A) 1.000 B) 1.428 C) 0.700 D) 0.411 E) None of these
14) Larry's Auto Body Repair Shop had revenues that averaged $60,000 per week in April and $50,000 per week in May. During both months, the shop employed six full-time (40 hours/week) workers. In April the firm also had four part-time workers working 25 hours per week but in May there were only two part-time workers and they only worked 10 hours per week. What is the percentage change in labor productivity from April to May for Larry's Auto Body Repair? Version 1
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A) −20.00% B) −15.82% C) 8.98% D) 2.3% E) −25.00% F) None of these
15)
Various financial data for SunPath Manufacturing for 2015 and 2016 follow. 2015
Output: Input:
2016
Sales Labor Raw Materials:
$300,000 $ 40,000 $ 45,000
$330,000 $ 43,000 $ 51,000
Energy:
$ 10,000
$ 9,000
Capital Employed:
$250,000
$262,000
Other:
$ 2,000
$ 6,000
What is the percentage change in SunPath’s total productivity measure between 2015 and 2016? A) − 9.22% B) 2.33% C) − 0.53% D) 2.88% E) 10.39% F) None of these
16)
Various financial data for SunPath Manufacturing for 2015 and 2016 follow. 2015
Output: Input:
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Sales Labor Raw Materials:
$300,000 $ 40,000 $ 45,000
2016 $330,000 $ 43,000 $ 51,000
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Energy:
$ 10,000
$ 9,000
Capital Employed:
$250,000
$262,000
Other:
$ 2,000
$ 6,000
What is the percentage change in the energy partial productivity measure for SunPath between 2015 and 2016? A) −9.22% B) 2.33% C) −0.53% D) 2.88% E) 22.2% F) None of these
17)
Various financial data for SunPath Manufacturing for 2015 and 2016 follow. 2015
Output: Input:
2016
Sales Labor Raw Materials:
$300,000 $ 40,000 $ 45,000
$330,000 $ 43,000 $ 51,000
Energy:
$ 10,000
$ 9,000
Capital Employed:
$250,000
$262,000
Other:
$ 2,000
$ 6,000
What is the percentage change in the labor partial productivity measure for SunPath between 2015 and 2016? A) −9.22% B) 2.27% C) −0.53% D) 2.88% E) 10.39% F) None of these
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18)
Various financial data for SunPath Manufacturing for 2015 and 2016 follow. 2015
Output: Input:
2016
Sales Labor Raw Materials:
$300,000 $ 40,000 $ 45,000
$330,000 $ 43,000 $ 51,000
Energy:
$ 10,000
$ 9,000
Capital Employed:
$250,000
$262,000
Other:
$ 2,000
$ 6,000
What is the percentage change in the multifactor labor and raw materials productivity measure for SunPath between 2015 and 2016? A) −9.22% B) 2.33% C) −0.51% D) −2.88% E) 10.39% F) None of these
19)
What is meant by the term "operations effectiveness?" A) Products produced in sufficient volume to meet demand. B) Products produced at the lowest price in the industry. C) Operations that run without error and with no surprises for top management. D) Operations that can adapt quickly and efficiently to new and evolving conditions. E) Performing activities in a manner that best implements strategic priorities at minimum
cost.
20) Decisions that relate to the design of the processes and the infrastructure needed to support these processes relate to which OSCM concept?
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A) Sustainability. B) Competitive dimensions of OSCM. C) Making trade-offs. D) integrating operations and supply chain strategy with a firm's operational capabilities. E) Supply chain risk.
21) Triple bottom line is a phrase that captures which of the following? A. The concept that shareholders like economic, environmental and societal stewardship affecting shareholders and stake holders. B. The concept that firms should consider economic prosperity, environmental stewardship and social responsibility affecting shareholders and stake holders. C. The concept that sustainability, social awareness and profitability are three important measures for a firm affecting shareholders and stake holders. D. The concept that firms should consider economic prosperity, environmental stewardship and social responsibility affecting only shareholders.
A) Choice A B) Choice B C) Choice C D) Choice D E) None of the above
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22) Which of the following lists contains only competitive dimensions of a firm discussed in the text? A. Cost or price, Triple bottom line, order winners B. Delivery speed, delivery reliability, order qualifiers C. Cost or price, delivery speed, delivery reliability, new product design D. Cost or price, delivery speed, delivery reliability, flexibility and new product introduction speed E. Triple bottom line, delivery speed, deliver reliability, supplier after sale support
A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E
23) Choose the most accurate description in the context of operations and supply chain from the following lists. A. Order winners and order qualifiers are two ways of describing market-oriented dimensions of a product. B. Order winners differentiates a product or service from another while order qualifiers are built in features. C. Order winners are built in features and order qualifiers are necessary features. D. Order qualifier is a screening criterion while order winner is a differentiating criterion. E. Order winners may have been order qualifiers before.
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A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E
24) In a firm, if the employees attend a training program, then the time to assemble one unit reduces by 10%. Training program will _____________blank. A. increase the labor productivity only B. increase the multifactor productivity only C. increase both labor and multifactor productivity D. decrease capital productivity E. have no effect on productivity.
A) Choice A B) Choice B C) Choice C D) Choice D E) Choice E
25) In a firm, all other things remaining the same, if the material usage per unit of final product decreases to half of the current usage, then the firm will _____________blank. A) double the material productivity B) increase the multifactor productivity C) double the material productivity and increase the multifactor productivity D) decrease capital productivity E) have no effect on productivity.
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26) An operations and supply chain strategy must be integrated with the organization's corporate strategy. ⊚ true ⊚ false
27) One of the competitive dimensions that form the competitive position of a company when planning their strategies is cost. ⊚ true ⊚ false
28) One of the competitive dimensions that form the competitive position of a company when planning their strategies is delivery speed. ⊚ true ⊚ false
29) One of the competitive dimensions that form the competitive position of a company when planning their strategies is making the best trade-off. ⊚ true ⊚ false
30) The process when a company seeks to match the benefits of a successful position while maintaining its existing position by adding new features, services, and technologies into its current portfolio is called flexibility. ⊚ true ⊚ false
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31) The process when a company seeks to match the benefits of a successful position while maintaining its existing position by adding new features, services, and technologies into its current portfolio it is called straddling. ⊚ true ⊚ false
32) Following a straddling strategy, firms can broaden their capabilities and effectively compete with more focused firms in markets requiring low cost for success. ⊚ true ⊚ false
33) An order winner is a set of criteria that differentiates the products or services of one firm from another. ⊚ true ⊚ false
34) An order winner is a set of screening criteria that permits a firm's products to be considered as possible candidates for purchase. ⊚ true ⊚ false
35) An order qualifier is a screening criterion that permits a firm's products to even be considered as possible candidates for purchase. ⊚ true ⊚ false
36) Activity-system maps show how a company's strategy is delivered through a set of tailored activities. ⊚ true ⊚ false
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37) Activity-system maps are useful in understanding how well a system of activities fits the overall company's strategy. ⊚ true ⊚ false
38)
Activity-system maps depict the geographic reach of a company's business strategies. ⊚ true ⊚ false
39) An operations strategy must resist change because of the long-term nature of equipment and personnel investments. ⊚ true ⊚ false
40) Operations and supply strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organization. ⊚ true ⊚ false
41) Infrastructure decisions within operations strategy include the selection of the appropriate technology, the role of inventory, and the location of facilities. ⊚ true ⊚ false
42) Infrastructure decisions within operations strategy include the selection of the logic associated with the planning and control systems.
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⊚ ⊚
true false
43) Once an operations strategy is adopted and articulated, the primary emphasis becomes perfecting the system of activities that make up the strategy through detailed refinements over a long period of time. ⊚ true ⊚ false
44) The job of operations and supply chain strategy is to deliver the most feature-rich, highest quality product at the lowest price within specified parameters of delivery time and customization. ⊚ true ⊚ false
45)
Productivity is a relative measure. ⊚ true ⊚ false
46) In a partial measure in productivity, the denominator of the ratio would include all resources used or all inputs. ⊚ true ⊚ false
47) In a multifactor measure in productivity, the numerator of the ratio would include all resources used or all inputs. ⊚ true ⊚ false
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48) The triple bottom line considers evaluating the firm against social, economic, and environmental criteria. ⊚ true ⊚ false
49) Sustainability means meeting a firm's current needs without excessively compromising the ability of future generations to meet their own needs. ⊚ true ⊚ false
50) The social impact of the triple bottom line concept pertains to fair and beneficial business practices toward labor, the community, and the region in which a firm conducts its business. ⊚ true ⊚ false
51) A firm's business practices toward its labor force pertain mainly to the economic aspect of the triple bottom line concept. ⊚ true ⊚ false
52) According to the economic aspect of the triple bottom line concept, the firm is required to compensate shareholders by paying dividends and growing the value of their common stock faster than their competitors. ⊚ true ⊚ false
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53) Within a sustainability framework, the economic dimension of the triple bottom line concept goes beyond just profit for the firm but also provides lasting economic benefit to society. ⊚ true ⊚ false
54) Within a sustainability framework, the environmental dimension of the triple bottom line concept has to do with labor, the community, and the region in which a firm conducts its business. ⊚ true ⊚ false
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Answer Key Test name: Chap 02_6e 1) A 2) A 3) A 4) C 5) B 6) C 7) A 8) B 9) D 10) A 11) D 12) B 13) A 14) C 15) D 16) E 17) B 18) C 19) E 20) D 21) B 22) D 23) D 24) C 25) C 26) TRUE Version 1
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27) TRUE 28) TRUE 29) FALSE 30) FALSE 31) TRUE 32) FALSE 33) TRUE 34) FALSE 35) TRUE 36) TRUE 37) TRUE 38) FALSE 39) FALSE 40) TRUE 41) FALSE 42) TRUE 43) FALSE 44) FALSE 45) TRUE 46) FALSE 47) FALSE 48) TRUE 49) FALSE 50) TRUE 51) FALSE 52) FALSE 53) TRUE 54) FALSE
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CHAPTER 3 1) In time series data depicting demand which of the following is not considered a component of demand variation? A) Trend B) Seasonal C) Cyclical D) Variance E) Autocorrelation
2)
Which of the following is not one of the basic forecasting types discussed in the text? A) Qualitative B) Time series analysis C) Causal relationships D) Simulation E) Force field analysis
3) In most cases, demand for products or services can be broken down into several components. Which of the following is not considered as a component of demand? A) Average demand for a period. B) A trend. C) Seasonal elements. D) Past data. E) Autocorrelation.
4) In most cases, demand for products or services can be broken into several components. Which of the following is considered as a component of demand?
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A) Cyclical elements. B) Future demand. C) Past demand. D) Inconsistent demand. E) Level demand.
5) In most cases, demand for products or services can be broken into several components. Which of the following is considered as a component of demand? A) Forecast error. B) Autocorrelation. C) Previous demand. D) Consistent demand. E) Repeat demand.
6) Which of the following forecasting methodologies is considered as a time series forecasting technique? A) Simple moving average. B) Market research. C) Leading indicators. D) Historical analogy. E) Simulation.
7) Which of the following forecasting methodologies is considered as a time series forecasting technique?
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A) Delphi method. B) Exponential averaging. C) Simple movement smoothing. D) Weighted moving average. E) Simulation.
8)
In business forecasting, what is usually considered as a short-term time period? A) Four weeks or less. B) More than three months. C) Six months or more. D) Less than three months. E) One year.
9)
In business forecasting, what is usually considered as a medium-term period? A) Six weeks to one year. B) Three months to two years. C) One to five years. D) One to six months. E) Six months to six years.
10)
In business forecasting, what is usually considered as a long-term time period? A) Three months or longer. B) Six months or longer. C) One year or longer. D) Two years or longer. E) Ten years or longer.
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11) In general, which forecasting time frame compensates most effectively for random variation and short-term changes? A) Short-term forecasts. B) Quick-time forecasts. C) Long range forecasts. D) Medium-term forecasts. E) Rapid change forecasts.
12)
In general, which forecasting time frame best identifies seasonal effects? A) Short-term forecasts. B) Quick-time forecasts. C) Long range forecasts. D) Medium-term forecasts. E) Rapid change forecasts.
13)
In general, which forecasting time frame is best to detect general trends? A) Short-term forecasts. B) Quick-time forecasts. C) Long range forecasts. D) Medium-term forecasts. E) Rapid change forecasts.
14)
Which of the following forecasting methods can be used for short-term forecasting?
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A) Simple exponential smoothing. B) Delphi technique. C) Market research. D) Hoskins-Hamilton smoothing. E) Serial regression.
15) Which of the following considerations is not a factor in deciding which forecasting model a firm should choose? A) Time horizon to forecast. B) Product. C) Accuracy required. D) Data availability. E) Analyst availability.
16) A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2014 = 100, year 2015 = 120, year 2016 = 140, and year 2017 = 210), which of the following is the simple moving average forecast for year 2018? A) 100.5 B) 140.0 C) 142.5 D) 145.5 E) 155.0
17) A company wants to forecast demand using the simple moving average. If the company uses three prior yearly sales values (i.e., year 2015 = 130, year 2016 = 110, and year 2017 =160), which of the following is the simple moving average forecast for year 2018?
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A) 100.5 B) 122.5 C) 133.3 D) 135.6 E) 139.3
18) A company wants to forecast demand using the weighted moving average. If the company uses two prior yearly sales values (i.e., year 2016 = 110 and year 2017 = 130), and we want to weight year 2016 at 10% and year 2017 at 90%, which of the following is the weighted moving average forecast for year 2018? A) 120 B) 128 C) 133 D) 138 E) 142
19) A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values (i.e., year 2015 = 160, year 2016 = 140 and year 2017 = 170), and we want to weight year 2015 at 30%, year 2016 at 30% and year 2017 at 40%, which of the following is the weighted moving average forecast for year 2018? A) 170 B) 168 C) 158 D) 152 E) 146
20) Which of the following is among the major reasons that exponential smoothing has become well accepted as a forecasting technique?
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A) Accurate and easy to use. B) Sophistication of analysis. C) Predicts turning points. D) Captures patterns in historical data. E) Ability to forecast lagging data trends.
21) The exponential smoothing method requires which of the following data to forecast the future? A) The most recent forecast. B) Precise actual demand for the past several years. C) The value of the smoothing constant delta. D) Overall industry demand data. E) Tracking values.
22) Given a prior forecast demand value of 230, a related actual demand value of 250, and a smoothing constant alpha of 0.1, what is the exponential smoothing forecast value for the following period? A) 230 B) 232 C) 238 D) 248 E) 250
23) If a firm produced a standard item with relatively stable demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be in which of the following ranges?
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A) 5% to 10% B) 20% to 50% C) 20% to 80% D) 60% to 120% E) 90% to 100%
24) If a firm produced a product that was experiencing growth in demand, the smoothing constant alpha (reaction rate to differences) used in an exponential smoothing forecasting model would tend to be which of the following? A) Close to zero. B) A very low, less than 0.1. C) The more rapid the growth, the higher alpha. D) The more rapid the growth, the lower alpha. E) 0.5 or higher.
25) Given a prior forecast demand value of 1,100, a related actual demand value of 1,000, and a smoothing constant alpha of 0.3, what is the exponential smoothing forecast value? A) 1,000 B) 1,030 C) 1,070 D) 1,130 E) 970
26) A company wants to generate a forecast for unit demand for year 2018 using exponential smoothing. The actual demand in year 2017 was 120. The forecast demand in year 2017 was 110. Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2018 forecast value?
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A) 100 B) 110 C) 111 D) 114 E) 120
27) As a consultant you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. The actual demand in year 2017 was 750. The forecast demand in year 2017 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2018 forecast value? A) 766 B) 813 C) 897 D) 1,023 E) 1,120
28) A company wants to forecast demand using the simple moving average. The company uses four positive prior yearly (2014, 2015, 2016 and 2017) sales values. All yearly sales figures are unique (no repetitions). Which of the following is most accurate about the moving average forecast for year 2018? A. Has to be smaller than at least one of the four yearly sales figures. B. Has to be larger than at least one of the four yearly sales figures. C. Has to be between the smallest and largest yearly sales figures. D. Has to greater than all four yearly sales figures.
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A) Choice A B) Choice B C) Choice C D) Choice D E) Choice A, B and C only
29) As a consultant, you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. You have data for the past three years, the forecast and the actual are the same for the first period of your data (3 years ago). Which of the following is the most accurate? A. Forecast for year 2018 will be higher than the actual for 2017, if your α is close to 1.0 B. Forecast for 2018 will be between all the actual sales C. Exponential smoothing is a type of weighted average forecasting method
A) Choice A. B) Choice B. C) Choice C. D) Choice B and C only. E) None of the above.
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30) As a consultant, you have been thinking about choosing the “right” alpha (smoothing constant) for forecasting using exponential smoothing. Which of the following is the most accurate about alpha? A. If alpha is high, speed of reaction to changes in actually low. B. If a firm produces standard product with relatively stable demand, alpha should be small. C. Products experiencing growth should be assigned higher alpha value. D. Alpha could be more than 1.0, and in this case (1-alpha) will become negative to make up for it.
A) Choice A. B) Choice B. C) Choice C. D) Choice D. E) Choice B and C.
31) Using the exponential smoothing model for forecasting, the smoothing constant alpha determines the level of smoothing and_____________blank A) the slope of the growth curve. B) the speed of reaction to differences between forecasts and actual results. C) the intercept on the Y-axis. D) the next forecast error. E) a measure of forecast accuracy.
32)
The least squares method refers to _____________blank
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A) a computation in linear regression. B) selecting participants for the Delphi Technique. C) time series decomposition into smaller and smaller units. D) determining the smallest sources of error in a forecast. E) calculating the running sum of forecast errors.
33)
Which of the following forecasting methods is considered a causal forecasting technique? A) Exponential smoothing. B) Weighted moving average. C) Linear regression. D) Historical analogy. E) Market research.
34) If the intercept value of a linear regression model is 40, the slope value is 40, and the value of X is 40, which of the following is the resulting forecast value using this model? A) 120 B) 1,600 C) 1,640 D) 2,200 E) 64,000
35) A company hires you to develop a linear regression forecasting model. Based on the company's historical sales information, you determine the intercept value of the model to be 1,200. You also find the slope value is −50. If after developing the model you are given a value of X = 10, which of the following is the resulting forecast value using this model?
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A) −1,800 B) 700 C) 1,230 D) 1,150 E) 12,000
36)
Which of the following is a possible source of bias error in forecasting? A) Failing to include the right variables. B) Using the wrong forecasting method. C) Employing less sophisticated analysts than necessary. D) Using incorrect data. E) Using standard deviation rather than MAD.
37)
Which of the following is used to describe the degree of error? A) Weighted moving average B) Regression C) Moving average D) Forecast as a percent of actual E) Mean absolute deviation
38) A company has actual unit demand for three consecutive years of 124, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which of the following is the resulting MAD value that can be computed from this data? A) 1 B) 3 C) 5 D) 15 E) 123
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39) A company has actual unit demand for four consecutive years of 100, 105, 135, and 150. The respective forecasts were 120 for all four years. Which of the following is the resulting MAD value that can be computed from this data? A) 2.5 B) 10 C) 20 D) 22.5 E) 30
40) If you were selecting from a variety of forecasting models based on MAD, which of the following MAD values from the same data would reflect the most accurate model? A) 0.2 B) 0.8 C) 1.0 D) 10.0 E) 100.0
41) A company has calculated its running sum of forecast errors to be 500 and its mean absolute deviation is exactly 35. Which of the following is the company's tracking signal? A) Cannot be calculated based on this information. B) About 14.3. C) More than 35. D) Exactly 35. E) About 0.07.
42) A company has a MAD of 10. It wants to have a 99.7 percent control limits on its forecasting system. The most recent tracking signal value is 3.1. What can the company conclude from this information? Version 1
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A) The forecasting model is operating acceptably. B) The forecasting model is out of control and needs to be corrected. C) The MAD value is incorrect. D) The upper control value is less than 20. E) It is using an inappropriate forecasting methodology.
43) You are hired as a consultant to advise a small firm on forecasting methodology. Based on your research you find the company has a MAD of 3. Its wants to have a 99.7 percent control limits on its forecasting system. Company most recent tracking signal value is 15. What should be your report to the company? A) The forecasting model is operating acceptably. B) The forecasting model is out of control and needs to be corrected. C) The MAD value is incorrect. D) The upper control value is less than 20. E) The company is using an inappropriate forecasting methodology.
44) Which of the following is the portion of observations you would expect to see lying within −3MAD and +3MAD range. A) 57.05 % B) 88.95 % C) 98.36 % D) 99.85 % E) 100 %
45) Which of the following is the portion of observations you would expect to see lying within −2MAD and +2MAD range.
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A) 57.04% B) 89.04% C) 98.33% D) 99.86% E) 100.00%
46) You are using an exponential smoothing model for forecasting. The running sum of the forecast error statistics (RSFE) are calculated each time a forecast is generated. You find the last RSFE to be 34. Originally, the forecasting model used was selected because it's relatively low MAD of 0.4. To determine when it is time to reevaluate the usefulness of the exponential smoothing model you compute tracking signals. Which of the following is the resulting tracking signal? A) 85 B) 60 C) 13.6 D) 12.9 E) 8
47)
Heavy sales of umbrellas during a rain storm is an example of which of the following? A) A trend. B) A causal relationship. C) A statistical correlation. D) A coincidence. E) A fad.
48) Which of the following forecasting methods is considered a qualitative forecasting technique?
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A) Simple moving average. B) Market research. C) Linear regression. D) Exponential smoothing. E) Multiple regression.
49) Which of the following forecasting methods uses executive judgment as its primary component for forecasting? A) Historical analogy. B) Time series analysis. C) Panel consensus. D) Market research. E) Linear regression.
50) Which of the following forecasting methods is very dependent on selection of the right individuals who will judgmentally be used to actually generate the forecast? A) Time series analysis. B) Simple moving average. C) Weighted moving average. D) Delphi method. E) Panel consensus.
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51) Collaborative Planning, Forecasting, and Replenishment (CPFR) is a web-based tool used to coordinate demand forecasting, production and purchase planning, and inventory replenishment between supply chain trading partners. In practice CPFR often doesn't deliver on its' promise because _____________blank. A) Computer systems at supplier companies cannot be made to work with each other. B) Forecast errors accumulate as data exchanges are made down the supply chain culminating in the “feast or famine” phenomena known as the “bullwhip effect.” C) Firms in a supply chain may not trust each other sufficiently to share information openly. D) conflicting objectives between the profit-maximizing vendor and the cost-minimizing customer give rise to adversarial supply chain relationships. A) All of these B) B and D C) A and C D) A, C, and D E) C and D
52) There are no differences in strategic and tactical forecasting. A forecast is a mathematical projection and its ultimate purpose should make no difference to the analyst. ⊚ ⊚
53)
true false
For every forecasting problem there is one best forecasting technique. ⊚ ⊚
true false
54) A good forecaster is one who develops special skills and experience at one forecasting technique and is capable of applying it to widely diverse situations. ⊚ ⊚
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55) Continual review and updating in light of new data is a forecasting technique called second guessing. ⊚ true ⊚ false
56) Cyclical influences on demand are often expressed graphically as a linear function that is either upward or downward sloping. ⊚ true ⊚ false
57) Cyclical influences on demand may come from occurrences such as political elections, war, or economic conditions. ⊚ true ⊚ false
58)
Trend lines are usually the last things considered when developing a forecast. ⊚ true ⊚ false
59) Time series forecasting models make predictions about the future based on analysis of past data. ⊚ true ⊚ false
60) In a forecasting model using simple exponential smoothing the data pattern should remain stationary.
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⊚ ⊚
true false
61) In a forecasting model using simple moving average, the shorter the time span used for calculating the moving average, the closer the average follows volatile trends. ⊚ true ⊚ false
62) In the weighted moving average forecasting model, the weights must add up to one times the number of data points. ⊚ ⊚
true false
63) Experience, trial, and error are the simplest ways to choose weights for the weighted moving average forecasting model. ⊚ true ⊚ false
64) Bayesian analysis is the simplest way to choose weights for the weighted moving average forecasting model. ⊚ true ⊚ false
65) The weighted moving average forecasting model uses a weighting scheme to modify the effects of individual data points. This is its major advantage over the simple moving average model. ⊚ true ⊚ false
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66) A central premise of exponential smoothing is that more recent data is less indicative of the future than data from the distant past. ⊚ true ⊚ false
67) The equation for exponential smoothing states that the new forecast is equal to the old forecast plus the error of the old forecast. ⊚ true ⊚ false
68)
Exponential smoothing is always the best and most accurate of all forecasting models. ⊚ true ⊚ false
69) In the simple exponential smoothing forecasting model, you need at least 30 observations to set the smoothing constant alpha. ⊚ ⊚
true false
70) In exponential smoothing, it is desirable to use a higher smoothing constant when forecasting demand for a product experiencing high growth. ⊚ true ⊚ false
71) The value of the smoothing constant alpha in an exponential smoothing model is between 0 and 1.
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⊚ ⊚
72)
true false
Single exponential smoothing lags changes in demand. ⊚ ⊚
true false
73) Exponential smoothing forecasts always lag behind the actual occurrence but can be corrected somewhat with a trend adjustment. ⊚ true ⊚ false
74)
To correct the trend, we need two smoothing constants. ⊚ ⊚
true false
75) A restriction in using linear regression is that it assumes that past data and future projections fall on or near a straight line. ⊚ ⊚
true false
76) Regression is a functional relationship between two or more correlated variables, where one or more variables are used to predict a single variable of interest. ⊚ ⊚
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77)
Linear regression is not useful for aggregate planning. ⊚ ⊚
true false
78) The standard error of the estimate in the linear regression is not useful for judging the fit between the data and the regression line when doing forecasts. ⊚ ⊚
true false
79) Decomposition of a time series means identifying and separating the time series data into its components. ⊚ ⊚
true false
80) A time series is defined in the text as chronologically ordered data that may contain one or more components of demand variation: trend, seasonal, cyclical, autocorrelation, and random. ⊚ ⊚
81)
true false
It is difficult to identify the trend in time series data. ⊚ ⊚
true false
82) In decomposition of time series, it is relatively easy to identify cycles and autocorrelation components.
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⊚ ⊚
true false
83) We usually associate the word "seasonal" with recurrent periods of repetitive activity that happen on other than an annual cycle. ⊚ ⊚
true false
84) Because the factors governing demand for products are very complex, all forecasts of demand contain error. ⊚ true ⊚ false
85) Random errors can be defined as those that cannot be explained by the forecast model being used. ⊚ true ⊚ false
86) Random errors in forecasting occur when an undetected secular trend is not included in a forecasting model. ⊚ true ⊚ false
87)
The MAD is used to generate tracking signals. ⊚ true ⊚ false
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88)
MAD statistics can be used to generate tracking signals. ⊚ true ⊚ false
89)
RSFE in forecasting stands for "reliable safety function error." ⊚ true ⊚ false
90)
In forecasting, RSFE stands for "running sum of forecast errors." ⊚ true ⊚ false
91) A tracking signal (TS) can be calculated using the arithmetic sum of forecast deviations divided by the MAD. ⊚ true ⊚ false
92)
A true forecast is when it is consistently low or high. ⊚ ⊚
93)
In causal relationship forecasting leading indicators are used to forecast occurrences. ⊚ ⊚
94)
true false
true false
Multiple regression analysis uses several regression models to generate a forecast.
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⊚ ⊚
true false
95) Multiple regression is the best forecasting method when several factors influence a variable. ⊚ ⊚
true false
96) Qualitative forecasting techniques generally take advantage of the knowledge of experts and therefore do not require much judgment. ⊚ true ⊚ false
97)
Market research is a quantitative method of forecasting. ⊚ true ⊚ false
98) When forecasting demand for a new product, it is typical to produce a model from historical data of similar or competing products. ⊚ ⊚
true false
99) Collaborative planning, forecasting, and replenishment (CPFR) integrates all the members of the supply chain. ⊚ ⊚
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26
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Answer Key Test name: Chap 03_6e 1) D 2) E 3) D 4) A 5) B 6) A 7) D 8) D 9) B 10) D 11) A 12) D 13) C 14) A 15) B 16) C 17) C 18) B 19) C 20) A 21) A 22) B 23) A 24) C 25) D 26) C Version 1
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27) C 28) E 29) D 30) E 31) B 32) A 33) C 34) C 35) B 36) A 37) E 38) C 39) C 40) A 41) B 42) A 43) B 44) C 45) B 46) A 47) B 48) B 49) C 50) D 51) E 52) FALSE 53) FALSE 54) FALSE 55) FALSE 56) FALSE Version 1
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57) TRUE 58) FALSE 59) TRUE 60) TRUE 61) TRUE 62) FALSE 63) TRUE 64) FALSE 65) TRUE 66) FALSE 67) FALSE 68) FALSE 69) FALSE 70) TRUE 71) TRUE 72) TRUE 73) TRUE 74) TRUE 75) TRUE 76) TRUE 77) FALSE 78) FALSE 79) TRUE 80) TRUE 81) FALSE 82) FALSE 83) FALSE 84) TRUE 85) TRUE 86) FALSE Version 1
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87) FALSE 88) TRUE 89) FALSE 90) TRUE 91) TRUE 92) FALSE 93) FALSE 94) FALSE 95) TRUE 96) FALSE 97) FALSE 98) TRUE 99) TRUE
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