1 Chapter Introduction to Operations Management
True/False
1. Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services. Answer: False Page: 4 Difficulty: Easy
2. Often, the collective success or failure of companies' operations functions will impact the ability of a nation to compete with other nations. Answer: True Page: 4 Difficulty: Easy
3. Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used. Answer: False Page: 6 Difficulty: Medium
4. Operations, marketing, and finance function independently of each other in most organizations. Answer: False Page: 4 Difficulty: Medium
5. The greater the degree of customer involvement, the more challenging the design and management of operations. Answer: True Page: 7 Difficulty: Easy
6. Goods producing organizations are not involved in service activities Answer: False Page: 13 Difficulty: Medium
7. Service operations require additional inventory because of the unpredictability of consumer demand. Answer: False Page: 9 Difficulty: Easy
8. The value of outputs is measured by the prices customers are willing to pay for goods or services. Answer: True Page: 5 Difficulty: Easy
9. The use of models will guarantee the best possible decisions. Answer: False Page: 15 Difficulty: Medium
10. People who work in the field of operations should have skills that include both knowledge and people skills. Answer: True Page: 27 Difficulty: Medium
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11. Assembly lines achieved productivity but at the expense of standard of living. Answer: False Page: 22 Difficulty: Hard
12. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities. Answer: False Page: 14 Difficulty: Hard
13. The word 'technology' is used only to refer to 'information technology'. Answer: False Page: 25 Difficulty: Easy 14. ,,Value added by definition is always a positive number since 'added' implies increases. Answer: False Page: 5 Difficulty: Medium
15. Service often requires a greater labor content, whereas manufacturing is more capital intensive. Answer: True Page: 7 Difficulty: Medium
16. Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials. Answer: False Page: 7 Difficulty: Medium
17. Outsourcing often involves collaboration with our competitors to prevent partners from taking unfair advantage of us. Answer: False Page: 26 Difficulty: Hard
18. One method of classifying production systems is the degree of standardization. Answer: True Page: 7 Difficulty: Easy
19. Most people encounter operations only in profit-making organizations. Answer: False Page: 6 Difficulty: Medium
20. Service involves a much higher degree of customer contact than manufacturing. Answer: True Page: 9 Difficulty: Easy
21. A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts. Answer: True Page: 16 Difficulty: Medium
22. The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management. Answer: True Page: 17 Difficulty: Medium
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23. Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision-making. Answer: False Page: 18 Difficulty: Medium
24. The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework. Answer: True Page: 15 Difficulty: Medium
25. Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions. Answer: False Page: 15 Difficulty: Hard
26. Many operations management decisions can be described as tradeoffs. Answer: True Page: 16 Difficulty: Medium
27. A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency. Answer: False Page: 16 Difficulty: Medium
28. Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts. Answer: True Page: 21 Difficulty: Medium
29. Elton Mayo's "Hawthorne Experiment" was the focal point of the Human Relations Movement, which emphasized the importance of the human element in job design. Answer: True Page: 23 Difficulty: Medium
30. Among Ford's many contributions was the introduction of mass production, using the concept of interchangeable parts and division of labor. Answer: True Page: 22 Difficulty: Easy
31. Lean production systems are efficient only in small countries like Japan and Korea, but not in America since American organizations have access to greater resources. Answer: False Page: 26 Difficulty: Medium
32. Lean production systems incorporate the advantages of both mass production and craft production. Answer: True Page: 28 Difficulty: Medium
33. A model is an abstraction of reality, which is a simplified version of a real phenomenon. Answer: True Page: 14 Difficulty: Easy
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34. Lean production systems use a highly skilled work force and flexible equipment. Answer: True Page: 28 Difficulty: Easy
35. Unions often oppose conversion to lean production systems because they view the added responsibility and multiple tasks involved as an expansion of job requirements with no comparable increases in pay. Answer: True Page: 28 Difficulty: Medium
36. Operations Management activities will be less important in the future because many firms are becoming service-oriented operations rather than goods producing operations. Answer: False Page: 4 Difficulty: Medium
Multiple Choice
37. A nation's ability to compete with other nations impacts a business' strategy in the area of: A) Marketing B) Finance C) Operations D) Distribution E) All of the above Answer: E Page: 4 Difficulty: Hard
38. Operations management involves continuous decision-making; hopefully most decisions made will be: A) redundant B) minor in nature C) smart D) quantitative E) none of the above Answer: C Page: 12 Difficulty: Easy
39. A 'product package' consists of: A) the exterior wrapping B) the shipping container C) a combination of goods and services D) goods if a manufacturing organization E) customer relations if a service organization Answer: C Page: 4 Difficulty: Medium
Learning Objective: Ref
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41. Which of the following is not a type of operations? A) goods production B) storage/transportation C) entertainment D) communication E) all the above involve operations Answer: E Page: 6 Difficulty: Medium
42. Technology choices seldom affect: A) costs. B) productivity. C) union activity. D) quality. E) flexibility. Answer: C Page: 25 Difficulty: Medium
43. Measurements taken at various points in the transformation process for control purposes are called: A) plans B) directions C) controls D) feedback E) budgets Answer: D Page: 4 Difficulty: Hard
44. Budgeting, analysis of investment proposals, and provision of funds are activities associated with the______ function. A) operation B) marketing C) purchasing D) finance E) internal audit Answer: D Page: 4 Difficulty: Easy
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45. 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 Page: 5 Difficulty: Hard Learning Objective: AS
46. Manufacturing work sent to other countries is called: A) downsized B) outsourced C) internationalization D) vertical integration E) entrepreneurial ship Answer: B Page: 26 Difficulty: Medium Learning Objective: MD
47. Product design and process selection are examples of decisions that are: A) financial B) tactical C) system design D) system operation E) forecasting Answer: C Page: 11 Difficulty: Hard
49. Knowledge skills usually don't include: A) process knowledge B) accounting skills C) communication skills D) global knowledge E) all of the above Answer: C Page: 20 Difficulty: Medium
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50. Which of the following is not true about systems approach? A) A systems viewpoint is almost always beneficial in decision making. B) A systems approach emphasizes interrelationships among subsystems. C) A systems approach concentrates on efficiency within subsystems. D) A systems approach is essential whenever something is being redesigned or improved. E) All of the above are true. Answer: C Page: 16 Difficulty: Medium
51. What is credited with gains in industrial productivity, increased standards of living and affordable products? A) personal computers B) the internet C) mass transportation D) assembly lines E) multi-level marketing Answer: D Page: 22 Difficulty: Hard Learning Objective: EU
52. Production systems with customized outputs typically have relatively: A) high volumes of output B) low unit costs C) high amount of specialized equipment D) fast work movement E) skilled workers Answer: E Page: 22 Difficulty: Hard
53. Which is not a significant difference between manufacturing and service operations? A) cost per unit B) uniformity of output C) labor content of jobs D) customer contact E) measurement of productivity Answer: A Page: 7 Difficulty: Hard 55. Which of the following is a recent trend in business? A) pollution control B) total quality management C) supply chain management D) competition from foreign manufacturers E) technological change Answer: C Page: 26 Difficulty: Medium
56. Farming is an example of: A) an obsolete activity B) a virtual organization C) non-manufactured goods D) a growth industry E) customized manufacturing
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Answer: C
Page: 6
Difficulty: Medium
57. Dealing with the fact that certain aspects of any management situation are more important than others is called: A) analysis of tradeoffs B) sensitivity analysis C) recognition of priorities D) analysis of variance E) decision table analysis Answer: C Page: 17 Difficulty: Hard
58. The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the: A) Irwin phenomenon B) Pareto phenomenon C) Stevenson phenomenon D) Tellier phenomenon E) Adam Smith phenomenon Answer: B Page: 17 Difficulty: Medium Learning Objective: MD
59. The process of comparing outputs to previously established standards to determine if corrective action is needed is called: A) planning B) directing C) controlling D) budgeting E) disciplining Answer: C Page: 7 Difficulty: Hard
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61. Which of the following is not emphasized in a lean production system? A) falling prices B) high quality C) worker involvement D) continual improvement E) customer satisfaction Answer: A Page: 28 Difficulty: Hard
62. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is called ... A) Illegal. B) Price-fixing. C) Volume analysis. D) Revenue management. E) Outsourcing. Answer: D Page: 27 Difficulty: Medium Learning Objective: EU
64. Which of the following is not a benefit of using models in decision making? A) They provide a standardized format for analyzing a problem. B) They serve as a consistent tool for evaluation. C) They are easy to use and less expensive than dealing with the actual situation. D) All of the above are benefits. E) None of the above is a benefit. Answer: D Page: 14 Difficulty: Hard Learning Objective: CA
Chapter 2 Competitiveness, Strategy and Productivity
True/False
1. An example of a strategic operations management decision is the choice of where to locate. Answer: True Page: 47 Difficulty: Hard
2. An example of an operational operations management decision is inventory level management. Answer: True Page: 48 Difficulty: Hard
3. An example of a tactical operations management decision is whether to build a new facility or to expand an existing one. Answer: False Page: 48 Difficulty: Hard
4. An example of a tactical operations management decision is determining employment levels. Answer: True Page: 48 Difficulty: Hard
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5. Productivity is defined as the ratio of output to input. Answer: True Page: 50 Difficulty: Easy
6. Productivity is defined as the ratio of input to output. Answer: False Page: 50 Difficulty: Easy
7. Competitiveness relates to the profitability of an organization in the marketplace. Answer: False Page: 37 Difficulty: Easy
8. If people would only work harder, productivity would increase. Answer: False Page: 53 Difficulty: Medium Learning Objective: MD
9. Tracking productivity measures over time enables managers to judge organizational performance and decide where improvements are needed. Answer: True Page: 53 Difficulty: Medium
10. Productivity is directly related to the ability of an organization to compete. Answer: True Page: 53 Difficulty: Easy
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11. A characteristic that was once an order winner may become an order qualifier, and vice versa. Answer: True Page: 45 Difficulty: Medium
12. Outsourcing tends to improve quality but at the cost of lowered productivity. Answer: False Page: 54 Difficulty: Medium
13. Productivity tends to be only a very minor factor in an organizations ability to compete. Answer: False Page: 53 Difficulty: Easy
14. An organization that is twice as productive as its competitor will be twice as profitable. Answer: False Page: 53 Difficulty: Medium
15. National productivity is determined by averaging the productivity measures of various companies or industries. Answer: False Page: 50 Difficulty: Medium
16. Wage and salary increases that are not accompanied by productivity increases tend to exert inflationary pressures on a nation's economy. Answer: True Page: 50 Difficulty: Medium
17. Global competition really only applies to multi-national organizations. Answer: False Page: 37 Difficulty: Medium
18. A business that is rated highly by their customers for service quality will tend to be more profitable than a business that is rated poorly. Answer: True Page: 39 Difficulty: Easy Learning Objective: EU 19. Services often dont fit simple yield measurements. Answer: True Page: 54 Difficulty: Easy
20. A mission statement should provide a guide for the formulation of strategies for the organization. Answer: True Page: 40 Difficulty: Easy
21. The hierarchy and sequence of planning and decision-making is: mission, organizational strategy, tactics, and operational decisions. Answer: True Page: 41 Difficulty: Medium
22. Strategy includes both organizational and functional strategies. Answer: True Page: 42 Difficulty: Easy
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23. Organizational strategy should be determined without considering the realities of functional area strengths and weaknesses since they can be changed to meet our strategy. Answer: False Page: 43 Difficulty: Medium Learning Objective: Ref
24. Mission statements should be as specific as possible regarding exactly how they will be accomplished. Answer: False Page: 40 Difficulty: Medium
25. Improving efficiency will guarantee a similar improvement in productivity Answer: False Page: 56 Difficulty: Medium
26. As long as we match a competitor on quality and price we will gain market share. Answer: False Page: 45 Difficulty: Easy
27. Environmental scanning is a search for events or trends that present either threats or opportunities to the organization. Answer: True Page: 45 Difficulty: Medium
28. Standardization has the advantage of reducing variability. Answer: True Page: 55 Difficulty: Easy
29. Traditional strategies of business organizations have tended to emphasize cost minimization or product differentiation. Answer: True Page: 49 Difficulty: Medium
30. The majority of our textbook deals with tactical operations that support established functional strategies. Answer: True Page: 40 Difficulty: Medium
31. Quality-based strategies focus on customer satisfaction by ensuring that each product is carefully and thoroughly inspected prior to delivery to prevent sending out bad product. Answer: False Page: 48 Difficulty: Hard
32. Time-based strategies focus on reducing the time required to accomplish certain activities, such as new product development or delivery to the customer. Answer: True Page: 49 Difficulty: Medium
33. Functional strategies should be designed to directly support a firm's mission. Answer: False Page: 40 Difficulty: Medium
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34. Companies are required to use environmental scanning because of both federal and state regulations regarding environmental pollution control. Answer: False Page: 45 Difficulty: Medium Learning Objective: EU
Multiple Choice 35. Competitiveness doesnt include: A) Productivity B) Effectiveness C) Profitability D) Operations Strategy E) Operations Management Answer: C Page: 38 Difficulty: Hard
Learning Objective: Ref
36. Product design and choice of location are examples of _______ decisions. A) strategic B) tactical C) operational D) customer focused E) design Answer: A Page: 47 Difficulty: Hard
37. Scheduling personnel is an example of an operations management: A) mission implementation B) operational decision C) organizational strategy D) functional strategy E) tactical decision Answer: B Page: 47 Difficulty: Hard
38. Productivity is expressed as: A) output plus input B) output minus input C) output times input D) output divided by input E) input divided by output Answer: D Page: 50 Difficulty: Easy
39. In the 1970's and 1980's in the USA, organizations concentrated on: A) operations strategies B) improving quality C) marketing and financial strategies D) revising mission statements E) environmental issues Answer: C Page: 48 Difficulty: Medium
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40. A significant reason why U.S. productivity is the highest in the world is high: A) agricultural productivity B) manufacturing productivity C) labor productivity D) savings productivity E) governmental productivity Answer: A Page: 53 Difficulty: Hard Learning Objective: Ref
41. Which of the following is not a factor that affects productivity? A) computer viruses B) design of the workspace C) use of the Internet D) standardizing process E) wireless cellular phones Answer: E Page: 54 Difficulty: Medium
42. Which of these factors affects productivity? A) methods and technology B) workers C) management D) a and b only E) all of the above Answer: E Page: 54 Difficulty: Easy
43. Which of the following is not a key step toward improving productivity? A) developing productivity measures for all operations B) improving the bottleneck operations C) establishing reasonable goals for improvement D) considering incentives to reward workers E) converting bond debt to stock ownership Answer: E Page: 55 Difficulty: Medium
44. For an organization to grow their market share, they must: A) advertise using multi-media B) lower their prices C) meet minimum standards of acceptability for their products or services D) establish an internet website E) broaden their mission statement Answer: C Page: 45 Difficulty: Hard
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45. The ratio of good output to quantity of raw material input is called A) non-defective productivity B) process yield C) worker quality measurement D) total quality productivity E) quantity/quality ratio Answer: B Page: 49 Difficulty: Hard
46. The fundamental purpose for the existence of any organization is described by its: A) policies B) procedures C) corporate charter D) mission statement E) bylaws Answer: D Page: 40 Difficulty: Easy 47. A productivity increase in one operation that doesnt improve overall productivity of the business isnt A) effective B) efficient C) politically justified D) productive E) financially justified Answer: A Page: 56 Difficulty: Hard
48. Value added can be calculated by: A) average productivity gains over time B) inputs divided by the outputs C) outputs divided by the inputs D) input plus output divided by two E) outputs minus inputs Answer: E Page: 53 Difficulty: Medium
49. Which of the following is true? A) Corporate strategy is shaped by functional strategies. B) Corporate mission is shaped by corporate strategy. C) Functional strategies are shaped by corporate strategy. D) External conditions are shaped by corporate mission. E) Corporate mission is shaped by functional strategies. Answer: C Page: 42 Difficulty: Hard Learning Objective: AS
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51. Which of the following is considered to be a cause of poor U.S. global competitiveness? A) the tendency to view labor as a cost factor to be minimized B) decision-making based on short-term horizons C) weaknesses in technological practice D) powerful trading partners E) all of the above Answer: E Page: 40 Difficulty: Hard Learning Objective: MD
52. Which of the following is not considered to be a cure for poor competitiveness? A) remove communications barriers within organizations B) minimize attention to the operations function C) put less emphasis on short-term financial results D) recognize labor as a valuable asset and act to develop it E) improve quality Answer: B Page: 40 Difficulty: Hard
53. 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 Page: 49 Difficulty: Medium
54. The external elements of SWOT analysis are: A) strengths and weaknesses B) strengths and threats C) opportunities and threats D) weaknesses and opportunities E) strengths and opportunities Answer: C Page: 44 Difficulty: Medium
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56. Which of the following is not a reason for poor performance of our organization in the marketplace? A) placing too much emphasis on product/service design and too little on process design B) failing to take into account customer wants and needs C) putting too much emphasis on short-term financial performance D) taking advantage of strengths/opportunities, and recognizing competitive threats E) none of the above Answer: D Page: 48 Difficulty: Hard
58. Which of the following is not a key factor of competitiveness? A) price B) product differentiation C) flexibility D) after-sale service E) size of organization Answer: E Page: 38 Difficulty: Hard
Chapter 3 Forecasting
True/False
1. Forecasting techniques generally assume an existing causal system that will continue to exist in the future. Answer: True Difficulty: Medium Page: 69
2. For new products in a strong growth mode, a low alpha will minimize forecast errors when using exponential smoothing techniques. Answer: False Difficulty: Medium Page: 83
3. Once accepted by managers, forecasts should be held firm regardless of new input since many plans have been made using the original forecast. Answer: False Difficulty: Easy Page: 70
4. Forecasts for groups of items tend to be less accurate than forecasts for individual items because forecasts for individual items dont include as many influencing factors. Answer: False Difficulty: Medium Page: 69
5. Forecasts help managers plan both the system itself and provide valuable for information using the system. Answer: True Difficulty: Easy Page: 68
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6. Organizations that are capable of responding quickly to changing requirements can use a shorter forecast horizon and therefore benefit from more accurate forecasts. Answer: True Difficulty: Medium Page: 70 Learning Objective: IT
7. MAD is endorsed by the American Statistical Society while MAPE is the choice of the Decision Science Association.. Answer: False Difficulty: Easy Page: 92
8. The purpose of the forecast should be established first so that the level of detail, amount of resources, and accuracy level can be understood. Answer: True Difficulty: Medium Page: 92
9. Forecasts based on time series (historical) data are referred to as associative forecasts. Answer: True Difficulty: Easy Page: 88
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10. Time series techniques involve identification of explanatory variables that can be used to predict future demand. Answer: False Difficulty: Hard Page: 72
11. A consumer survey is an easy and sure way to obtain accurate input from future customers since most people enjoy participating in surveys. Answer: False Difficulty: Easy Page: 71
12. The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast. Answer: True Difficulty: Easy Page: 72 13. Exponential smoothing adds a percentage (called alpha factor) of last periods forecast to estimate next periods demand. Answer: False Difficulty: Medium Page: 77
14. The shorter the forecast period, the more accurately the forecasts tend to track what actually happens. Answer: True Difficulty: Easy Page: 69
15. Forecasting techniques that are based on time series data assume that future values of the series will duplicate past values. Answer: False Difficulty: Medium Page: 72
16. Trend adjusted exponential smoothing uses double smoothing to add twice the forecast error to last periods actual. Answer: False Difficulty: Medium Page: 82 17. Forecasts based on an average tend to exhibit less variability than the original data. Answer: True Difficulty: Medium Page: 74
18. The naive approach to forecasting requires a linear trend line. Answer: False Difficulty: Easy Page: 73
19. The naive forecast is limited in its application to series that reflect no trend or seasonality. Answer: False Difficulty: Easy Page: 73
20. The naive forecast can serve as a quick and easy standard of comparison against which to judge the cost and accuracy of other techniques. Answer: True Difficulty: Easy Page: 73
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21. A moving average forecast tends to be more responsive to changes in the data series when more data points are included in the average. Answer: False Difficulty: Medium Page: 74
22. In order to update a moving average forecast, the values of each data point in the average must be known. Answer: True Difficulty: Hard Page: 74
23. Forecasts of future demand are used by operations people to plan capacity. Answer: True Difficulty: Easy Page: 99
24. An advantage of a weighted moving average is that recent actual results can be given more importance than what occurred a while ago. Answer: True Difficulty: Medium Page: 74
25. Exponential smoothing is a form of weighted averaging. Answer: True Difficulty: Medium Page: 77
26. A smoothing constant of .1 will cause an exponential smoothing forecast to react more quickly to a sudden change than a smoothing constant value of .3. Answer: False Difficulty: Hard Page: 77
27. The T in the model TAF = S+T represents the time dimension (which is usually expressed in weeks or months). Answer: False Difficulty: Medium Page: 82
28. Trend adjusted exponential smoothing requires selection of two smoothing constants. Answer: True Difficulty: Easy Page: 82
29. An advantage of "trend adjusted exponential smoothing" over the "linear trend equation" is its ability to adjust over time to changes in the trend. Answer: True Difficulty: Medium Page: 82
30. A seasonal relative (or seasonal indexes) is expressed as a percentage of average or trend. Answer: True Difficulty: Medium Page: 84
31. In order to compute seasonal relatives, the trend of past data must be computed or known which means that for brand new products this approach cant be used. Answer: True Difficulty: Medium Page: 84
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32. Removing the seasonal component from a data series (de-seasonalizing) can be accomplished by dividing each data point by its appropriate seasonal relative. Answer: True Difficulty: Hard Page: 84
33. If a pattern appears when a dependent variable is plotted against time, one should use time series analysis instead of regression analysis. Answer: True Difficulty: Hard Page: 92 Learning Objective: AS
34. Curvilinear and multiple regression procedures permit us to extend associative models to relationships that are non-linear or involve more than one predictor variable. Answer: True Difficulty: Medium Page: 92
35. The sample standard deviation of forecast error, is equal to the square root of MSE. Answer: True Difficulty: Easy Page: 92
36. Correlation measures the strength and direction of a relationship between variables. Answer: True Difficulty: Medium Page: 91
37. MAD is equal to the square root of MSE which is why we calculate the easier MSE and then calculate the more difficult Mean Absolute Deviation. Answer: False Difficulty: Medium Page: 92
38. In exponential smoothing, an alpha of 1.0 will generate the same forecast that a nave forecast would yield. Answer: True Difficulty: Medium Page: 77
39. A forecast method is generally deemed to perform adequately when the errors exhibit an identifiable pattern. Answer: False Difficulty: Medium Page: 92
40. A control chart involves setting action limits for cumulative forecast error. Answer: False Difficulty: Medium Page: 92
41. A tracking signal focuses on the ratio of cumulative forecast error to the corresponding value of MAD. Answer: True Difficulty: Medium Page: 92
42. The use of a control chart assumes that errors are normally distributed about a mean of zero. Answer: True Difficulty: Hard Page: 92
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43. Bias exists when forecasts tend to be greater or less than the actual values of time series. Answer: True Difficulty: Easy Page: 92
44. Bias is measured by the cumulative sum of forecast errors. Answer: True Difficulty: Medium Page: 92
45. Seasonal relatives can be used to de-seasonalize data or incorporate seasonality in a forecast. Answer: True Difficulty: Medium Page: 3-22
46. The best forecast is not necessarily the most accurate. Answer: True Difficulty: Medium Page: 92 Learning Objective: Ref
47. A proactive approach to forecasting views forecasts as probable descriptions of future demand, and requires action be taken to meet that demand. Answer: False Difficulty: Hard Page: 99
48. Simple linear regression applies to linear relationships with no more than three independent variables. Answer: False Difficulty: Medium Page: 88
49. An important goal of forecasting is to minimize the average forecast error. Answer: False Difficulty: Medium Page: 92
50. Forecasting techniques such as moving averages, exponential smoothing, and the naive approach all represent smoothed (averaged) values of time series data. Answer: False Difficulty: Medium Page: 72
51. In exponential smoothing, an alpha of .30 will cause a forecast to react more quickly to a large error than will an alpha of .20. Answer: True Difficulty: Medium Page: 77
Multiple Choice 52. Forecasts based on judgment and opinion dont include A) executive opinion B) salesperson opinion C) second opinions D) customer surveys E) Delphi methods Answer: C Difficulty: Medium Page: 71
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57. The two general approaches to forecasting are: A) mathematical and statistical B) qualitative and quantitative C) judgmental and qualitative D) historical and associative E) precise and approximation Answer: B Difficulty: Easy Page: 70
60. Which of the following would be an advantage of using a sales force composite to develop a demand forecast? A) The sales staff is least affected by changing customer needs. B) The sales force can easily distinguish between customer desires and probable actions. C) The sales staff is often aware of customers' future plans. D) Salespeople are least likely to be influenced by recent events. E) Salespeople are least likely to be biased by sales quotas. Answer: C Difficulty: Hard Page: 71
61. Which phrase most closely describes the Delphi technique? A) associative forecast B) consumer survey C) series of questionnaires D) developed in India E) historical data Answer: C Difficulty: Easy Page: 72 Learning Objective: CA 63. One reason for using the Delphi method in forecasting is to: A) avoid premature consensus (bandwagon effect) B) achieve a high degree of accuracy C) maintain accountability and responsibility D) be able to replicate results E) prevent hurt feelings Answer: A Difficulty: Medium Page: 72
65. Gradual, long-term movement in time series data is called: A) seasonal variation B) cycles C) irregular variation D) trend E) random variation Answer: D Difficulty: Easy Page: 79
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67. Averaging techniques are useful for: A) distinguishing between random and non-random variations B) smoothing out fluctuations in time series C) eliminating historical data D) providing accuracy in forecasts E) average people Answer: B Difficulty: Hard Page: 74 68. Putting forecast errors into perspective is best done using A) Exponential smoothing B) MAPE C) Linear decision rules D) MAD E) Hindsight Answer: B Difficulty: Medium Page: 92
71. Moving average forecasting techniques do the following: A) immediately reflect changing patterns in the data B) lead changes in the data C) smooth variations in the data D) operate independently of recent data E) assist when organizations are relocating Answer: C Difficulty: Hard Page: 74
75. Which is not a characteristic of exponential smoothing? A) smoothes random variations in the data B) weights each historical value equally C) has an easily altered weighting scheme D) has minimal data storage requirements E) smoothes real variations in the data Answer: B Difficulty: Hard Page: 77
87. The primary method for associative forecasting is: A) sensitivity analysis B) regression analysis C) simple moving averages D) centered moving averages E) exponential smoothing Answer: B Difficulty: Medium Page: 88
89. Which of the following corresponds to the predictor variable in simple linear regression? A) regression coefficient B) dependent variable C) independent variable D) predicted variable
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E) demand coefficient Answer: C Difficulty: Medium
Page: 88
90. The mean absolute deviation (MAD) is used to: A) estimate the trend line B) eliminate forecast errors C) measure forecast accuracy D) seasonally adjust the forecast E) all of the above Answer: C Difficulty: Medium Page: 92
Chapter 4 Product and Service Design
True/False
1. Global teams provide diversity while eliminating conflicts and miscommunication. Answer: False Difficulty: Medium Page: 138 2. A ,,House of Quality is achieved when no department in a single location has more than 15% rejects. Answer: False Difficulty: Easy Page: 150
3. Concurrent Engineering is another term for sequential development. Answer: False Difficulty: Easy Page: 143
4. One of the main advantages of standardization is that it increases the potential variety of products. Answer: False Difficulty: Medium Page: 133
5. A disadvantage of standardization is the possibility of standardizing designs too early, which may make it difficult to modify in the future. Answer: True Difficulty: Medium Page: 133
6. Reducing consumer choices makes service more efficient. Answer: True Difficulty: Easy Page: 154
7. Modular design increases costs of purchasing and controlling inventory compared to non-modular. Answer: False Difficulty: Medium Page: 149
8. Product failures can be easier to remedy with modular design. Answer: True Difficulty: Medium Page: 149
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9. One motivation for an organization to redesign its product or service is to avoid the alternative of downsizing the organization. Answer: True Difficulty: Easy Page: 126
10. A major benefit of Computer Aided Design (CAD) is the increased productivity of designers. Answer: True Difficulty: Easy Page: 144 Learning Objective: IT
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11. Most of the time what is called product or service design is actually a redesign of an existing product or service. Answer: True Difficulty: Easy Page: 126
12. A service blueprint is quite similar to an architectural drawing. Answer: True Difficulty: Easy Page: 155
13. The process of dismantling and inspecting a competitor's product to discover product improvement is called benchmarking. Answer: False Difficulty: Easy Page: 139
14. To save money, it is essential that designers revise the production capabilities to meet the requirements of the new products. Answer: False Difficulty: Medium Page: 143
15. Many US manufacturers are now shifting their focus from products to both product and process improvements. Answer: True Difficulty: Medium Page: 132
16. Applied research has the objective of achieving commercial applications for new ideas. Answer: True Difficulty: Easy Page: 139
17. Basic research is done with the expectation that discoveries will have near-term commercial application. Answer: False Difficulty: Easy Page: 139
18. "Design for operations" takes into account the capabilities of the organization to produce or deliver a given product or service. Answer: True Difficulty: Easy Page: 143
19. Consumers tend to resist purchasing products containing recycled materials. Answer: False Difficulty: Medium Page: 145
20. "Concurrent engineering" brings people concerned with manufacturing into the design phase earlier than in the "over-the-wall" approach. Answer: True Difficulty: Easy Page: 143
21. "Concurrent engineering" means that at least two engineers are involved in product design at the same time. Answer: False Difficulty: Easy Page: 143
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22. One approach to extending a products life cycle is to promote alternate uses of the product. Answer: True Difficulty: Easy Page: 128
23. "Quality Function Deployment" is a structured approach that guarantees that the highest quality product or service will be designed. Answer: False Difficulty: Easy Page: 149
24. Product liability means that a manufacturer is liable for any injuries and damages caused by a faulty product because of poor workmanship or design. Answer: True Difficulty: Medium Page: 131
25. The process of dismantling and inspecting a competitor's product to discover improvement is called reverse engineering. Answer: True Difficulty: Easy Page: 139
26. Research and development (R&D) refers to organized efforts that are directed toward increasing scientific knowledge and product (or process) innovation. Answer: True Difficulty: Easy Page: 139
27. Standardization refers to the extent to which there is absence of variety in a product, service, or process. Answer: True Difficulty: Easy Page: 133
28. Re-manufacturing refers to removing some of the components of old products and reusing them in new products. Answer: True Difficulty: Easy Page: 147
29. The demand for a product and the rate of technological change have significant impact on the length of a given phase of the product life cycle. Answer: True Difficulty: Easy Page: 132
30. Robust design describes a product that will perform satisfactorily so long as it is used in a very narrow range of conditions. Answer: False Difficulty: Easy Page: 136
31. Taguchi design methods involve identifying the optimal operating or environmental conditions for a given product. Answer: False Difficulty: Medium Page: 137 Learning Objective: EU
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32. Quality function deployment (QFD) is based on a set of standards which relate customer requirements to company capabilities. Answer: False Difficulty: Hard Page: 149
33. The quality function deployment (QFD) matrices are often referred to as the "House of Quality" because, when completed, they "house" all of the customer's quality requirements. Answer: False Difficulty: Medium Page: 149
34. Service design often must take into account the degree of customer contact required. Answer: True Difficulty: Easy Page: 147
35. Reliability refers to the ability of a product to perform its intended function under normal conditions. Answer: True Difficulty: Easy Page: 153
36. Applied research is the major R & D effort of business organizations because of the desire for commercial applications. Answer: True Difficulty: Easy Page: 139
37. Commonality of a components is beneficial for manufacturing but not for services. Answer: False Difficulty: Medium Page: 149 Learning Objective: Ref
38. Standardization can at times lead to serious difficulties and competitive struggles, particularly when systems are running under different conditions. Answer: False Difficulty: Medium Page: 133
39. The term failure as applied to reliability means that a part or item does not function at all. Answer: False Difficulty: Medium Page: 136
40. Reliability can be defined in terms of a particular point in time or in terms of length of service. Answer: True Difficulty: Easy Page: 136
41. Reliability can be improved by the use of backup components. Answer: True Difficulty: Easy Page: 136
42. Delayed differentiation and modular design are tactics for mass customization. Answer: True Difficulty: Medium Page: 134 Learning Objective: CA
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Multiple Choice
43. One way to increase reliability is to: A) improve component design B) increase the number of service stations C) increase mean repair time D) increase the number of dependent components E) none of the above Answer: A Difficulty: Medium Page: 136
44. One way to increase reliability is to: A) eliminate backup component B) improve preventive maintenance procedures C) increase mean repair time D) increase the number of independent components E) none of the above Answer: B Difficulty: Easy Page: 136
46. A disadvantage of global teams for product design is that: A) Customers may have different needs in different countries B) The product designed may have increased marketability and utility C) The diversity of an international team may be a detriment D) Ease of face to face meetings is absent since members are located everywhere E) Technology allows constant contact with team members Answer: D Difficulty: Medium Page: 138 Learning Objective: MD
47. The stage in a product or service life cycle where some firms adopt a defensive research posture is: A) incubation B) growth C) maturity D) saturation E) decline Answer: E Difficulty: Medium Page: 132
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48. One step that isnt part of service blueprinting is: A) Eliminate boundaries for the service and decide on the level of interaction needed B) Identify and determine the sequence of customer and service actions and interactions C) Develop time estimates for each phase of the process D) Understand the time variability involved E) Identify potential failure points and develop a plan to minimize them Answer: A Difficulty: Hard Page: 155
49. The research and development activity which starts after positive research results are available and attempts to turn these results into useful commercial applications is: A) basic research B) applied research C) development D) redesign E) commercial research Answer: C Difficulty: Medium Page: 139
51. Products or Services with a high degree of similarity of features and components are called: A) generic B) copy-cat C) rip-offs D) product families E) product/service matrix Answer: D Difficulty: Medium Page: 149 52. "Must have", "expected" and "excitement" characteristics are categories in the ____ model. A) Bi-polar B) Kano C) Pareto D) Quality E) Service Matrix Answer: B Difficulty: Medium Page: 152
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53. One possible disadvantage of modular design is that: A) replacement and repair is more difficult B) failure diagnosis is more complex C) number of configurations of modules decreases D) individual parts lose their identities E) inventory problems arise Answer: C Difficulty: Medium Page: 149
54. In the area of product and service design, the acronym CAD refers to: A) conceptually appropriate design B) computer aided design C) commercial applications design D) competitive advantage design E) completely automated design Answer: B Difficulty: Easy Page: 144
55. Which of the following statements about CAD is not true? A) It increases the productivity of designers. B) It uses computer graphics. C) It requires a good data base. D) Some systems permit engineering or cost analysis of proposed designs. E) It is used successfully by 68% of the manufacturing companies. Answer: E Difficulty: Hard Page: 144 Learning Objective: IT
56. Which one of the following is not a factor of successful product and service design? A) be aware of what the competitors are doing B) be aware of what customers want C) know what government regulations are D) use computerized design techniques E) know what new technologies are available Answer: D Difficulty: Medium Page: 139
57. As part of a strategy for improving competitiveness, a manager may have to initially sacrifice: A) research and development B) short-term performance C) employee pay raises D) product or service quality E) personal incentive bonuses Answer: B Difficulty: Medium Page: 132 Learning Objective: EU
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60. The term ,,degrees of newness is associated with: A) average age of employees B) average length of time on the job C) total years of business experience D) degree of design change E) average age of the capital equipment Answer: D Difficulty: Hard Page: 137 61. The term ,,standardization is closely associated with: A) customization B) high cost C) longer lead times D) variety E) interchangeability Answer: E Difficulty: Medium Page: 133 Learning Objective: Ref
62. Service design generally differs from product design in which of the following ways? A) Service design tends to focus on tangible factors. B) There is less latitude in detecting and correcting errors prior to delivery. C) There is a lesser requirement to be aware of competitors' offerings. D) There is less visibility to customers. E) There is no difference Answer: B Difficulty: Hard Page: 153
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63. The structural approach for integrating customer requirements into every aspect of product development is known as: A) total quality management B) customer satisfaction C) quality function deployment D) customer integration E) a product development team Answer: C Difficulty: Easy Page: 149
64. Which of the following is an issue that designers must take into account in product and service design? A) legal, environmental, and ethical issues B) reliability C) standardization D) range of operating conditions E) all of the above Answer: E Difficulty: Medium Page: 132
65. One of these is not a characteristic of a well-designed service system: A) User friendly B) Robust C) Distributed computer networks D) Cost effective E) Easy to sustain Answer: C Difficulty: Medium Page: 156
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