1 Chapter Competing with Operations
Chapter
1
Competing with Operations
TRUE/FALSE
1. Operations management refers to the direction and control of inputs that transform processes into products and services. Answer: True Reference: Operations Management Across the Organization Difficulty: Easy Keywords: operations management, inputs, process, transformation
2.
As a functional area of a business, Operations translates materials and services into outputs. Answer: True Reference: Operations Management Across the Organization Difficulty: Easy Keywords: operations management, inputs, process, transformation Answer: True Reference: Operations Management Across the Organization Difficulty: Easy Keywords: operations management, inputs, process, transformation Answer: False Reference: Operations Management Across the Organization Difficulty: Easy Keywords: operations management, inputs, process, transformation
3. The three main line functions of any business include Operations, Finance and Marketing.
4. Support functions in an organization include Operations, Finance and Marketing.
5. Support functions in an organization include Accounting, Human Resources and
Engineering. Answer: True Reference: Operations Management Across the Organization Difficulty: Easy Keywords: operations management, inputs, process, transformation
6. A process involves transforming inputs into outputs. Answer: True Reference: A Process View Difficulty: Easy Keywords: process, inputs, outputs
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Chapter 1 Competing with Operations
7. Inputs to a process can include human resources. Answer: True Reference: A Process View Difficulty: Easy Keywords: inputs, process, resources 8. Every process has a customer. Answer: True Reference: A Process View Difficulty: Easy Keywords: process, customer 9. A nested process refers to a process within a process. Answer: True Reference: A Process View Difficulty: Easy Keywords: nested process
10. At the level of the firm, service providers offer just services and manufacturers offer just
products. Answer: False Reference: A Process View Difficulty: Moderate Keywords: manufacturing, service, similarity, goods, services
11. At the process level, it is much easier to distinguish whether the process is providing a service or manufacturing a product. Answer: True Reference: A Process View Difficulty: Moderate Keywords: manufacturing process, service process, goods, services 12. In a service process, output can be inventoried. Answer: False Reference: A Process View Difficulty: Easy Keywords: manufacturing process, service process, inventory
13. Manufacturing processes tend to be capital intensive, while service processes tend to be
more labor intensive. Answer: True Reference: A Process View Difficulty: Easy Keywords: manufacturing process, service process, capital intensive, labor intensive
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14. Quality is more easily measured in a service process than in a manufacturing process. Answer: False Reference: A Process View Difficulty: Moderate Keywords: manufacturing process, service process, quality 15. Manufacturing processes usually have long response times compared to service processes. Answer: True Reference: A Process View Difficulty: Moderate Keywords: manufacturing process, service process, response time 16. Contact with the customer is usually higher in a manufacturing process than in a service process. Answer: False Reference: A Process View Difficulty: Easy Keywords: manufacturing process, service process, customer contact
17. A core process is a set of activities that delivers value to external customers.
Answer: True Reference: The Supply Chain View Difficulty: Moderate Keywords: core process, supply chain Answer: True Reference: The Supply Chain View Difficulty: Easy Keywords: process, supply chain
18. A supply chain is the cumulative work of a firm's processes.
19. The supplier relationship process selects the suppliers of services, materials and
information, while the order fulfillment process facilitates the timely and efficient flow of these items into the firm. Answer: False Reference: The Supply Chain View Difficulty: Moderate Keywords: supplier relationship, process, order fulfillment process
20. Environmental scanning refers to the unique resources and strengths that an organization's management considers when formulating a strategy. Answer: False Reference: The Supply Chain View Difficulty: Moderate Keywords: environmental scanning, strategy
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21. A firm's core competencies should determine its core processes. Answer: True Reference: The Supply Chain View Difficulty: Easy Keywords: core competency, core process 22. Competitive priorities are the means by which operations implements the firm's corporate strategies. Answer: False Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priority, corporate strategy 23. Flexibility is a possible competitive priority. Answer: True Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: flexibility, competitive priority
24. Consistent quality is not important to today's consumers.
Answer: False Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: consistent quality, competitive priorities
25. Delivery speed is measured by the elapsed time between receipt of a customer's order and filling it. Answer: True Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: delivery speed, order, fill time
26. Volume flexibility involves accelerating or decelerating the rate of production of services
or products to handle large fluctuations in demand. Answer: True Reference: Competitive Priorities and Capabilities Difficulty: Hard Keywords: volume flexibility
27. A firm once made purchasing decisions based on which supplier had the lowest cost. But
once cash flow was healthy, purchasing decisions were made based on which company could provide the goods and services the fastest. In this case, delivery speed is clearly the order qualifier. Answer: False Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priority, order qualifier
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Chapter 1 Competing with Operations
28. Strategic plans are developed farther into the future than tactical plans.
Answer: True Reference: Operations Strategy As a Pattern of Decisions Difficulty: Easy Keywords: strategic plans, tactical plans
29. Productivity is measured as input divided by output. Answer: False Reference: Trends in Operations Management Difficulty: Easy Keywords: productivity, input, output 30. Labor productivity is an index of the output per person or hours worked. Answer: True Reference: Trends in Operations Management Difficulty: Moderate Keywords: labor productivity, output
31. Most products today are composites of global materials and services from throughout the
world. Answer: True Reference: Trends in Operations Management Difficulty: Moderate Keywords: globalization, products
32. The increased global presence of many firms has lessened the burden to behave ethically. Answer: False Reference: Trends in Operations Management Difficulty: Easy Keywords: ethics, global presence
MULTIPLE CHOICE
33. Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an organization, they are all linked together through: a. management. b. processes. c. customers. d. stakeholders. Answer: b Reference: Operations Management Across the Organization Difficulty: Moderate Keywords: departments, functions, processes
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34. Which one of the following statements regarding operations management is true? a. Inputs to a production system include capital and materials, but not human resources. b. Operations management deals only with manufacturing organizations because service organizations do not have tangible outputs. c. Typical inputs to a production system are processes and consumer goods. d. Customer participation and information on performance are two special types of inputs to a production system. Answer: d Reference: A Process View Difficulty: Moderate Keywords: operations, participation, information, input 35. Operations management is part of a production system that can be described in the following manner: Organization: inputsprocessesoutputs. Which one of the following correctly describes a production system? a. Airline: pilotsplanestransportation b. Bank: tellerscomputer equipmentdeposits c. Furniture manufacturer: woodsandingchair d. Telephone company: satellitescablescommunication Answer: c Reference: A Process View Difficulty: Moderate Keywords: production system, input, process, output
Table 1.1 You are the Production Manager for the toy manufacturing process at the ABC Company. LUMBER COMPANY ABC TOY MANUFACTURING COMPANY TOY STORE AT THE MALL
36. Use the information provided in Table 1.1. An example of an internal customer is: a. The lumber company b. The Receiving Department at ABC c. The Shipping Department at ABC d. The toy store at the mall Answer: c Reference: A Process View Difficulty: Moderate Keywords: internal customer
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37. Use the information provided in Table 1.1. An example of an internal supplier is: a. The lumber company b. The Receiving Department at ABC c. The Shipping Department at ABC d. The toy store at the mall Answer: b Reference: A Process View Difficulty: Moderate Keywords: internal supplier 38. Use the information provided in Table 1.1. An example of an external customer is: a. The lumber company b. The Receiving Department at ABC c. The Shipping Department at ABC d. The toy store at the mall Answer: d Reference: A Process View Difficulty: Moderate Keywords: external customer 39. Use the information provided in Table 1.1. An example of an external supplier is: a. The lumber company b. The Receiving Department at ABC c. The Shipping Department at ABC d. The toy store at the mall Answer: a Reference: A Process View Difficulty: Moderate Keywords: external supplier
40. Which of the following is an example of a nested process?
a. At the start of the new semester, a student first pays tuition and then goes to the bookstore. b. A customer service representative verifies a caller's account information. c. A candidate's intent to graduate is checked for financial holds by the Bursar and for degree requirements by Advising before the diploma mill prints their sheepskin. d. A stockbroker calls a client and advises her to sell silver short. Answer: c Reference: A Process View Difficulty: Easy Keywords: nested process
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41. Which of the following statements is more of a general characteristic of a manufacturing organization, as compared to a service organization? a. Short-term demand tends to be highly variable. b. Operations are more capital intensive. c. Outputs are more intangible. d. Quality is more difficult to measure. Answer: b Reference: A Process View Difficulty: Moderate Keywords: manufacturing organization, service organization, capital intensity 42. Which one of the following statements is more of a general characteristic of a service organization, as compared to a manufacturing organization? a. Output can be inventoried. b. The response time is longer. c. There is less customer contact. d. The facilities tend to be smaller. Answer: d Reference: A Process View Difficulty: Moderate Keywords: manufacturing organization, service organization, facilities 43. Manufacturing processes usually have: a. physical, durable output. b. high levels of customer contact. c. output that cannot be inventoried. d. low levels of capital intensity. Answer: a Reference: A Process View Difficulty: Moderate Keywords: manufacturing organization, service organization, physical output 44. Service processes usually have: a. physical, durable output. b. low levels of customer contact. c. output that can be inventoried. d. low levels of capital intensity. Answer: d Reference: A Process View Difficulty: Moderate Keywords: manufacturing organization, service organization, capital intensity
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45. Which of the following statements concerning manufacturing and service organizations is generally true? a. A service facility is more likely to serve national or even international markets. b. Manufacturing organizations generally have more difficulty in matching capacity with demand. c. In many service organizations, such as hospitals and entertainment centers, customers themselves are inputs to the transformation processes. d. Most service organizations can buffer themselves against uncertain demand by creating inventories and smoothing output levels. Answer: c Reference: A Process View Difficulty: Moderate Keywords: manufacturing organization, service organization, input, transformation process
46. Refresh your understanding of the word customer in operations management and identify
the statement that is TRUE. a. Manufacturing systems can have only internal customers because other departments are responsible for serving the external customer. b. Only service organizations have external customers because service is provided in the presence of a customer. c. Customers can be internal or external in both manufacturing and service operations. d. The concept of an external customer is no longer relevant because delivery is given by third-party distribution companies. Answer: c Reference: A Process View Difficulty: Moderate Keywords: internal customer, external customer, manufacturing operation, service operation
47. Which of the following statements is best? Operations management can be made more effective by: a. focusing on aspects of operations that are directly related to production. b. coordinating operations with other functional areas that impact operations. c. making production early enough so that stockouts do not occur. d. coordinating all activities related to operations directly or indirectly, both within and outside the organization. Answer: d Reference: A Process View Difficulty: Moderate Keywords: operation management, coordination of activities
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48. A set of activities that delivers value to external customers is a: a. supply chain.
b. core process. c. support process. d. system. Answer: b Reference: The Supply Chain View Difficulty: Moderate Keywords: activity, core process
49. Budgeting, recruiting, and scheduling are examples of these types of processes. a. Development b. Core process c. Support process d. System Answer: c Reference: The Supply Chain View Difficulty: Moderate Keywords: activity, support process
50. The core processes in a supply chain must add value for the external customers, while
support processes: a. do not add value for the customer. b. include the order fulfillment process. c. are directly involved in service to the external client. d. are also part of the supply chain. Answer: d Reference: The Supply Chain View Difficulty: Moderate Keywords: core process, support process, supply chain
51. The process that facilitates the placement of orders and identifies, attracts, and builds relationships with external customers is called the: a. customer relationship process. b. new service development process. c. order fulfillment process. d. supplier relationship process. Answer: a Reference: The Supply Chain View Difficulty: Moderate Keywords: process, customer relationship
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52. The process that designs and develops new products and services is called the: a. customer relationship process. b. new service development process. c. order fulfillment process. d. supplier relationship process. Answer: b Reference: The Supply Chain View Difficulty: Easy Keywords: process, service development 53. The process that includes the activities required to produce and deliver the service or product to the customer is called the: a. customer relationship process. b. new service development process. c. order fulfillment process. d. supplier relationship process. Answer: c Reference: The Supply Chain View Difficulty: Moderate Keywords: process, order fulfillment 54. The framework for carrying out all of an organization's functions is: a. the competitive priority. b. the corporate strategy. c. the market analysis. d. the organizational design. Answer: b Reference: The Supply Chain View Difficulty: Moderate Keywords: corporate strategy 55. In response to social and political moves to discourage cigarette smoking, major cigarette manufacturers have had to diversify into other products. Identifying the pressures against smoking is an example of: a. environmental scanning. b. market segmentation. c. flow strategy. d. mission statement development. Answer: a Reference: The Supply Chain View Difficulty: Moderate Keywords: environmental scanning, strategy
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56. Monitoring trends in the industry, the marketplace, and society for potential opportunities or threats is known as: a. flow strategy. b. market segmentation. c. environmental scanning d. mission statement development. Answer: c Reference: The Supply Chain View Difficulty: Moderate Keywords: environmental scanning, monitoring 57. A company realizes that layoffs at its primary customers reflect falling demands for its customers' products, and hence for its own products. The company has engaged in: a. flow strategy. b. market segmentation. c. mission statement redefinition. d. environmental scanning. Answer: d Reference: The Supply Chain View Difficulty: Moderate Keywords: environmental scanning 58. Core competencies are: a. product or service attributes that represent the needs of a particular market segment. b. another name for competitive priorities. c. various flow strategies. d. the unique resources and strengths that management considers when formulating strategy. Answer: d Reference: The Supply Chain View Difficulty: Moderate Keywords: core competency, strategy
59. All of the following are core competencies except:
a. workforce. b. competitive priorities. c. facilities. d. market and financial know-how. Answer: b Reference: The Supply Chain View Difficulty: Moderate Keywords: core competency
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60. All of the following are core competencies except: a. facilities. b. market and financial know-how. c. systems and technology. d. environmental scanning. Answer: d Reference: The Supply Chain View Difficulty: Moderate Keywords: core competency 61. Which of the following is an example of a core competency? a. Facilities b. Top quality c. Low-cost operations d. On-time delivery Answer: a Reference: The Supply Chain View Difficulty: Moderate Keywords: core competency 62. The Gap, Inc. has targeted teenagers and young adults needing casual clothes and, for its GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example of: a. market segmentation. b. a collaborative effort between the company and its customers. c. a needs assessment. d. a mission statement. Answer: a Reference: The Supply Chain View Difficulty: Moderate Keywords: market segmentation 63. A steel company has categorized its customers as standard steel customers, special barquality steel customers, and mixed-steel customers. This is an example of: a. a needs assessment. b. a mission statement. c. market segmentation. d. a joint venture with its customers. Answer: c Reference: The Supply Chain View Difficulty: Moderate Keywords: market segmentation
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64. A lawn fertilizer company has identified a group of customers, such as Costco and WalMart, that has a high degree of variability in its demands for fertilizer. This is an example of needs assessment on the basis of: a. product/service needs. b. delivery system needs. c. volume needs. d. industry factors. Answer: c Reference: The Supply Chain View Difficulty: Moderate Keywords: volume needs, needs assessment
65. Which one of the following statements concerning competitive priorities is TRUE? a. By providing customized toys, a firm is competing mainly on the basis of delivery speed. b. All nine dimensions of competitive priorities should be given equal emphasis in order to survive in the increasingly competitive market. c. A firm competing along the dimension of volume flexibility will generally be expected to do well with a product or service with a seasonal or cyclical demand pattern. d. Federal Express has registered impressive increases in sales and profits by emphasizing development speed. Answer: c Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, volume flexibility 66. Competitive priorities define the dimensions on which the firm should excel with its products or services. Which one of the following statements regarding this concept is TRUE? a. The strategy of emphasizing lower price is most appropriate when the product is highly differentiated. b. McDonald's restaurants emphasize high-performance design quality rather than consistent quality. c. All nine dimensions of competitive priorities should be equally emphasized in order to service the increasingly competitive market of the 1990s. d. Often there are trade-offs among competitive priorities; thus, the best emphasis is situational. Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, situational emphasis
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67. Competitive priorities state the dimensions on which a firm can excel. Which one of the following statements about each dimension is TRUE? a. Emphasizing low price is most appropriate for differentiated products in the growth stage of demand. b. A firm that intends to excel at top quality can succeed only when its production volume is very high. c. McDonald's is a typical example of an organization that excels at volume flexibility rather than quality consistency. d. For a firm that gives top priority to customization, volumes for any individual product tend to be low. Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, 68. customization Which of the following statements about competitive priorities is TRUE? a. Firms emphasizing low price have slack capacity and hold large inventories in order to be efficient. b. To survive, all firms in an industry must compete on the same dimensions of competitive priority. c. United Parcel Service (UPS) competes on the dimension of on-time delivery in part by using its logistics and warehousing expertise to deliver a very large volume of shipments on-time across the globe. d. A good delivery time is less than a few weeks, irrespective of the industry under consideration. Answer: c Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities 69. Competitive priorities define the dimensions on which companies should excel in producing their products or services. Which one of the following statements is TRUE? a. A firm that competes on the dimension of volume flexibility is more likely to manufacture products that experience a seasonal demand variation. b. It is impossible for a firm to improve cost and quality simultaneously. c. A firm offering little customization cannot compete simultaneously on the dimension of consistent quality. d. A firm that competes on the dimension of customization tends to have operating systems that are inflexible. Answer: a Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, volume flexibility
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70. A firm that competes based on development speed would not: a. have critical suppliers participate in the process. b. have a high level of cross-functional coordination between marketing and sales. c. practice concurrent engineering. d. have critical competitors engage in the design process. Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: development speed 71. Admission to the prestigious school had become so competitive that a high GPA was no longer enough to separate one fresh-faced high school student from another. Today's outstanding candidate must also demonstrate their involvement in a myriad of extracurricular activities in order to be admitted. It seems that good grades are now: a. the voice of the engineer. b. order qualifiers. c. order winners. d. the voice of the customer. Answer: b Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: order qualifier
72. The first three cars I bought all fell apart around 50,000 miles. It was called planned
obsolescence and no one seemed to care until companies entered the market and promised 70,000, then 80,000, and finally 100,000 warranties. What sets a great car apart from a good one now is not the quality, which is assumed, but performance, safety and fuel economy. A car that can achieve all three is highly sought after. In the automotive market, performance, safety and fuel economy are sterling examples of: a. order winners. b. the voice of the engineer. c. order qualifiers. d. the voice of the customer. Answer: a Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: order winner
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73. You are interested in buying a laptop computer. Your list of considerations include the
computer's speed in processing data, its weight, screen size, and price. You consider a number of different models, and narrow your list based on speed and monitor screen size, then finally select a model to buy based on its weight and price. In this decision, weight and price are examples of: a. order qualifiers. b. the voice of the supplier. c. order winners. d. the voice of the customer. Answer: c Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: order winner computer's speed in processing data, its weight, screen size and price. You consider a number of different models, and narrow your list based on its speed and monitor screen size, then finally select a model to buy based on its weight and price. In this decision, speed and monitor screen size are examples of: a. order winners. b. the voice of the supplier. c. the voice of the customer. d. order qualifiers. Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: order qualifier is giving particular emphasis to which dimension of competitive priorities? a. Price b. Consistent quality c. Delivery speed d. Top quality Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: quality, competitive priority
74. You are interested in buying a laptop computer. Your list of considerations include the
75. An ethnic restaurant, in serving a lovely, four-hour, seven-course dinner for two for $250,
76. Quickly filling a customer's order is evidence of: a. delivery speed. b. lead time. c. development speed. d. variety. Answer: a Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: delivery speed
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Chapter 1 Competing with Operations
77. Using an airline example for competitive priorities, the process capability of handling service needs of all market segments and promotional programs would be best described by: a. top quality. b. variety. c. consistent quality. d. delivery speed. Answer: b Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: variety, competitive priorities 78. A company's ability to reconfigure processes to meet diverse types of customer needs would be best described by: a. top quality. b. variety. c. customization. d. delivery speed. Answer: c Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: customization, competitive priorities 79. A company's ability to quickly introduce a new service or product would be best described as: a. volume flexibility. b. variety. c. consistent quality. d. development speed. Answer: d Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: development speed, competitive priorities
80. A company's ability to support varying rates of production is best described as:
a. volume flexibility. b. variety. c. consistent quality. d. development speed. Answer: a Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: volume flexibility, competitive priorities
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81. In an assembly operation at a furniture factory, six employees assembled an average of 450
custom cabinet drawers per 5-day week. What is the labor productivity of this operation? a. 90 chairs per worker per day b. 20 chairs per worker per day c. 15 chairs per worker per day d. 75 chairs per worker per day Answer: c Reference: Trends in Operations Management Difficulty: Moderate Keywords: labor productivity
82. A process produces 5000 units of output that yield $6 per unit. Resources contributed to this output are 200 hours of labor at $15 per hour, materials at $700 and overhead at $300. What is the labor productivity? a. 20 units per hour b. 25 units per hour c. 30 units per hour d. 40 units per hour Answer: b Reference: Trends in Operations Management Difficulty: Easy Keywords: labor productivity
83. The manager of a landscaping company is trying to determine the best crew size to use for
laying sod for new construction homes. She has tried various crew sizes, with the results shown below. Based on productivity, which crew size averages the greatest productivity in square yards installed per week? Crew Size Square Yards Installed Per Week 2 716 4 1298 3 1017 3 1002 4 1278 2 702
a. b. c. d.
2-person crew 3-person crew 4-person crew Either a 3- or 4-person crew can be selected; their productivities are both higher than the 2-person crew . Answer: a Reference: Trends in Operations Management Difficulty: Easy Keywords: labor productivity
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84. A manufacturing process requires 12 minutes of labor to make 10 units of production. Which of the following actions will increase productivity? 1. Increase labor per 10 units of production 2. Decrease labor per 10 units of production 3. Increase number of units per 10 minutes of labor 4. Decrease number of units per 12 minutes of labor
a. 1. and 3. only b. 2. and 4. only c. 1. and 4. only d. 2. and 3. only
Answer: d Reference: Trends in Operations Management Difficulty: Easy Keywords: labor productivity
85. The Burdell Company makes tee shirts on an assembly line that works 5 days per week and
uses 5 workers. Over the past 4 weeks, the line has produced 16,000 shirts. The line's productivity for the 4-week period is a. 20 shirts per worker per day. b. 50 shirts per worker per day. c. 160 shirts per worker per day. d. 400 shirts per worker per day. Answer: c Reference: Trends in Operations Management Difficulty: Easy Keywords: labor productivity
86. The details of weekly output and input for a fabrication process are as follows: output is 400 units, with a standard selling price of $100 per unit. For the week, total labor costs are: 10 workers at 40 hours for the week, paid $15 per hour. Total material costs for the 400 units are $5,000. Weekly overhead is charged at the rate of 1.5 times the labor costs. What is the multifactor productivity for the week? a. 0.02 b. 0.75 c. 1.50 d. 2.00 Answer: d Reference: Trends in Operations Management Difficulty: Easy Keywords: multifactor productivity
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Table 1.2 The Abco Company manufactures electrical assemblies. The current process uses 10 workers and produces 200 units per hour. You are considering changing the process with new assembly methods that increase output to 300 units per hour, but will require 14 workers. Particulars are as follows: CURRENT PROCESS 200 10 $120 NEW PROCESS 300 14 $150
OUTPUT (UNITS / HOUR) NUMBER OF WORKERS MATERIAL COST / HOUR
Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs. Finished switches sell for $20 / unit.
87. Use the information provided in Table 1.2. What is the multi-factor productivity of the
current process? a. Less than or equal to 8.0 b. Greater than 8.0 but less than or equal to 10.0 c. Greater than 10.0 but less than or equal to 12.0 d. Greater than 12.0 Answer: c Reference: Trends in Operations Management Difficulty: Moderate Keywords: multifactor productivity process? a. Less than or equal to 8.0 b. Greater than 8.0 but less than or equal to 10.0 c. Greater than 10.0 but less than or equal to 12.0 d. Greater than 12.0 Answer: d Reference: Trends in Operations Management Difficulty: Moderate Keywords: multifactor productivity
88. Use the information provided in Table 1.2. What is the multi-factor productivity of the new
89. Use the information provided in Table 1.2. Based on your productivity calculations, what
decision should you make? a. implement the new process b. stay with the current process c. need more information to make a decision d. either process is acceptable (since the multi-factor productivities are the same) Answer: a Reference: Trends in Operations Management Difficulty: Moderate Keywords: multifactor productivity
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90. It takes the Blacksburg shipyard twenty six weeks with 500 workers to build a small
tanker. Material costs are $32 million and overhead costs are $2 million. Workers cost $40 per hour including benefits and work 40 hours per week. The ship sells for $75 million. What is the multifactor productivity ratio? a. Less than 1.0 b. Greater than 1.0 but less than or equal to 2.0 c. Greater than 2.0 but less than or equal to 3.0 d. Greater than 3.0 Answer: b Reference: Trends in Operations Management Difficulty: Moderate Keywords: multifactor productivity a. b. c. d. ability to safeguard proprietary technology in working with offshore suppliers a recent climate of low political risk and lessening nationalization high levels of worker skills in foreign countries mean less required training strong global competition and increased worldwide demand Answer: d Reference: Trends in Operations Management Difficulty: Moderate Keywords: global competition
91. Which of the following would be considered an advantage of global competition?
FILL IN THE BLANK
92. Operations management refers to the systematic design, direction, and control of ___________ that transform ____________ into products and services. Answer: processes, inputs Reference: Operations Management Across the Organization Difficulty: Moderate Keywords: process, input, transform, product, service 93. A(n) ________ is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides one or more outputs for its customers. Answer: process Reference: A Process View Difficulty: Moderate Keywords: process, activity, input, value
94. The cumulative work of the processes of a firm is a(n) ________________.
Answer: supply chain Reference: The Supply Chain View Difficulty: Moderate Keywords: processes, supply chain
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95. ________________ provide vital resources and inputs to core processes. Answer: Support processes Reference: The Supply Chain View Difficulty: Moderate Keywords: support process, core process 96. A firm gains competitive advantage by outperforming competitors in terms of competitive priorities, which fall into four major groups: _____________, ____________, _____________, and _____________. Answer: cost, quality, time, flexibility Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: competitive priorities, cost, quality, time, flexibility 97. _____________ is the elapsed time between receiving a customer's order and filling it. Answer: Lead time Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: time, delivery speed 98. _____________ is how industrial buyers often refer to delivery speed. Answer: Lead time Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: lead time, delivery speed 99. _____________ measures the frequency with which delivery-time promises are met. Answer: On-time delivery Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: on-time delivery 100. _____________ is the ability to accelerate or decelerate the rate of production quickly to handle large fluctuations in demand. Answer: Volume flexibility Reference: Competitive Priorities and Capabilities Difficulty: Easy Keywords: volume flexibility, demand fluctuations 101. A strategy that focuses on the competitive priorities of delivery speed and development speed is _____________. Answer: time-based competition Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: time-based competition, competitive priority
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Chapter 1 Competing with Operations
102. Every sub-contractor knew that their quality had to be excellent to be considered for the
project; it was their ability to deliver on time that would secure the lucrative contract. Quality was recognized as being an ______________ but on- time was the ______________. Answer: order qualifier; order winner Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: order qualifier, order winner
103. Productivity is defined as __________ divided by____________. Answer: output, input Reference: Trends in Operations Management Difficulty: Moderate Keywords: output, input, productivity
SHORT ANSWERS
104. List and briefly describe five differences between services and manufacturing. Provide examples to illustrate your arguments. Answer:
Manufactured Goods Physical, durable products Output can be produced, stored, and transported Low customer contact Have days to deliver Regional, national, or international markets Large facilities Capital intensive Quality easily measured Services Intangible, perishable products Can't be produced and stored Customers can be part of the input and part of the process Must be offered within minutes Local markets Small facilities Labor intensive Quality not easily measured
Examples will vary. Reference: A Process View Difficulty: Moderate Keywords: manufacturing process, service process 105. Identify a large employer in your hometown. Describe this organization's inputs, processes, and outputs. Answer: Answers will vary based on the employer selected. Reference: A Process View Difficulty: Moderate Keywords: input, process, output
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Chapter 1 Competing with Operations
106. What are four core processes in a firm and how are they related? Answer: The customer relationship process identifies, attracts, and builds relationships with external customers and facilitates the placement of orders. The order fulfillment process includes activities required to produce and deliver the service or product to the external customer. The new service/product development process designs and develops new services or products, which may be to customer specifications. The supplier relationship process selects the suppliers of services, materials, and information and facilitates the flow of these items into the firm. All of these processes exist to provide a service or product to the customer. Reference: The Supply Chain View Difficulty: Moderate Keywords: core process, customer relationship, service/product development, order fulfillment, supplier relationship
107. Explain what an operations strategy is and the importance of competitive priorities. Give
an example from an organization (public or private, manufacturing or service). Answer: An operations strategy is the means by which operations implements the firm's corporate strategy. Competitive priorities are the key capabilities that operations must develop to compete successfully in a market segment. Possible competitive priorities include low-cost operation, high-performance design, consistent quality, delivery speed, on-time delivery, development speed, customization, and volume flexibility. Examples will vary. Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: operations strategy competitive priorities
108. Name the two competitive priorities for quality and give an example of each. Answer: The two competitive priorities are top quality, which is the determination of the level of operations performance required in making a product or performing a service, and consistent quality, which measures the frequency with which the product or service meets design specifications. Examples will vary. Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, top quality, consistent quality 109. Name the three competitive priorities for time, and give an example of each. Answer: The three competitive priorities for time are delivery speed, on-time delivery, and development speed. Delivery speed refers to the elapsed time between receiving a customer's order and filling it. On-time delivery measures the frequency with which delivery-time promises are met. Development speed measures how quickly a new product or service is introduced. Examples will vary. Reference: Competitive Priorities and Capabilities Difficulty: Moderate Keywords: competitive priorities, delivery speed, on-time delivery, development speed
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Chapter 1 Competing with Operations
110. How has global competition affected productivity? Cite specific examples and reference the productivity equation to support your thesis. Answer: Examples will vary; students should argue that the increase in global competition has increased productivity for those firms that have survived. Firms that fail (or have already failed) to effectively compete with new competition suffer from reduced sales, so the numerator in the productivity equation will be lower, perhaps without a commensurate decrease in the denominator, resulting in reduced productivity. Firms that are effectively competing against global competition probably have higher levels of productivity. Global operations might include cheaper or better raw materials and labor, resulting in a smaller denominator and higher productivity. Global competition might also inject new management techniques and leaner operations if some services are outsourced to specialist companies. Reference: Trends in Operations Management Difficulty: Moderate Keywords: productivity, raw materials, labor, management techniques, lean operations, outsourcing
PROBLEMS
111. Barry's Tire Service completed 100 tire changes, six brake jobs, and 16 alignments in an eight-hour day with his standard crew of six mechanics. A brake specialist costs $16 per hour, a tire changer costs $8 per hour, and an alignment mechanic costs $14 per hour. The materials cost for a day was $2000, and overhead cost was $500. a. What is the shop's labor productivity if the retail price for each respective service is $60, $150, and $40? b. What is the multifactor productivity, if the crew consisted of two of each type mechanic? Answer: a.
(100 60 + 6 150 + 16 40) $157 = hr 6 8
b.
{(100 60) + (6 150) + (16 40)} = 2.43 {(2 8 16) + (2 8 8) + (2 8 14) + 2000 + 500}
Reference: Trends in Operations Management Difficulty: Moderate Keywords: labor productivity, multifactor productivity
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Chapter 1 Competing with Operations
112. Consider the information in Table 1.3. Table 1.3 The Abco Company manufactures electrical assemblies. The current process uses 10 workers and produces 200 units per hour. You are considering changing the process with new assembly methods that increase output to 300 units per hour, but will require 14 workers. Particulars are as follows: CURRENT PROCESS OUTPUT (UNITS / HOUR) NUMBER OF WORKERS MATERIAL COST / HOUR 200 10 $120 NEW PROCESS 300 14 $150
Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs. Finished switches sell for $20 / unit. a. Calculate the multifactor productivity for the current process b. Calculate the multifactor productivity for the new process c. Determine if the new process should be implemented Answer: a.
(200)($20) $4, 000 = = 11.11 (10)($10) + $120 + (1.4)(10)($10) $360 (300)($20) $6, 000 = = 12.35 (14)($10) + $150 + (1.4)(14)($10) $486
b.
c. The new process increases multifactor productivity and should be implemented. Reference: Trends in Operations Management Difficulty: Moderate Keywords: labor productivity, multifactor productivity
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