Chapter 1 Introduction to Operations Management

1. In addition to operations, which of the following is considered a "line" function?

A. accounting
B. finance
C. IT
D. procurement
E. sales

Operations and sales are considered line functions.

2. Marketing personnel and product designers must work closely with operations to successfully develop and produce new
products because operations personnel can best judge how _____________ new product designs will be.

A. marketable
B. segmentable
C. manufacturable
D. profitable
E. nameable

Greater understanding of operations helps marketing personnel and product designers better interact with operations
personnel to ensure the manufacturability of their new product designs.

3. Managing the supply chain has become more important as a result of firms increasing their levels of:

A. overtime.
B. outsourcing.
C. marketing.
D. promotions.
E. shipping.

By buying more goods and services rather than producing them themselves, firms are increasing their levels of outsourcing,
thereby increasing the need to manage the supply chain.

4. Which of the following would tend to increase the importance of supply chain management?

A. increased supply chain stability

B. lower levels of outsourcing
C. reduced competitive pressures
D. increased globalization
E. greater emphasis on local markets

Increased globalization leads to longer lead times, increased shipping distances, greater opportunities for disruption of
deliveries, more heterogeneous markets and sources of supply, and greater sources of uncertainty.
5. In their chief role of _________, operations managers exert considerable influence over the degree to which the goals and
objectives of the organization are realized.

A. promoter/salesman
B. designer/builder
C. planner/decision maker
D. recruiter/trainer
E. troubleshooter/problem-solver

Operations management professionals make a number of key decisions that affect the entire organization. Most of these
decisions involve many possible alternatives that can have quite different impacts on costs or profits.

6. 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.

Most firms are not pure service or manufacturing firms; they produce combinations of goods and services.

7. Business organizations consist of three major functional areas which, ideally:

A. support one another.

B. are mutually exclusive.
C. exist independently of each other.
D. function independently of each other.
E. do not interface with each other.

Finance, marketing and operations are these major functional areas. In practice, there is significant interfacing and
collaboration between these areas.

8. Which of the following is a type of transformation process used by operations to convert inputs into outputs?

A. cutting
B. storing
C. entertaining
D. analyzing
E. all of the above are transformation processes

Cutting, storing, entertaining, and analyzing are all types of value-adding transformations that may be used to convert inputs
into outputs.
9. Technology choices can have a major impact on:

A. costs.
B. productivity.
C. customer satisfaction.
D. quality.
E. all of the above.

Technology choices can have a major impact on productivity, costs, flexibility, quality, customer satisfaction, and
competitiveness.

10. Measurements taken at various points in the transformation process for control purposes are called:

A. plans.
B. directions.
C. controls.
D. feedback.
E. budgets.

Feedback is used to monitor and improve processes.

11. 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

These are the primary tasks for the finance function.

12. 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

Staffing doesn't involve transforming resources so much as it involves acquiring them.

13. Buying goods or services instead of producing or providing them in-house is called:

A. downsizing.
B. outsourcing.
C. internationalization.
D. vertical integration.
E. entrepreneurship.

Outsourcing is increasingly a part of operations management and is contributing to the increased attention on supply chain
management.

14. Product design and process selection are examples of _______ decisions.

A. financial
B. tactical
C. system design
D. system operation
E. forecasting

These major strategic decisions affect decisions made at lower levels.

15. The responsibilities of the operations manager include:

A. allocating financial resources throughout the organization.

B. the creation of goods or provision of services.
C. promoting the organization’s goods or services.
D. assessing consumer wants and needs.
E. analyzing investment proposals.

The scope of operations management ranges across the organization. The operations manager is the key figure in the system
with the ultimate responsibility for the creation of goods or provision of services.

16. Knowledge skills usually don't include:

A. process knowledge.
B. accounting skills.
C. communication skills.
D. global knowledge.
E. financial skills.

Communication skills generally are considered to be people skills.

17. Which of the following is not true about the 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 choices are true.

Subsystem efficiency doesn't necessarily translate into overall system efficiency; so an approach which concentrates on
efficiency within subsystems is an alternative to the systems approach

18. Which of the following is a system in which low-skilled workers use specialized equipment to produce high volumes of
standardized goods?

A. supply chain
B. the Internet
C. craft production
D. mass production
E. lean systems

Mass production has played a prominent role in increasing standards of living.

19. Production systems with customized outputs typically have relatively:

A. high volumes of output.

B. low unit costs.
C. high amounts of specialized equipment.
D. fast work movement.
E. skilled workers.

Skilled workers are necessary to accommodate the variation inherent in customized outputs.

20. Which is not an area of significant difference between manufacturing and service operations?

A. forecasting demand
B. uniformity of input
C. labor content of jobs
D. customer contact
E. measurement of productivity

Manufacturing and service operations both use forecasting and capacity planning to match supply and demand.
21. Which of the following is not a characteristic of service operations?

A. intangible output
B. high customer contact
C. high labor content
D. easy measurement of productivity
E. low uniformity of input

The productivity of service operations is often hard to measure.

22. Which of the following most involves coordinating the activities among all the elements of the business including its
suppliers and distributors?

A. pollution control
B. quality management
C. supply chain management
D. competition from foreign manufacturers
E. technological change

Supply chain management involves a broader systemic view of operations.

23. Farming is an example of:

A. an obsolete activity.
B. a virtual organization.
C. nonmanufactured goods production.
D. a growth industry.
E. customized manufacturing.

Farm operations are not manufacturing operations.

24. Dealing with the fact that certain aspects of any management situation are more important than others is called:

A. analysis of trade-offs.
B. sensitivity analysis.
C. recognition of priorities.
D. analysis of variance.
E. decision table analysis.

Solutions tend to be targeted toward higher priority aspects of a situation.

25. 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.

Pareto phenomena direct our attention to the difference between the "important few" and the "trivial many."

26. 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.

Controls are used to maintain performance.

27. Which of the following does not relate to system design?

A. altering the system capacity

B. location of facilities
C. inventory management
D. selection and acquisition of equipment
E. physical arrangement of departments

Inventory management is a system operation decision area.

28. Taking a systems viewpoint with regard to operations in today's environment increasingly leads decision makers to consider
______________ in response to the ___________.

A. flexibility; pressure to be more efficient

B. offshoring; need to promote domestic production
C. sustainability; threat of global warming
D. technology; impact of random variation
E. forecasting; stabilization of demand

Sustainability is a relatively recent operations management consideration.

29. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands
through price manipulation. This is an example of:

A. illegal price discrimination.

B. collusion.
C. volume analysis.
D. revenue management.
E. outsourcing.

Revenue management is used to ensure that as much perishable capacity as possible is sold.

30. Which of the following is not an ongoing trend in manufacturing?

A. globalization
B. quality improvement
C. flexibility and agility
D. mass production for greater economies of scale
E. technological advances

Manufacturers are moving away from mass production for economies of scale.

31. 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. They force the decision maker to take into account qualitative issues such as personalities and emotions.
E. They offer insights into fundamental issues at play in a decision-making setting.

While models are useful tools for making decisions without confronting the actual situation with all of its complexity, there
is the risk that important qualitative information may be overlooked.

32. Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This
increased level of _____________ is leading to increased emphasis on ____________ management.

A. outsourcing; supply chain

B. offshoring; lean
C. downsizing; total quality
D. optimizing; inventory
E. internationalization; intercultural

Supply chain management takes a more systemic view of the firm, its operations, and its suppliers.
33. Operations and sales are the two ________ functions in businesses.

A. strategic
B. tactical
C. support
D. value-adding
E. line

Others are support functions.

34. Marketing depends on operations for information regarding:

A. productivity.
B. lead time.
C. cash flow.
D. budgeting.
E. corporate intelligence.

Marketing uses lead time information to make promises to customers.

35. Two widely used metrics of variation are the __________ and the _________.

A. mean; standard deviation

B. productivity ratio; correlation
C. standardized mean; assignable deviation
D. randomized mean; standardized deviation
E. normal distribution; random variation

The mean and standard deviation summarize important facts regarding the variation in a process.

36. Which of the following statements about variation is false?

A. Variation prevents a production process from being as efficient as it can be.

B. Some variation can be prevented.
C. Variation can either be assignable or random.
D. Any variation makes a production process less productive
E. Random variation generally cannot be influenced by managers.

The choice to offer customers greater variety might increase variation but increase productivity even more.

37. Which of the following is essential to consider with respect to managing a process to meet demand?

A. advertising
B. trends in fashion
C. global economic trends
D. financial reporting standards
E. capacity

While all of these can play a role in determining the demands placed on a process, capacity is most directly associated with
determining whether that process can actually meet demand.
38. Which of the following refers to service and production processes that use resources in ways that do not harm ecological
systems?

A. sustainability
B. supportability
C. marketability
D. perishability
E. transportability

Sustainability refers to service and production processes that use resources in ways that do not harm those ecological systems
that support both current and future human existence.

39. Which of the following principles emphasizes that actions should make the community as a whole better off?

A. The Rights Principle

B. The Fairness Principle
C. The Virtue Principle
D. The Common Good Principle
E. The Utilitarian Principle

The Common Good Principle is that actions should contribute to the common good of the community.

40. If one organization is better able than most to respond to changes in demands or opportunities, we say that organization
exhibits higher:

A. sustainability.
B. efficiency.
C. productivity.
D. agility.
E. marketability.

Agility refers to the ability of an organization to respond quickly to demands or opportunities.

41. Supplying operations with parts and materials, performing work on products, and/or performing services are part of the
firm's:

A. division of labor.
B. market development.
C. outsourcing.
D. external process orientation.
E. internal supply chain.

The internal parts of a supply chain are part of the operations function itself, supplying operations with parts and materials,
performing work on products, and/or performing services.