Multiple Choice Answers


1. Make-to-stock processes
a. are best when demand is predictable and steady
b. result in longer lead times to fulfill orders
c. are best when demand is seasonal
d. result in lower inventory costs

2. One way to decrease the process throughput time would be
a. to increase the process operation time
b. to increase the process setup time
c. to increase the process throughput rate
d. to increase the work in process

3. Productivity is usually measured in __________ units and __________.
a. monetary, labor
b. labor, time
c. monetary, time
d. labor, rate

4. When designing a process flow structure managers should consider
a. required customer delivery times
b. 1 quantities required and the degree of product customization
c. potential supply chain disruptions
d. prevailing local labor rates

5. Capital equipment, such as robotic assembly lines used to replace hourly workers,
a. improve production flexibility
b. lower fixed costs
c. increase the break-even point
d. increase variable costs

6. Learning curve theory is based on the premise that
a. the unit time required to produce a product will decrease at an increasing rate
b. the unit time to produce a product may be estimated by linear regression
c. the unit time required to produce a product will decrease at a decreasing rate
d. the unit time required to produce a product will decrease at a constant rate

7. When evaluating a new product development project using net present value analysis, which of the following will make the project more attractive?
a. Delaying the start of the project
b. Making the project run over a longer period of time
c. Improving (bringing forward) the date when revenue will begin
d. Reducing sunk costs

8. Value analysis/value engineering (VA/VE)
a. relies on engineering inputs to minimize the cost of the product under development
b. relies on research and development in order to provide the latest technological improvements in the product under development
c. relies on customer provided inputs to provide optimal performance at the lowest possible cost for the product under development
d. relies on sales force input to design and build products at a cost making them easy to sell

9. When marketing, engineering, and operations simultaneously develop a process (cross-functional integration), this approach is known as
a. sequential process
b. traditional approach
c. concurrent engineering
d. core competency

10. A corporate ISO 91 certification
a. applies only to service organizations
b. mandates adoption of Six Sigma methodology
c. is required for TQM designation
d. requires a periodic audit of the certified firm

11. A free product replacement under warranty is an example of
a. an external failure cost
b. an internal failure cost
c. the cost of quality
d. a sales and marketing cost

12. An example of prevention costs as a type of cost of quality is
a. inspection
b. testing
c. train personnel
d. rework

13. Inventory carrying costs
a. decrease as inventory on hand becomes obsolete
b. increase when the cost of capital increases
c. increase when there is a stockout
d. decrease when shipping charges increase

14. Fixed–time period ordering models (P-models)
a. are most useful when demand is predictable
b. are most useful when demand unexpectedly spikes
c. are most useful when inventory carrying costs are high
d. are most useful when lead times are long

15. The optimal order quantity Q-opt
a. increases as holding costs increase
b. increases as setup costs increase
c. is independent of demand
d. decreases as demand increases

16. Materials requirement planning (MRP)
a. is an infinite, backwards scheduling system
b. is an infinite, forward scheduling system
c. is a finite, backwards scheduling system
d. is a finite, forward scheduling system

17. Job sequencing priority rules
a. impact the lead times
b. impact the due date
c. impact job processing times
d. impact the total completion time

18. According to Goldratt, a useful measure of profitabilty is
a. cash flow
b. gross margin on sales
c. net profit divided by current assets
d. earnings before interest and tax deductions

19. According to Goldratt and Fox, inventory dollar days are
a. inventory costs multiplied by days in department
b. work in process in department divided by cycle time
c. cost of good sold multiplied by process set up time
d. work in process in department multiplied by cycle time

20. Matrix style organizations
a. provide overall authority to the functional manager
b. provide overall authority to the project manager
c. do not allow participants to work on more than one project at a time
d. permit functional organizations to remain intact when projects are concluded

21. One advantage of the network planning models over the Gantt chart is that
a. they are easy to use and quite widely understood
b. they provide a procedure for determining a project’s critical path
c. they are less costly to use
d. they relate activities to time in a usable fashion

22. Outsourcing
a. is always driven by the desire to reduce costs
b. always results in mass lay-offs
c. always turns fixed costs into variable costs
d. always allows an organization to improve profit margins

23. Capacity planning will always
a. require the planners to consider the cost of new equipment
b. involve trade-offs between outsourcing and building a new factory
c. require a physical inventory count
d. require a sales forecast

24. A kanban card is used to signal that
a. work is ready to be moved to the next station
b. a worker has run out of parts
c. a machine has broken down
d. work is authorized to replenish a downstream station

25. In a just-in-time manufacturing environment,
a. value stream mapping is used to set inventory levels
b. safety stock is kept at constant levels
c. everything is made to order
d. nothing is manufactured until it is needed

26. Lean production was embodied in The Toyota Production System developed in Japan. Two philosophies of the Japanese culture are
a. customer satisfaction and respect for people
b. respect for people and increased employee participation
c. eliminate waste and increased employee participation
d. respect for people and eliminate waste

27. In the functional areas of finance and accounting, __________ provide the basis for budgetary planning and cost control.
a. time series analysis
b. casual relationships
c. forecasts
d. demand management

28. The form of capacity planning that covers a time horizon for the next 6 to 18 months, with time increments that are monthly or quarterly is
a. short-range planning
b. long-range planning
c. intermediate-range planning
d. sales and operation planning

29. Strategic capacity planning dictates that when product demand temporarily declines,
a. production overhead needs to be permanently reduced
b. finished goods inventory needs to be reduced
c. any existing external capacity should be reduced
d. capacity cushions must be maintained

30. The centroid method calculates the optimal location for a single facility based upon
a. customer density function
b. shipping costs between facilities
c. overhead expenses
d. the location of existing facilities and volumes shipped