Operation Management Exam #2

All of the following are common objectives of layout studies EXCEPT to:
a) maintain flexibility
b) provide for good housekeeping and maintenance
c) minimize the number of workstations
d) minimize delays in materials handling and customer movement

c) minimize the number of workstations

A __________ layout is an arrangement based on the sequence of operations that are performed during the manufacturing of a good or delivery of a service.
product
A ________ layout consists of a functional grouping of equipment or activities that do similar work.
process
A ________ layout is an arrangement based on self-contained groups of equipment needed to produce a particular set of goods or services.
cellular
The typical layout of facilities in a pizza restaurant would be an example of a _______ layout.
product
The production of large goods such as airplanes is best accomplished using a ______ layout.
fixed-position
Identify an advantage of product layouts.
Lower work-in-process inventories
Which of the following statements is NOT true about fixed-postion layouts?
a) They require a high level of planning and control.
b)The volume of demand us very high.
c) They are used in the production of heavy machine tools and locomotives.
d) Work-in-process remains stationary.

b)The volume of demand us very high.

Which of the following statements is NOT true about cellular layout?
a) It makes additional floor space available for productive users
b) Workers concentrate more on moving parts of the machines rather than on production
c) Workflow is standardized and centrally located.
d) It facilitates the processing of families of parts with similar processing requirements.

b) Workers concentrate more on moving parts of the machines rather than on production

All of the following are limitations of process layouts EXCEPT:
a) more complicated planning and control systems
b) low equipment utilization
c) high material handling costs
d) diverse range of products

d) diverse range of products

_________ layout is used for high volumes of demand and setup requirements.
product
_______ classifies parts into families so that cellular layouts can be effectively used.
Group technology
Which of the following is NOT a common reason for facility layout studies?
a) There is significant change in demand or throughput volume.
b) Different process, equipment and/or technology are installed.
c) A new material supplier is used.
d) A new good or service is introduced to the customer benefit package.

c) A new material supplier is used.

The typical layout of facilities in a legal office would be an example of a ______ layout.
process
_____ occurs whenever one stage completes work and no units from the previous stage are awaiting processing.
Lack-of-work delay
An assembly line with 28 activities is to be balanced. The total amount of time required for all 28 activities is 39 minutes. The line will operate for 450 minutes per day. What must the cycle time be to achieve an output rate of 400 units/day?
1.125 minutes

CT= A/R = 450/400

An assembly line with 28 operations is to be balanced. The total amount of time required for all 28 operations is 39 minutes. The longest operation takes 2.2 minutes and the shortest takes 0.8 minutes. The line will operate for 450 minutes per day.
1. Determine the minimum and maximum cycle time.
2. What is the output rate if the cycle time is set at 2.2 minutes?
min cycle time = 0.8;
max cycle time = 39; output rate = 204.5

CT = A/R = 450/2.2

Which of the following statements is NOT true of ERP systems?
a) Each application has its own independent database.
b) The applications share a common database engine, common DM component.
c) The applications are all integrated.
d) The design allows for abundant reuse of software like the DM (data management) component.

a) Each application has its own independent database.

Database systems, artificial intelligence programs, and voice-recognition software are examples of _____.
soft technology
_____ consist of two or more computer-controlled machines or robots linked by automated handling devices such as transfer machines, conveyors, and transport systems.
Flexible manufacturing systems (FMSs)
_____ involves computer control of a manufacturing process, such as determining tool movements and cutting speeds.
Computer-aided manufacturing (CAM) systems
Which of the following enables engineers to design, analyze, test, simulate, and manufacture products before they physically exist?
a) Computer-aided design/computer-aided engineering (CAD/CAE) systems
b) Computer numerical control (CNC) machines
c) Computer-aided manufacturing (CAM) systems
d) Computer-integrated manufacturing systems (CIMs)

a) Computer-aided design/computer-aided engineering (CAD/CAE) systems

Computer-aided manufacturing (CAM) has advantages over conventional manufacturing approaches under many conditions. Which of the following is NOT such a condition?
a) When homogeneous parts are manufactured
b) When the manufacturing process is complex
c) When frequent design changes are made
d) When expert operator skills and close control are required

a) When homogeneous parts are manufactured

According to the National Research Council, companies with computer-integrated manufacturing system experience have been able to _____.
decrease engineering design costs by up to 30 percent
Which of the following statements is TRUE about enterprise resource planning (ERP) systems?
a) It consists of a single module.
b) It gives each function or department the ability to set up its own database.
c) It is a business strategy designed to learn more about customers’ wants, needs, and behaviors.
d) Customer ordering and production scheduling are its real-time transaction processing systems.

d) Customer ordering and production scheduling are its real-time transaction processing systems.

Which of the following would NOT be included in a typical customer relationship management (CRM) system?
a) Cross-selling goods and services
b) Supply chain inventory management
c) Market segmentation and analysis
d) Effective complaint resolution

b) Supply chain inventory management

Customer relationship management (CRM) helps firms gain competitive advantage by all of the following EXCEPT:
a) by tracking sales trends and advertising effectiveness.
b) by segmenting markets based on demographic and behavioral characteristics
c) by identifying which customers should be the focus of targeted marketing initiatives.
d) by providing real-time transaction processing.

d) by providing real-time transaction processing.

Information technology has significantly affected health care. Which of the following is NOT an outcome?
a) Revenue enhancement
b) Faster exchange of handwritten charts between physicians and nurses
c) Cost reduction
d) Improved clinical efficiency and patient care

b) Faster exchange of handwritten charts between physicians and nurses

Which of the following is NOT an activity handled by a return facilitator?
a) Repairing the manufactured good
b) Invoking the service guarantee
c) Requesting money back for a customer
d) Recommending a new supplier

d) Recommending a new supplier

Apple computer would best be described as what type of company?
Business to customer (B2C)
General Electric (GE) would best be described as what type of company?
Business to business (B2B)
In order to increase value, an organization must do all of the following EXCEPT:
a) decrease price or cost while holding perceived benefits constant.
b) increase perceived benefits while holding price or cost constant.
c) keep the proportion of price or cost to perceived benefits constant.
d) increase perceived benefits while reducing price or cost

c) keep the proportion of price or cost to perceived benefits constant.

_____ is defined as the perception of the benefits associated with a good, service, or bundle of goods and services in relation to what buyers are willing to pay for them.
value
A competitively dominant customer experience is often called a _____.
value proposition
Which of the following statements in the perspective of a value chain is TRUE?
a)Pre- and postproduction services complete the ownership cycle for a good or service.
b) Value chain integration includes improving external processes for the client, and not the internal processes.
c) A value chain is a narrower concept than a supply chain that focuses more on the physical movement of goods, not services.
d) Offshoring is the process of having suppliers provide goods and services that were previously provided internally.

a)Pre- and postproduction services complete the ownership cycle for a good or service.

In the value chain model for a hospital, patients, drugs, and staff would be considered as _____.
inputs
For a restaurant, order taking, bill payment, and home delivery would be considered as _____.
process
Which of the following is NOT a value chain process?
a) General management processes
b) Support processes
c) Core processes
d) Open-ended processes

d) Open-ended processes

In the value chain model for a hospital, pharmaceutical companies and organ donors would be considered as _____.
suppliers
In the context of the perspectives of a value chain, product and service guarantees, contract negotiations and consulting services would be considered as _____. preproduction services
preproduction services
In the context of the perspectives of a value chain, training and transportation delivery services for customers would be considered as _____.
postproduction services
The operational structure of a value chain deals with the _____.
configuration of resources
The control of Walmart’s value chain is _____, while the control of General Electric’s is _____.
centralized; decentralized
A company has two alternatives for meeting a customer requirement for 9,000 units of a specialty molding. If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. If outsourced, the cost is $80 per unit. Determine the break-even point and determine if they should make the item in-house or outsource it.
break-even point = 7,000 units; make it in-house

Q* = FC/(VC2 – VC1 ), if Q is less than Q* then outsource, otherwise produce in-house

A company has two alternatives for meeting a customer requirement for 6,000 units of a specialty molding. If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. If outsourced, the cost is $80 per unit. Determine the break-even point and determine if they should make the item in-house or outsource it.
break-even point = 7,000 units; outsource it

Q* = FC/(VC2 – VC1 ) , if Q is less than Q* then outsource, otherwise produce in-house

_____ is the process of managing information, physical goods, and services to ensure their availability at the right place, at the right time, at the right cost, at the right quantity, and with the highest attention to quality.
Value chain integration
_____ refers to acquiring capabilities in the value (supply) chain toward distributions or even customers.
Forward integration
_____ refers to the process of acquiring and consolidating elements of a value chain to achieve more control.
Vertical integration
The first, second, and third waves of outsourcing experienced by the United States involve _____ respectively.
goods-producing jobs, simple service work, and skilled knowledge work
A(n) _____ produces only what is needed at upstream stages in the supply chain in response to customer demand signals.
pull system
Which of the following is NOT a basic function of the Supply Chain Operations Reference (SCOR) model?
a) Source
b) Deliver
c) Control
d) Make

c) Control

Managing the flow of goods and materials from the customers toward either suppliers, distributers, or manufacturers for the purpose of reuse, resale, or disposal through the supply chain is called the _____.
reverse logistics
The function of Supply Chain Operations Reference (SCOR) model function that entails procuring goods and services to meet planned or actual demand is called _____.
source
A(n) _____ seeks to balance capacity and demand, might use only a few large distribution centers, and minimize costs of routing products from factories to retail stores and customers.
efficient supply chain
Where in its supply chain does Dell Inc. begin to use a pull system?
Supplier
The function of Supply Chain Operations Reference (SCOR) model function that entails all order management activities from processing customer orders to routing shipments, managing goods at distribution centers, and invoicing the customer is called _____.
deliver
_____ is a manufactured good recovery option in which a physical good is disassembled and the parts or the scrap materials are sold to other suppliers.
Recycling
A firm that specializes in certain types of goods-producing activities, such as customized design, manufacturing, assembly, and packaging, and works for end users is called a _____.
contract manufacturer
A pull system _____.
waits for customer orders
Which of the following is TRUE regarding a responsive supply chain?
a) Contribution margins are low.
b) Product life cycles are short and change often because of innovation.
c) Customers require standardization.
d) Demand is stable and predictable.

b) Product life cycles are short and change often

Which one of the following statements about sustainable supply chains is FALSE?
a) A green sustainable supply chain process develops outputs that can be reclaimed and reused at the end of their life-cycle.
b) Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain.
c) For products that are of high enough value, it is normally more cost-effective to remanufacture or refurbish the product.
d) Reverse logistics includes using raw materials and parts to assemble new finished goods.

d) Reverse logistics includes using raw materials and parts to assemble new finished goods.

The basic purpose of a(n) _____ is to coordinate the flow of materials, services, and information among its elements to maximize customer value.
supply chain
A push system _____.
can reduce transportation costs by using full-truckload shipments
Which one of the following statements is FALSE?
a) Increasing revenues by converting wastes to byproducts is an environmental activity to enhance supply chain management.
b) Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain.
c) Social sustainability includes a commitment from an organization to improve the quality of life through industry-community partnerships.
d) Efficiencies associated with manufactured goods recovery can yield increases in customer loyalty and improve the new customer’s uptime.

c) Social sustainability includes a commitment from an organization to improve the quality of life through industry-community partnerships.

Which one of the following statements is FALSE?
a) General Motors pushes finished goods from its dealers to the customers.
b) Boeing’s new 787 Dreamliner airplane has encountered many startup and supply chain coordination problems.
c) Federal Express has over one million pickup and delivery sites and therefore, is a good example of multisite management.
d) Zappos uses third-party logistics for customer deliveries, return, and inbound shipping.

a) General Motors pushes finished goods from its dealers to the customers.

The point in the supply chain that separates the push system from the pull system is called the _____.
push-pull boundary
Which one of the following statements is FALSE?
a) Historically, General Motors used the push system to get vehicles to their dealers.
b) Walmart is a good example of a company that runs a highly efficient supply chain.
c) Apple and Nordstrom companies are examples of having push supply chains.
d) Zappos is a good example of using third-party logistics (3PL) providers for customer deliveries and returns.

c) Apple and Nordstrom companies are examples of having push supply chains.

_____ is the process of delaying product customization until the product is closer to the customer at the end of a supply chain.
Postponement
Which one of the following statements is FALSE?
a) Reverse logistics combined with forward supply chain is called a closed loop system.
b) Reverse logistics includes remarketing and selling the recovered good for reuse or resale to wholesalers and retailers.
c) Postponement is a form of remanufacturing.
d) Selecting suppliers that support sustainability is a part of supply chain management.

c) Postponement is a form of remanufacturing.

A(n) _____ produces goods in advance of customer demand using a forecast of sales and moves them to points of sale where they are stored as finished goods inventory.
push system
A contract manufacturer can offer significant competitive advantages. Which one of the following is NOT an advantage of using a contract manufacturer?
a) Lower costs from economies of scale
b) Standardized goods in regional markets
c) Access to advanced manufacturing technologies
d) Faster product time to market

b) Standardized goods in regional markets

An assignment problem with four jobs to be performed and four employees to do these jobs will have how many constraints?
8

Assignment Problem
# of jobs to be performed = 4 constraints
# of employees to do the jobs = 4 constraints

A transportation problem with four factories and four warehouses will have how many decision variables?
16

Transportation Problem
Each factory can ship to one warehouse. Decision variables are:
– Factory 1 to Warehouse 1
– Factory 1 to Warehouse 2
– Factory 1 to Warehouse 3
– Factory 1 to Warehouse 4
– Factory 2 to Warehouse 1
….
– Factory 4 to Warehouse 4

An assignment model ________.
will have decision variables being binary
The problem which deals with the distribution of goods from several sources to several destinations is the ________.
transportation problem
The difference between the transportation and assignment problems is that ________.
each supply and demand value is 1 in the assignment problem
In an assignment problem, ________.
None of the alternatives is correct.
The assignment problem is a special case of the ________.
transportation problem
________ represent a restriction on decision variable values for a linear programming problem.
Constraints
The area that contains the values that satisfies all the constraints in a linear programming problem is known as the ________ space.
feasible solution
The optimal solution for a linear programming problem will always occur ________.
at an extreme point
For a less than or equal to (<) constraint the shadow price represents the ________.
maximum amount you would be willing to pay for one additional unit of a resource (constraint right-hand-side)
A company produces product A and product B. Each product must go through two processes. Each A produced requires five hours in process 1 and two hours in process 2. Each B produced requires three hours in process 1 and six hours in process 2. There are 160 hours of capacity available each week in each process. Each A produced generates $9.00 in profit for the company. Each B produced generates $6.00 in profit for the company. To maximize profit, the company’s objective function is ________.
$9.00A + $6.00B
A company produces product A and product B. Each product must go through two processes. Each A produced requires five hours in process 1 and two hours in process 2. Each B produced requires three hours in process 1 and six hours in process 2. There are 160 hours of capacity available each week in each process. Each A produced generates $9.00 in profit for the company. Each B produced generates $6.00 in profit for the company. The capacity constraint for process 1 is represented by ________.
5A + 3B <= 160
A company produces product A and product B. Each product must go through two processes. Each A produced requires five hours in process 1 and two hours in process 2. Each B produced requires three hours in process 1 and six hours in process 2. There are 160 hours of capacity available each week in each process. Each A produced generates $9.00 in profit for the company. Each B produced generates $6.00 in profit for the company. The capacity constraint for Process 2 is represented by ________.
2A + 6B <= 160
A company produces product A and product B. Each product must go through two processes. Each A produced requires five hours in process 1 and two hours in process 2. Each B produced requires three hours in process 1 and six hours in process 2. There are 160 hours of capacity available each week in each process. Each A produced generates $9.00 in profit for the company. Each B produced generates $6.00 in profit for the company. If the company produces 10 units of A and 12 units of B the value of the objective function is equal to ________.
$162

($9*10) + ($6*12) = $162

A company produces product A and product B. Each product must go through two processes. Each A produced requires five hours in process 1 and two hours in process 2. Each B produced requires three hours in process 1 and six hours in process 2. There are 160 hours of capacity available each week in each process. Each A produced generates $9.00 in profit for the company. Each B produced generates $6.00 in profit for the company. If the company produces 10 units of A and 12 units of B the amount of slack (in hours) for process 1 is ________.
74 hours

160 – [(10*5) + (3*12)] = 74 hours

In the linear programming formulation of a transportation network, ________.
a) there is one constraint for each node
b) there is one variable for each arc
c) the sum of variables corresponding to arcs out of an origin node is constrained by the supply at that node
d) All of the above are correct.

d) All of the above are correct.

Which of the following is not true regarding the linear programming formulation of a transportation problem?
a) The constraints’ left-hand side coefficients are either 0 or 1.
b) Costs appear only in the objective function.
c) The number of constraints is (number of origins) x (number of destinations).
d) The number of variables is (number of origins) x (number of destinations).

c) The number of constraints is (number of origins) x (number of destinations).

In the general linear programming model of the assignment problem, ________.
one agent is assigned to one and only one task
In the linear programming formulation of the transportation problem, the cost of transporting one unit of the material from a supply point to a demand point appears in ________.
the objective function only
Network models like the transportation and transshipment problems are known to have ________.
integer solutions