Multiple Choice CH 6

File: ch06, Chapter 6: Processes and Technology
True/False
1. A process is a group of unrelated tasks with specific inputs and outputs.

Ans: False
Difficulty: Easy
Learning Objective: LO 1
2. Process design specifies what tasks need to be done and how they are to be
coordinated among functions, people, and organizations.
Ans: True
Difficulty: Easy
3. Planning, analyzing, and improving processes is the function of operations

management.
Ans: True
Difficulty: Easy
4. The organization’s overall approach for producing goods and providing services
is its process strategy.
Ans: True
Difficulty: Easy
5. A firm’s process strategy defines the extent of customer involvement in providing

a service.
Ans: True
Difficulty: Easy
6. Producing a high volume of a single product is a characteristic of batch

production.
Ans: False
Difficulty: Easy
7. Most of the operations in batch production involve assembly rather than

fabrication.
Ans: False
Difficulty: Easy
8. Process planning determines how a manufactured good is produced or a service is

provided.
Ans: True
Difficulty: Easy
9. Companies that control the production of virtually all of the parts that go into a
product are said to be horizontally integrated.
Ans: False
Difficulty: Moderate
10. Outsourcing occurs when a company cannot or will not make all the parts that go
into a product.
Ans: True
Difficulty: Easy
11. Supplier speed is rarely an important consideration in outsourcing decisions.
Ans: False
Difficulty: Easy
12. Supplier reliability is often an important consideration in outsourcing decisions.

Ans: True
Difficulty: Easy
13. One-of-a-kind production of a product based on a customer’s unique

specifications is a called a project.
Ans: True
Difficulty: Easy
14. Customers are rarely involved in a project that takes an extended period of time to
complete.
Ans: False
Difficulty: Easy
15. Batch production is also known as a job shop because it creates more jobs than
any of the other process choices.
Ans: False
Difficulty: Easy
16. Mass production is characterized by high volumes of a customized product for a

mass market.
Ans: False
Difficulty: Easy
17. Mass production is often associated with assembly lines.
Ans: True
Difficulty: Easy
18. Mass production is characterized by the use of specialized equipment and workers
with limited skills.
Ans: True
Difficulty: Easy
19. Continuous production is characterized by very high volumes of commodity

products.
Ans: True
Difficulty: Easy
20. Breakeven analysis examines the cost tradeoffs associated with demand volume
when selecting a process.
Ans: True
Difficulty: Easy
21. Vertical integration is the degree to which a firm produces the parts that go into
its products.
Ans: True
Difficulty: Easy
22. The best process strategy is usually found on the diagonal of the product-process
matrix.
Ans. True
23. Process plans are a set of documents that detail the steps in process selection.
Ans. False
24. In general, processes should be analyzed for continuous improvement only after a
breakthrough improvement.
Ans. False
25. Process analysis yields a set of documents detailing manufacturing and service
delivery specifications.
Ans. False
26. The basic tools of process analysis include process flowcharts, diagrams and
maps.
Ans. True
27. A process flowchart is a useful tool for analyzing a process because it often
highlights nonproductive activities.
Ans: True
Difficulty: Easy
28. Process innovation reflects the total redesign of a process for a breakthrough
improvement.
Ans: True
Difficulty: Easy
29. Two approaches to process improvement include continuous and breakthrough.

Ans. True
30. Process innovation is most successful in organizations that view their systems as a
set of functional areas vying for limited resources.
Ans. False
Difficulty: Hard
31. A high-level process map is a useful tool in beginning the redesign of a process.
Ans. True
32. Breakthrough improvement is often implemented when opportunities for

continuous improvement have been exhausted.
Ans. True
33. Capital budgeting techniques are often one of the inputs used for technology
decisions.
Ans. True
34. Technology decisions that involve the outlay of funds is considered a capital
investment.
Ans. True
35. Technology decisions are often a significant factor in process planning.

Ans. True
Multiple Choice
36. A firm’s process strategy defines all of the following except its
a. capital intensity.
b. process flexibility.
c. vertical integration.
d. process selection.
Answer : D
37. The extent to which the firm will produce the inputs and control the outputs of each
stage of the production process is known as
a. vertical integration.
c. process planning.
d. capital intensity.
Answer : A
38. The ease of adjusting resources in response to changes in demand defines a firm’s
a. vertical integration.
c. customer involvement.
d. capital intensity.
Difficulty: Easy
Answer : B
39. Variable demand and small-to-moderate quantities produced to-order are

characteristics usually associated with
a. mass production.
b. continuous production.
c. projects.
d. batch production.
Answer : D
40. Most of the operations in batch production involve

a. fabrication.
b. assembly.
c. continuous processing.
d. outsourcing.
Difficulty: Easy
Answer : A
41. A print shop is an example of which of the following process choices?

a. project
b. batch production
c. continuous production
d. mass production
Difficulty: Easy
Answer : B
42. Which of the following is not an advantage of batch production?

a. frequent changes in product mix
b. flexibility
c. customization of output
d. quality reputation
Answer : A
43. Disadvantages of batch production include all of the following except

a. high per-unit costs.
b. frequent changes in product mix.
c. flexibility.
d. scheduling problems.
Difficulty: Hard
Answer : C
44. Complex scheduling problems are most likely to occur with which process type?
a. mass production
b. batch production
c. continuous production
d. None of these answer choices is correct.
Answer : B
45. Which of the following is not a characteristic of mass production?

a. made-to-stock
b. stable demand
c. high product variety
d. high product volume
Difficulty: Easy
Answer : C
46. Mass production systems tend to employ

a. specialized equipment and limited labor skills.
b. specialized equipment and specialized labor skills.
c. general purpose equipment and limited labor skills.
d. general purpose equipment and specialized labor skills.
Difficulty: Easy
Answer : A
47. One disadvantage of mass production is its

a. efficiency.
b. speed of production.
c. low per-unit costs.
d. lack of responsiveness.
Difficulty: Easy
Answer : D
48. Steel, paper, paints, and chemicals are examples of products that use
a. batch production.
b. repetitive production.
c. continuous production.
d. mass production.
Answer : C
49. As process selection moves up the diagonal from project to continuous production
a. demand volume increases.
b. product variety increases.
c. capital intensity decreases.
d. flexibility increases.
Answer : A
50. A company is considering producing a product for a new market. The fixed cost
required for manufacturing and delivering the product is $50,000. Labor and material
costs are estimated to be approximately $25 per product. If the product is sold for $35.00
each, the firm’s breakeven volume would be
a. 50,000 units
b. 5,000 units
c. 2,500 units
d. 500 units
Difficulty: Hard
Answer : B
Solution: BE=50,000/(35-25)=5,000 units
51. If a firm can sell a product for $40each, then what is the volume needed to breakeven
if the fixed cost of production is $125,000 and labor and material costs are $30. per item?
a. 125,000
b. 12,500
c. 4,167
d. 3,250
Difficulty: Hard
Answer : B
52. A company is evaluating which of two alternatives should be used to produce a

product that will sell for $35 per unit. The following cost information describes the two
alternatives.
Process A Process B
Fixed Cost $500,000 $750,000
Variable Cost per Unit $25 $23
The breakeven volume for Process A is
a. 50,000 units.
b. 62,500 units.
c. 30,000 units.
d. 20,000 units.
Difficulty: Hard
Answer : A
Solution: 500,000/(35-25)=50,000 units

alternatives.
Process A Process B
Fixed Cost $500,000 $750,000
The break-even volume for Process B is

a. 50,000 units.
b. 62,500 units.
c. 30,000 units.
d. 20,000 units.
Difficulty: Hard
Answer : B
Solution: 750000/(35-23)=62,500 units

alternatives
Process A Process B
Fixed Cost $500,000 $750,000
If total demand (volume) is 120,000 units, then the company should

a. select Process A with a profit of $940,000 to maximize profit
b. select Process B with a profit of $450,000 to maximize profit
c. select Process A with a profit of $700,000 to maximize profit
d. select Process B with a profit of $690,000 to maximize profit
Difficulty: Hard
Answer : C
Solution: Profit=120,000*($35-$25)-$500,000=$700,000

alternatives
Process A Process B
Fixed Cost $500,000 $750,000
If total demand (volume) is 150,000 units, then the company should

a. select Process A with a profit of $1,300,000 to maximize profit
b. select Process B with a profit of $750,000 to maximize profit
c. select Process A with a profit of $1,000,000 to maximize profit
d. select Process B with a profit of $1,050,000 to maximize profit
Difficulty: Hard
Answer : D
Solution: Profit=150,000*($35-$23)-$750,000=$1,050,000

alternatives
Process A Process B
Fixed Cost $500,000 $750,000
For what level of volume (output) would the firm prefer Process A to Process B?
a. for all volume levels greater than 75,000
b. for all volume levels greater than 97,500
c. for all volume levels greater than 117,500
d. for all volume levels greater than 125,000
Difficulty: Hard
Answer : D
Solution: $500,000+$25v=$750,000+$23v; v=125,000
57. A company is considering producing an item that can be sold for $37.50 per unit. If
the fixed costs for setting up production are $225,000 and the variable cost per unit for
the item is $35 then the breakeven volume for this item is
a. 6,000 units.
b. 6,429 units.
c. 72,500 units.
d. 90,000 units.
Difficulty: Hard
Answer : D
Solution:$225,000/($37.50-$35.00)=90,000 units
58. All the following are factors influencing the outsourcing decision except
a. capacity.
b. expertise.
c. quality.
d. product variety.
Answer : D
59. The product-process matrix includes all the following process types except
a. mass production.
b. stable production.
c. continuous production.
d. batch production.
Answer : B
60. Which of the following is not associated with the sourcing continuum?
a. Joint venture
b. In-house production
c. Strategic alliance
d. Single contract
Difficulty: Hard
Answer : B
61. Technology decisions typical in operations management include all the following
areas except
a. information technology.
b. product technology.
c. process technology.
d. communication technology.
Answer : D
62. Processes are analyzed for all the following reasons except
a. speed-time-to-completion.
b. for environmental considerations.
c. to increase sustainability.
d. All these answer choices are correct.
Answer : D
e. Learning Objective: LO 2
63. All the following are basic tools of process analysis except
a. flowcharts.
b. diagrams.
c. maps.
d. spreadsheets.
Answer : D
64. The first step in building a flowchart is to

a. define process boundaries.
b. map out the process
c. determine objectives
Answer : C
65. Which of the following is not a standard label of the symbols used for the
construction of a process flowchart?
a. Improve
b. Transport
c. Operation
d. Delay
Answer :
66. Process flowcharts document

a. productive activities.
b. nonproductive activities.
c. Both productive and nonproductive activities.
d. None of these answers is correct.
Answer : C
67. Existing processes should be analyzed for improvement on a

a. Continual basis.
b. Sporadic basis
c. As needed basis
Answer : A
68. When opportunities for continuous improvement of a process have been

exhausted, it may be time to
a. redesign or innovate.
b. shut down the process.
c. subcontract the production.
d. All of these answer choices are correct.
Answer : A
69. Typical performance improvement resulting from a process innovation project

ranges from
a. 5 to 10%.
b. 25 to 50%.
c. 50 to 100%.
d. 100 to 200%.
Answer : C
70. A high-level process map, useful in the beginning the redesign of a process,
contain(s)
a. detailed steps associated with each activity.
b. essential building blocks of the main activities.
c. both detailed steps and essential building blocks.
Answer : B
71. The first step in process innovation is to determine

a. design principles.
b. strategic directives.
c. customer requirements.
d. model validation.
Difficulty: Hard
Answer :
72. Technology decisions

a. involve large sums of money.
b. definefuture capabilities.
c. set the stage for competitive interactions.
Answer : D
73. Capital budgeting techniques, used to evaluate new technology, often examine
a. purchase cost.
b. operating costs.
c. annual savings.
Answer : D
74. Which of the following is not a capital budgeting technique?

a. Revenue enhancement
b. Replacement analysis
c. Risk and uncertainty
Answer : D
75. Which of the following is not an example of product technology?

a. CAD
b. PLM
c. FMS
d. CAE
Answer : A
76. Which of the following is not an example of manufacturing technology?

a. Robots
b. AGV
c. E-procurement
d. Conveyors
Answer : C
Short Answer Questions
77. What is a process strategy and how does it affect the firm?
Ans: A process strategy is an organization’s overall approach for physically

producing goods and providing services. Process decisions should reflect how the
firm has chosen to compete in the marketplace, reinforce product decisions, and
facilitate the achievement of corporate goals. A firm’s process strategy defines its: (1)
capital intensity, or mix of capital and labor; (2) process flexibility; (3) degree of
vertical integration; and (4) level of customer involvement in the production process.
Difficulty: Hard
78.List some noneconomic factors that can influence a firm’s outsourcing decision.
Ans: There are several noneconomic factors that can influence or dominate the
economic considerations of an outsourcing decision. Among these are: (1) the level
of capacity at which the company is operating; (2) the capability to provide quality
parts consistently; (3) the speed with which goods can be provided by a supplier; (4)
the reliability of suppliers; and (5) the expertise of the firm and its willingness to
release valuable product information to a supplier.

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File: ch06, Chapter 6: Processes and Technology

1. A process is a group of unrelated tasks with specific inputs and outputs.

3. Planning, analyzing, and improving processes is the function of operations

5. A firm’s process strategy defines the extent of customer involvement in providing

6. Producing a high volume of a single product is a characteristic of batch

7. Most of the operations in batch production involve assembly rather than

8. Process planning determines how a manufactured good is produced or a service is

12. Supplier reliability is often an important consideration in outsourcing decisions.

13. One-of-a-kind production of a product based on a customer’s unique

16. Mass production is characterized by high volumes of a customized product for a

19. Continuous production is characterized by very high volumes of commodity

29. Two approaches to process improvement include continuous and breakthrough.

32. Breakthrough improvement is often implemented when opportunities for

35. Technology decisions are often a significant factor in process planning.

39. Variable demand and small-to-moderate quantities produced to-order are

40. Most of the operations in batch production involve

41. A print shop is an example of which of the following process choices?

42. Which of the following is not an advantage of batch production?

43. Disadvantages of batch production include all of the following except

45. Which of the following is not a characteristic of mass production?

46. Mass production systems tend to employ

47. One disadvantage of mass production is its

52. A company is evaluating which of two alternatives should be used to produce a

53. A company is evaluating which of two alternatives should be used to produce a

The break-even volume for Process B is

54. A company is evaluating which of two alternatives should be used to produce a

If total demand (volume) is 120,000 units, then the company should

55. A company is evaluating which of two alternatives should be used to produce a

If total demand (volume) is 150,000 units, then the company should

56. A company is evaluating which of two alternatives should be used to produce a

64. The first step in building a flowchart is to

66. Process flowcharts document

67. Existing processes should be analyzed for improvement on a

68. When opportunities for continuous improvement of a process have been

69. Typical performance improvement resulting from a process innovation project

71. The first step in process innovation is to determine

72. Technology decisions

74. Which of the following is not a capital budgeting technique?

75. Which of the following is not an example of product technology?

76. Which of the following is not an example of manufacturing technology?

Ans: A process strategy is an organization’s overall approach for physically

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