Operations Management and TQM (BAM 199) BSA -2

PART 1: IDENTIFICATION/FILL IN THE BLANKS

WRITE THE CORRECT ANSWER

1. It refers to the most advanced and developed equipment or methods. (HIGH

TECHNOLOGY)
2. This are machine breakdowns, absenteeism, shortages of materials and quality
problems, as well as factors that are outside the control of the operations
managers (CONTRAINTS)
3. It is a layout that uses standardized processing operations to achieve smooth,
rapid, high volume flow. (PRODUCT LAYOUT)
4. It involves choice of technology and type of processing. (PROCESS
SELECTION)
5. These are typically based on assumptions and predictions about long-term
demand patterns, technological change, and competitor behavior.
(STRATEGIES)
6. It involves hiring outside assistance, often through another business, to perform
activities instead of using internal assets or employees. (OUTSOURCING)
7. The basic objective of layout __________ is to facilitate a smooth flow of work,
material, and information through the system. (DESIGN)
8. It is used when higher volumes of more standardized good or services are
needed. (REPETITIVE)
9. . If a firm lacks the ____________ to do a job satisfactorily, buying might be a
reasonable alternative. (EXPERTISE)
10. It refers to the configuration of departments, work centers, and equipment, with
particular emphasis on movement of work through the system. (LAYOUT)
11.It is the capacity that a firm expects to achieve given the current operating
constraints. (EFFECTIVE CAPACITY)
12.To meet anticipated customer demand is one of the _____________ of
inventories. (FUNCTION)
13.This is the ratio of actual output to design capacity. (UTILIZATION)
14.It is the maximum rate of output achieved under ideal or perfect conditions.
(DESIGN CAPACITY)
15.It is the supervision of inventories. (INVENTORY MANAGEMENT)
16.It is the point of congestion in a production system that occurs when workloads
arrive too quickly for the production process to handle. (BOTTLENECK)
17. Capacity in “__________” refers to the large stepwise increases that are
frequently encountered in capacity decisions. (CHUNKS)
18.This happens when the capacity to produce of the organization is higher than the
available demand in the market. (OVERCAPACITY)
19. Facility is one of the ____________ of effective capacity. (DETERMINANTS)
20.This represents the formula of actual output divided by effective capacity
multiplied by 100 percent. (EFFICIENCY)

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Operations Management and TQM (BAM 199) BSA -2

PART 2. MULTIPLE CHOICE

Direction : WRITE THE LETTER OF THE CORRECT ANSWER

1. Outsourcing some production is a means of _________ a capacity constraint.

A. identifying
B. modifying
C. supporting
D. overcoming

2. Which of the following is a key question in capacity planning?

A. Should we make the product in-house or outsource it?
B. Where do we need the capacity?
C. When do we need the capacity?
D. Who will pay for the capacity change?

3. Allowances for which of these factors would be subtracted from design capacity when
calculating effective capacity?
A. personal time
B. equipment maintenance
C. scheduling problems
D. changing the mix of products
E. all of the choices

4. Which of the following is not a reason why capacity decisions are so important?
A. Capacity limits the rate of output possible.
B. Capacity affects operating costs.
C. Capacity is a major determinant of initial costs.
D. Capacity is a long-term commitment of resources.
E. Capacity chunks can be added or deleted quickly and inexpensively.

5. Which of the following is the case where capacity is measured in terms of inputs?

A. tons of steel per day that can be produced by a steel mill

B. kilowatt hours per day that can be generated by an electrical power plant
C. number of meals per day that can be served by a restaurant
D. gallons of gasoline that can be produced per day by a petroleum refinery
E. number of passenger seats that can be filled per day on an airline route

6. Unbalanced systems are evidenced by:

A. top-heavy operations.
B. labor unrest.
C. bottleneck operations.
D. increasing capacities.

7. The maximum possible output given a product mix, scheduling difficulties, personal time, and
so on is:
A. utilization.
B. design capacity.
C. efficiency.
D. effective capacity

8. Efficiency is defined as the ratio of:

A. actual output to effective capacity.
B. actual output to design capacity.
C. design capacity to effective capacity.
D. effective capacity to actual output.

9. Utilization is defined as the ratio of:

A. actual output to effective capacity.
B. actual output to design capacity.
C. design capacity to effective capacity.
D. effective capacity to actual output.

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Operations Management and TQM (BAM 199) BSA -2

10. The decision to outsource opens the firm up to certain risks, among them _________ and
________.
A. lower costs; fewer task-specific investments
B. loss of direct control over operations; need to disclose proprietary information
C. access to greater expertise; greater demand variability
D. greater capacity rigidity; tight knowledge control

11. Given the following information, what would efficiency be?

Effective capacity = 80 units per day

Design capacity = 100 units per day
Utilization = 48 percent

A. 20 percent
B. 35 percent
C. 48 percent
D. 60 percent

12. Given the following information, what would efficiency be?

Effective capacity = 50 units per day

Design capacity = 100 units per day
Actual output = 30 units per day

A. 40 percent
B. 50 percent
C. 60 percent
D. 80 percent

13. Given the following information, what would utilization be?

Effective capacity = 20 units per day

Design capacity = 60 units per day
Actual output = 15 units per day

A. 25%
B. 33%
C. 50%
D. 75%

14. Which of the following is not a determinant of effective capacity?

A. facilities
B. product mix
C. actual output
D. human factors

15. Which of the following is not a criterion for developing capacity alternatives?

A. design structured, rigid systems

B. take a big-picture approach to capacity changes
C. prepare to deal with capacity in "chunks"
D. attempt to smooth out capacity requirements

16. Key aspects of the process selection challenge include _________ and __________.

A. information technology; marketing strategy

B. process flexibility; marketing strategy
C. capital intensity; process flexibility
D. marketing strategy; operations strategy

17. Process choice is _________ driven.

A. demand
B. operations
C. marketing
D. process

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Operations Management and TQM (BAM 199) BSA -2

18. Job shops tend to be __________ while continuous processes tend to be __________.

A. in services; in manufacturing
B. short-term and capital intensive; long-term and labor intensive
C. small scale and flexible; large-scale and inflexible
D. standardized; customized

19. Which of the following is not a process type commonly considered in making products or
delivering services?

A. continuous
B. batch
C. repetitive
D. job shop
E. subcontracting

20. The type of processing system which is used for highly standardized products is:

A. continuous.
B. intermittent.
C. project.
D. batch.

21. In which type of operation are you likely to see, at most, only minor variations in the
product or service being produced using the same process and the same equipment?
A. a project
B. a job shop
C. repetitive production
D. batch processing

22. Which type of processing system tends to produce the most product variety?

A. assembly
B. job shop
C. batch
D. continuous
E. mass customization

23. Which of the following is not a characteristic of layout decisions in system design?

A. substantial investment of both money and effort

B. long-term commitment
C. significant impact on short-term efficiency
D. usually well received by operative personnel

24. The type of layout which features departments or other functional groupings in which
similar activities are performed is:

A. process.
B. product.
C. fixed-position.
D. mass.

25. A service organization such as a hospital is likely to use a(n) ________ layout because of
variability in customer processing requirements.

A. project
B. process
C. flow
D. assembly

26. Which of the following is not a significant concern for process selection?

A. variety in products/services
B. flexibility of equipment
C. volume of output
D. pricing strategy
E. flexibility of personnel

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Operations Management and TQM (BAM 199) BSA -2

27. One of the major advantages of process-oriented layouts is

A. high equipment utilization

B. large work-in-process inventories
C. flexibility in equipment and labor assignment
D. smooth and continuous flow of work
E. none of the above

28. Which of the following is not one of the four main types of inventory?
A. raw material inventory
B. work-in-process inventory
C. maintenance/repair/operating supply inventory
D. safety stock inventory
E. All of these are main types of inventory

29. Which of the following is a function of inventory?

A. to decouple or separate parts of the production process

B. to decouple the firm from fluctuations in demand and provide a stock of goods that will
provide a selection for customers
C. to take advantage of quantity discounts
D. to hedge against inflation
E. All of the above are functions of inventory

30. What is perpetual inventory system?

A. An inventory system that updates inventory only on a quarterly basis.

B. An inventory tool used only to track theft and breakage.
C. An inventory system that tracks how inventory is ordered.
D. An inventory system that allows a business to keep track of inventory in real time.

31. In which of the following layout type, materials are fed into the first machine and finished
products come out of the last machine?

A. Product layout
B. Process layout
C. Fixed position layout
D. Cellular manufacturing layout

32. Hand tools, lubricants, and cleaning supplies are usually examples of what?

A. WIP inventory
B. finished goods inventory
C. raw materials inventory
D. distribution inventory
E. MRO inventory

33. Which one of the following is not a typical question dealt with by operations managers?
A. How much capacity will be needed in the months ahead?
B. What is a satisfactory location for a new facility?
C. Which products/services should be offered?
D. All are typical of operations decisions.

34. Which one does not use operations management?

A. A CPA firm.
B. A bank.
C. A hospital
D. They all use it.

35. A stock or store of goods is called a(n):

A. bundler.
B. servicer.
C. retailer.
D. supply chain.
E. inventory.

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Operations Management and TQM (BAM 199) BSA -2

36. Answer the following question using the information below:

The following information applies to Labs Plus, which supplies microscopes to laboratories
throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a
reputation for very high quality in its manufacturing operation.

Annual demand (weekly demand=1/52 of annual demand) 20,800 units

Orders per year 20
Lead time in days 15 days
Cost of placing an order $100

What is the reorder point?

A. 1,040 units
B. 857 units
C. 1,560 units
D. 2,080 units

Answer: B
Explanation: B) 20,800/52 = 400/7 = 57.14 daily demand × 15 = 857.1

37. The costs associated with storage are an example of which cost category?

A. quality costs
B. labor costs
C. ordering costs
D. carrying costs

38. The purchase-order lead time is the:

A. difference between the times an order is placed and delivered

B. difference between the products ordered and the products received
C. discrepancies in purchase orders
D. time required to correct errors in the products received

39. Total costs in the economic-order-quantity decision model equal ordering costs plus:

A. carrying costs
B. stockout costs
C. quality costs
D. purchasing costs

40. The following information applies to Labs Plus, which supplies microscopes to laboratories
throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a
reputation for very high quality in its manufacturing operation.

Annual demand (weekly demand=1/52 of annual demand) 20,800 units

Orders per year 20
Lead time in days 15 days
Cost of placing an order $100

What is the annual carrying cost, assuming each order was made at the economic-order-
quantity amount?
A) $200
B) $1,000
C) $2,000
D) $6,000

Answer: C
Explanation: C) Annual carrying costs = annual ordering costs = $100 × 20 = $2,000

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