File: ch01, Chapter 1: Basics of Operations Management

Multiple Choice

1. Every business is managed through what three major functions?

a) accounting, finance, and marketingb) engineering, finance, and operations managementc) accounting, purchasing, and human resourcesd) accounting, engineering, and marketinge) finance, marketing, and operations management

2. Which business function is responsible for managing cash flow, current assets, and capital investments?a) accountingb) financec) marketingd) operations managemente) purchasing

3. Which business function is responsible for managing cash flow, current assets, and capital investments?a) accountingb) financec) marketingd) operations managemente) purchasing

4. Which business function is responsible for sales, generating customer demand, and understanding customer wants and needs?a) financeb) human resourcesc) marketingd) operations managemente) purchasing

5. Which business function is responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services? a) engineeringb) financec) human resourcesd) marketinge) operations management

6. Which of the following is not true for business process reengineering?a) It can increase efficiency.b) It cannot be used to improve quality.c) It can reduce costs.d) It involves asking why things are done in a certain way.e) It involves redesigning processes.

7. At the GAP, which function plans and coordinates all the resources needed to design, produce, and deliver the merchandise to its various retail locations?a) engineeringb) human resources

c) marketingd) operations managemente) purchasing

8. Operations Management is responsible for increasing the organization’s efficiency, which means the company will be able to __________.a) add to the engineering processb) take for granted current operationsc) increase the number of positions under the manager’s positiond) eliminate activities that do not add valuee) increasing purchasing opportunities

9. Which one of the following would not generally be considered to be a transformation?

a) a haircutb) a train ridec) manufacturing a radiod) waiting to see the doctore) a surgery

10. At a factory, the transformation process is a (an) change of raw materials and components into products.a) locationalb) imperceptiblec) hypotheticald) irreversiblee) physical

11. Which of the following is not an input?a) servicesb) managersc) buildingsd) technologye) information

12. Operations management is responsible for orchestrating all the resources needed to produce the final product. This includes all of the following excepta) obtaining customer feedbackb) arranging schedulesc) managing inventoryd) controlling qualitye) designing work methods

13. Which second-tier computer company utilized a drastic change in its operations function to become an industry leader in the late 1990s?a) Appleb) Compaqc) Delld) IBMe) Kozmo

14. A company with a low customer contact that is capital intensive is called:a) a farmb) manufacturingc) quasi-manufacturing

d) servicee) Industrial era operations management

15. Which initially successful web-based home delivery company had to shut down in 2001 due to inadequate management of its operations?a) Contact.comb) Time Saver.comc) Kozmo.comd) Kramer.come) Neptune.com

16. In order to be successful with Web-based on-line shopping, companies must do all except which of the following?a) manage distribution centers and warehousesb) operate fleets of trucksc) maintain adequate inventories of productsd) promise same-day deliverye) schedule deliveries

17. What outsourcing functions does UPS provide for clients?a) accounting and inventoriesb) inventories and deliveriesc) accounting and deliveriesd) accounting and maintenancee) deliveries and maintenance

18. An example of an operation that does not add value isa) removing iron ore from the ground and shipping it to a steel millb) filling the underground gasoline tanks at a service stationc) making a wedding caked) moving components to a warehouse for storage until the factory needs theme) moving luggage from a cab to the airport ticket counter

19. Which famous economist once suggested that, “The production problem has been solved.”?a) John Nashb) Irving Fisherc) John Kenneth Galbraithd) Adam Smithe) John Maynard Keynes

20. What was the primary reason why American firms lost market dominance in many industries in the 1970s and 1980s?a) OPEC oil embargoes b) the Vietnam war had drained the economy of resourcesc) after Richard Nixon was President, foreign consumers began to mistrust American firmsd) they had become lax with a lack of competition in the 1950s and 1960se) foreign government subsidies for business

21. In what area does General Motors earn its highest return on capital?a) selling carsb) selling logo merchandisec) financingd) selling racing enginese) post-sales parts and service

22. Which of the following is an example of a “back room” operation for an airline company?

a) serving food and drinks to passengersb) collecting tickets and checking passengers in at the gatec) loading luggage onto the airplaned) demonstrating use of the seat belt and other safety features of the airplanee) assisting passengers in getting off of the plane

23. What are companies that have low customer contact and are capital intensive, yet provide a service, called?

a) pseudo-manufacturing organizationsb) quasi-manufacturing organizationsc) hierarchical manufacturing organizationsd) service factoriese) servifacturing organizations24. What percentage of total non-farm jobs in the U.S. economy come from service-producing industries?a) 20%b) 50%c) 60%d) 80%e) 95%

25. What are long-term decisions that set the direction for the entire organization called?

a) tacticalb) operationalc) directionald) distante) strategic

26. Which of the following is not true with respect to strategic and tactical decisions?a) tactical decisions focus on more specific day-to-day decisionsb) tactical decisions determine the direction for strategic decisionsc) tactical decisions provide feedback to strategic decisionsd) tactical decisions are made more frequently and routinelye) tactical decisions must be aligned with strategic decisions

27. Which of the following is not primarily performed by the operation management function?a) job design and work measurementb) advertising strategyc) location analysisd) quality managemente) facility layout

28. When did operations management emerge as a formal field of study?a) during the late 1950s and early 1960sb) during the late 1970s and early 1980sc) during World War IId) during the nineteenth centurye) during the early 1900s

29. Managing the transformation of inputs into goods and services is:a) a post industrial era process.b) a direct contributor to the curved earth syndrome.c) as old as time.d) a twenty-first century developed process.e) a design of Frederick Taylor.

30. Who invented the steam engine?a) James Wattb) Adam Smithc) Eli Whitneyd) Henry Forde) Frederick Taylor

31. What concept involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker?a) division of laborb) interchangeable partsc) scientific managementd) the Hawthorne effecte) operations research

32. Who wrote The Wealth of Nations in 1776, describing division of labor?a) James Wattb) Adam Smithc) Eli Whitneyd) Henry Forde) Frederick Taylor

33. The concept of interchangeable parts was introduced bya) Adam Smithb) Frederick Taylorc) Eli Whitneyd) Henry Forde) W. Edwards Deming

34. Who created “scientific management?”a) James Wattb) Adam Smithc) Eli Whitneyd) Frederick W. Taylore) Henry Ford

35. What was Frederick W. Taylor’s background?a) physicsb) human resources managementc) operations researchd) psychologye) engineering

36. A key feature of scientific management is that workers are motivated only by __________________.

a) loveb) powerc) challenging workd) moneye) fame

37. A key feature of scientific management is that workers are limited only bya) machineryb) co-workersc) their job descriptiond) their toolse) their physical ability

38. The creator of scientific management believed that a) worker productivity is governed by scientific lawsb) the worker should have a lot of control over his or her jobc) efficiency is overratedd) worker pay should primarily be based on senioritye) mathematical models are the basis for management of production

39. Which of the following operations management concepts did not evolve from scientific management?

a) moving assembly linesb) interchangeable partsc) stopwatch time studiesd) piece rate incentivese) setting time standards for task performance

40. Who popularized the moving assembly line?a) James Wattb) Adam Smithc) Eli Whitneyd) Frederick W. Taylore) Henry Ford

41. Under scientific management, information from what is used to set time standards for task performance?a) stopwatch time studiesb) observance of similar tasksc) computer simulationd) negotiations with unionse) arbitration

42. What movement started with the publication of the results of the Hawthorne studies?

a) scientific managementb) human relationsc) management scienced) marketing researche) operations management

43. What is the Hawthorne effect?a) workers responding to the attention they are givenb) stopwatch time studies leading to time standardsc) the use of quantitative methods for solving management problems

d) the use of interchangeable partse) more lighting increases productivity

44. Increasing the level of responsibility of a job by adding planning and coordination tasks is ___________.

a) job enlargementb) job rotationc) job involvementd) job enrichmente) job backward integration

45. The first military use of management science was solving complex problems of logistics control, weapons system design, and deployment of missiles during _____________________.a) World War Ib) World War IIc) The Korean Ward) The Vietnam Ware) Operation Desert Storm

46. What term describes the approach of giving workers a larger portion of the total task to do?

a) job enlargementb) job rotationc) job involvementd) job enrichmente) job backward integration

47. When were the Hawthorne Studies conducted?a) 1770sb) 1830sc) 1930sd) 1960se) 1980s

48. In what company were the Hawthorne Studies conducted?a) Westinghouseb) General Electricc) Hawthorne Incorporatedd) General Motorse) Western Electric

49. Management science is focused on:a) profit marginb) qualitative systems analysisc) management promotion metricsd) quantitative techniques for solving personnel issuese) quantitative techniques for solving operations problems

50. When was the first mathematical model for inventory management developed?a) 1770b) 1865c) 1900d) 1913e) 1930

51. Where was the just-in-time philosophy developed?a) Germanyb) United Statesc) Canadad) Japane) Italy

52. Just-in-time philosophy is applicable in:a) Service organizationsb) Manufacturing organizationsc) Assembly line operationsd) A, B, and Ce) A and C only

53. When was the just-in-time philosophy developed?a) 1980sb) 1930sc) 1800sd) 1700se) 1990s

54. What is a philosophy that aggressively seeks to improve product quality by eliminating causes of product defects and making quality an all-encompassing organizational philosophy?a) CQIb) TQMc) SPCd) JITe) BPR

55. Which of the following is considered a “quality guru?”a) Elton Mayob) W. Edwards Demingc) Alex Gambled) F.W. Harrise) Frederick W. Taylor

56. Supply chain management involves managing:a) the flow of internal information only.b) the flow of materials and information from suppliers and buyers to the final customer.c) the flow of raw materials to inventory only.d) managing the stock room supply only.

57. Many companies require their suppliers to meet what standards as a condition for obtaining contracts?a) RFO 6000b) PUR 8000c) ISO 9000d) MACH 5000e) SUP 2000

58. One of the two most important features of time-based competition involves ________________________.

a) advertising on the Internetb) stopwatch time studiesc) setting time standards for task performanced) instantaneous access to inventory informatione) developing new products and services faster than the competition

59. ISO 14000 standards provide guidelines for what?a) business ethicsb) environmentally responsible actionsc) supplier certificationd) quality controle) web site development

60. NAFTA and the EU are _________________________.

a) certification groupsb) regional trade agreementsc) quality control methodsd) logistics providerse) U.S. government agencies

61. What type of commerce makes up the highest percentage of electronic transactions?a) B2Cb) C2Cc) B4Bd) B2Be) B4C

62. The Internet developed from a government network called ARPANET, which was created in 1969 by _____.

a) Japanese scientists b) the EPAc) the U.S. Defense Departmentd) NSFe) ISO

63. Today’s business must think in terms of:a) regional trade zonesb) the EPAc) the U.S. Defense Departmentd) the global market placee) the curved world

64. General Electric’s Trading Process Network primarily handles transactions between _________________.a) individual customersb) companies and individual customersc) companies and their shipping firmsd) companies and their distributorse) companies and their suppliers

65. What is a concept that takes a total system approach to creating efficient operations?a) lean systemsb) enterprise resource planningc) customer relationship managementd) management sciencee) management information systems

66. What are software solutions that allow the firm to collect customer-specific data?a) MRPb) CRMc) ERPd) JITe) ISO

67. Entry-level positions for operations management graduates include all of the following except _________.a) quality specialistb) inventory analystc) plant managerd) production analyste) production supervisor

68. Operations management personnel perform a variety of functions, including all of the following except ___________________.a) analyzing production problemsb) analyzing potential mergersc) developing forecastsd) developing employee schedulese) monitoring inventory

69. Which of the following concepts is linked the least with Henry Ford?a) scientific managementb) mass productionc) mass customizationd) technologye) interchangeable parts

70. Today’s operations management is characterized by:a) its use of the internet.b) its reliance on the intranet.c) its increased use of cross-functional decision making.d) its use of cross-functional job sharing.e) its use of interchangeable parts.

71. Which of the following historical figures would probably have the most different management style from the others?a) Elton Mayob) Henry Fordc) Eli Whitneyd) Frederick W. Taylore) Adam Smith

72. Operations management interacts with which of the following:a) Marketingb) Information systemsc) Financed) Engineeringe) all the above

True/False

1. Operations management is the business function that plans, coordinates, and controls the resources needed to produce a company’s products and services. T2. Marketing is the central core function of every company. F3. Operations management is the central core function of every company. T4. An example of a transformation is waiting to see the doctor. F5. At a factory, the transformation process is the physical change of raw materials and components into products. T6. An example of an operation that does not add value is making a wedding cake. F7. Efficiency means being able to perform most activities. F8. An example of a “back room” operation for an airline company is loading luggage onto the airplane. T9. Companies that have low customer contact and are capital intensive, yet provide a service, are called service factories. F10. The Industrial Revolution started in the 1770s with the development of a number of inventions that relied on machine power instead of human power. T11. Division of labor involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker. T12. A key feature of scientific management is that workers are limited only by their tools. F13. The creator of scientific management believed that worker productivity was governed by scientific laws. T14. Operations management is a result of a single event, the industrial revolution. F15. Worker participation in decision making is a key feature of scientific management. F16. “Job enrichment” is an approach in which workers are given a larger portion of the total task to do. F17. The first mathematical model for inventory management was developed by Elton Mayo. F18. Operations research started with the publication of the results of the Hawthorne studies. F19. Sustainability was an early 1950’s management function and focus. F20. The Hawthorne effect is that workers are motivated by the attention they are given. T21. Increasing the level of responsibility of a job by adding planning and coordination tasks is called job enrichment. T22. Outsourcing is providing goods or services to an outside provider. F23. Management science focuses on developing quantitative techniques for solving operations problems. T24. The advent of the computer age paved the way for the development of MRP for inventory control and scheduling. T25. The objective of supply chain management is to have every member of the chain compete against each other to enhance competitive abilities. F26. The need to offer a greater variety of product choices to customers of a traditionally standardized product is the challenge of flexibility. T27. One of the most important trends in companies today is competition based on time. T28. The highest percentage of transactions on the internet occur between businesses and their customers (B2C). F29. Today many corporate CEOs have come through the ranks of operations. T30. Marketing can always meet the customer’s needs. F

Essay

1. Define operations management.Ans: The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s

products and services.

2. What must companies focus on in order to survive in today’s business environment?Ans: quality, time-based competition, efficiency, international perspectives, and customer relationships

3. What are the three major functions through which every business is managed?Ans: finance, marketing, and operations management

4. What is the “role” of operations management?Ans: To transform organizational inputs into outputs

5. List at least seven different possible inputs to a transformation process.Ans: workers, managers, buildings, equipment, materials, technology, and information

6. What must companies do in order to be successful with Web-based on-line shopping?Ans: Manage distribution centers and warehouses, operate fleets of trucks, forecast what customers want and maintain adequate

inventories of products, and schedule deliveries while keeping costs low and customers happy.

7. In what ways do service organizations differ from manufacturing organizations?Ans: Manufacturing organizations produce a physical, tangible product that can be stored in inventory before it is needed, while

service organizations produce an intangible product that cannot be produced ahead of time; and for manufacturing organizations most customers have no direct contact with the operation, while for service organizations customers are typically present during creation of the service. Also, service organizations tend to have a shorter response time and are more labor intensive.

8. List some typical operations management decisions that are made, along with their associated operations management term.Ans: What are the unique features of the business that will make it competitive? (Operations strategy)

What are the unique features of the product? (Product design)What are the unique features of the process that give the product its unique characteristics? (Process selection)How do we manage our sources of supply? (Supply chain management)How will managers ensure the quality of the product, measure quality, and identify quality problems? (Quality

management) What is the expected demand for the product? (Forecasting)Where will the facility be located? (Location analysis)How large should the facility be? (Capacity planning)How should the facility be laid out? (Facility layout)What jobs will be needed in the facility, who should do what task, and how will their performance be measured? (Job

design and work measurement)How will the inventory of raw materials be monitored? When will orders be placed? (Inventory mgt.)Who will work on what schedule? (Scheduling)

9. Why are operations management decisions typically more complex for large companies than for small companies?Ans: Because of the size and scope of large companies: they typically produce a greater variety of products, have multiple

location sites, and often use both domestic and international suppliers.

10. What operations management approaches came out of the scientific management movement?Ans: moving assembly lines, stopwatch time studies, piece rate incentives, and setting time standards for task performanceSection Ref: Historical DevelopmentLevel: hard

11. Tactical decisions can be distinguished from strategic decisions by what set of characteristics?Ans: Focus on specific day-to-day issues, tactical decisions are made after strategic decisions, tactical decisions must be aligned

with strategic decisions, tactical decisions provide feedback to strategic decision12. What are the two key features of scientific management?Ans: First, it is assumed that workers are motivated only by money and are limited only by their physical ability. Second,

management should perform “planning” separately from the workers who perform the “doing.”

13. What were the major impacts on operations management that resulted from the widespread use of computers in the 1970s?Ans: using quantitative models on a larger scale; development of material requirements planning; and data processing was made

easier, with advances in forecasting, scheduling, and inventory management

14. What is the basic approach for business process reengineering and what are its major impacts?Ans: It involves asking why things are done in a certain way, questioning assumptions, and then redesigning the processes. It

can increase efficiency, improve quality, and reduce costs.

15. How have information technology tools helped with supply chain management?Ans: They enable collaborative planning and scheduling. They allow synchronized supply chain execution and design

collaboration, and they allow companies to respond better and faster to changing market needs.

16. What are environmental issues faced by business?Ans: air pollution, water pollution, global warming, and waste disposal

17. Operations Management is:Ans: the business function that plans, organizes, coordinates, and controls resources an organization transforms into goods and services.

18. Why is today’s Operations Management environment described as very different from what it was just a few years ago?Ans: Customers demand better quality, greater speed, and lower costs.

19. While customers and service organizations interact directly, customers and manufacturers interact Ans: through service organizations like distributors, wholesalers, and retailers.

20. Manufacturers often provide services likeAns: Shipping, helping customers use products, repairs, replacement parts, warranty service, and credit.

21. Service providers may also transform inputs intoAns: goods that support their service, like restaurant food preparation, hair and skin care products, and final assembly of bicycles, tricycles, wagons, furniture, and other products.

22. Service providers’ “back room” activities, like ________________________, often have manufacturing characteristics like ________________________.Ans: check and credit card transaction processing, credit analysis, cleaning and repairing clothing and other products; physical products that can be inventoried, low customer contact, capital intense, and long response times.23. While service and manufacturing firms contribute more to the economy and offer more jobs at all levels, ________________________ are also important to our lives and the economy.Ans: Agriculture, fishing, and forestry; construction, and extraction (mining, oil and natural gas, industrial gases).

24. All business functions need ______________from operations management while operations managers are highly dependent on______ from _____ _______ to perform their jobs.Ans: Information, input, all others

25. While Operations Management focuses on privately−owned firms, governments provide many services and some goods, like:. Ans: postal service; family, social, and aged assistance and care, health care, transportation, safety and security, transportation facility maintenance, education and libraries, real estate title and ownership recording, professional licensing, skill testing, recreation and related licensing (fishing and hunting), historic preservation.

26. The history of Operations Management reflects.Ans: the accumulation of experience and ideas over time.

27. Applying the best practices to operations management is not enough to give a competitive advantage because: Ans: Best practices are quickly passed to competitors.

28. Scientific Management, Management Science, Just−in−Time, Total Quality Management, Business Process Reengineering, and other developments reflect the application of ________________________ and ________________________ to the transformation of inputs into goods and services.Ans: the Computer Age or computers or information processing or quantitative methods and philosophies that emphasize human relations, questioning existing practices, accepting change.

File: ch02, Chapter 2: Strategy and Productivity

Multiple Choice

1. What are the two key components of the operations strategy of Federal Express?a) they own their own fleet of tractor trailers, and they use a sophisticated bar code technologyb) they own their own fleet of tractor trailers, and they have a large warehouse in every statec) they own their own fleet of airplanes, and they have a large warehouse in every stated) they use a sophisticated bar code technology, and they have a large warehouse in every statee) they own their own fleet of airplanes, and they use a sophisticated bar code technology

2. Operational efficiency is:

a) driving the business strategyb) ensuring the right tasks are performedc) decreasing the firm’s input requirementsd) increasing the firm’s outpute) performing operations tasks well

3. During the 1970s and 1980s, firms from which country provided the most serious competitive threat to U.S. companies? a) Germanyb) Canadac) Mexicod) Japan e) United Kingdom

4. The process of monitoring the external environment is called what?a) environmental examinationb) environmental inspectionc) environmental scrutinyd) environmental perusal e) environmental scanning

5. Which of the following would not be considered a core competency that a company might have?a) a highly trained workforceb) an inefficient distribution systemc) skills in attracting and raising capitald) use of information technologye) quality control techniques

6. .Environmental scanning would not provide information on:a) sources of highly trained workersb) the firm’s internal inefficient distribution systemc) opportunities and threatsd) changes in information technologye) changes in global competition

7. Which of the following is not typically considered to be a core competency?

a) workforceb) missionc) market understandingd) technologye) facilities

8. What term describes the process of obtaining goods or services from an outside provider?a) outprovidingb) transferizationc) outsourcingd) subsourcinge) supersourcing

9. Once a business strategy has been developed:a) service prices are establishedb) competition must be identifiedc) an operations strategy must be formulatedd) contracting with external sources must begine) insourcing will be conducted

10. Which of the following is not considered one of the four broad categories of competitive priorities?

a) technologyb) costc) qualityd) flexibilitye) time

11. Which of the following competitive priorities typically requires the use of more general-purpose equipment?

a) technologyb) costc) qualityd) flexibilitye) time

12. Highly-skilled hourly workers would be most needed by companies employing which of the following competitive priorities?a) locationb) cost

c) flexibilityd) development speede) time

13. How does Federal Express maintain its ability to compete on time during peak demand periods?a) it subcontracts overload to other firmsb) it purchases more planesc) overtimed) it uses a very flexible part-time workforcee) it purchases more vans

14. When making competitive priority decisions the firm:a) must select the correct supply chainb) must ensure the PWP is correctly establishedc) must focus on the one competitive priority at the exclusion of all othersd) must make trade-off decisionse) must isolate the competing internal departments

15. Empire West displays what by specializing in making a wide variety of products?a) outsourcingb) SCMc) qualityd) flexibilitye) efficiency

16. Order winners and qualifiers:a) are consistent between manufacturing and service organizationsb) only matter when responding to formal competitive bid requestsc) remain constant over timed) change over timee) only apply to quasi-manufacturing firms

17. Decisions regarding which of the following are not part of the production process infrastructure?

a) organization of workersb) facilitiesc) worker payd) quality control measurese) management policies

18. Decisions regarding which of the following are not part of the production process structure?

a) management policiesb) facilitiesc) robotsd) flow of goods and services through the facilitye) flexible manufacturing system (FMS) machines

19. What are the three primary types of technology?a) product technology, process technology, and information technologyb) product technology, process technology, and environmental technologyc) product technology, process technology, and safety technologyd) information technology, environmental technology, and safety technology

e) environmental technology, information technology, and process technology

20. Teflon is an example of what?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology

21. Technology should be acquired because:a) the new technology is funb) the new technology keeps the employees happyc) the new technology doesn’t cost very muchd) the new technology always improves productivitye) the new technology supports the company’s chosen competitive priorities

22. Computer-aided manufacturing is an example of what?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology

23. Which type of technology has had the greatest impact on business?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology

24. When does productivity increase?a) inputs increase while outputs remain the sameb) inputs decrease while outputs remain the samec) outputs decrease while inputs remain the samed) inputs and outputs increase proportionallye) none of the above

25. Which of the following is a valid type of “productivity measure”?

a) multi-output productivity measureb) partial productivity measurec) multi-part productivity measured) multi-component productivity measuree) imperfect productivity measure

26. Consider a pizza parlor. Which of the following would not be a valid productivity measure?

a) pizzas produced / number of workers usedb) pizzas produced / number of ovensc) pizzas produced / cost of workers and ingredientsd) pizzas produced / cost of all inputs usede) labor hours / pizzas produced

27. If inputs increase by 30% and outputs decrease by 15%, what is the percentage change in productivity?

a) 100% decreaseb) 11.54% increasec) 34.62% decreased) 15% increase

e) 15% decrease

28. If inputs increase by 6% and outputs increase by 24%, what is the percentage productivity increase?

a) 400.00%b) 16.98%c) 0.25%d) 4.00%e) 18.00%

29. An airline has determined that its baggage handlers handle 12,000 bags when 3 baggage handlers are on shift. What is the baggage handler productivity?

a) 4,000 bags/shiftb) 4,000 bags/handlerc) 14,000 bags/shiftd) 12,000 bags/shifte) 2,000 bags/handler

30. If inputs increase by 10% and outputs increase by 4%, what is the percentage productivity increase?

a) 5.45%b) 250.00%c) - 5.45%d) 5.77%e) - 5.77%

31. If inputs increase by 10% and outputs increase by 5%, what is the percentage change in productivity?

a) 4.545% decreaseb) 4.545% increasec) 4.762% increased) 4.762% decreasee) 50.000% increase

32. If Joe’s Diner serves 150 meals in one day using 3 kitchen staff, what is the kitchen staff daily productivity?

a) 40 meals/staff b) 45 meals/staffc) 50 meals/staffd) 55 meals/staffe) 60 meals/staff

33. If inputs increase by 30% and outputs increase by 15%, what is the percentage change in productivity?

a) 50.00% decreaseb) 88.46% increasec) 88.46% decreased) 11.54% increasee) 11.54% decrease

34. Suppose that on Monday the cost of inputs sums to $1000, and the value of outputs sums to $4000. For which of the following values on Tuesday would productivity increase?a) inputs = $1100, outputs = $4000b) inputs = $1100, outputs = $4200c) inputs = $850, outputs = $3600

d) inputs = $1000, outputs = $3900e) inputs = $2000, outputs = $8000

35. Suppose that a plant has a daily productivity of 200 parts per employee? What can we conclude?

a) the daily productivity is excellentb) the plant can hire more workers and still earn profitsc) the plant is not earning profitsd) the plant must be highly automatede) nothing

36. Suppose that a plant has a daily productivity of 0.85 parts per employee? What can we conclude?

a) the plant must be very labor-intensiveb) the plant is not earning profitsc) the plant must be highly automatedd) the plant should lay off workerse) nothing

37. Suppose that a plant has a total productivity measure of 0.85. What can we conclude?a) the plant is not earning profitsb) nothingc) the plant should lay off workersd) the plant is highly automatede) the daily productivity is excellent

38. Suppose that last month the cost of inputs summed to $100,000, and the value of outputs summed to $800,000. For which of the following values this month would productivity increase?a) inputs = $110,000, outputs = $800,000b) inputs = $50,000, outputs = $400,000c) inputs = $200,000, outputs = $1,600,000d) inputs = $100,000, outputs = $820,000e) inputs = $300,000, outputs = $1,600,000

39. Suppose that in week 1 a company produced 1000 units using 60 labor hours. For which of the following values in week 2 would labor productivity decrease?a) units = 2000, hours = 120b) units = 1500, hours = 95c) units = 1000, hours = 58d) units = 500, hours = 30e) units = 2000, hours = 100

40. Suppose that on Wednesday the cost of inputs summed to $4000, and the value of outputs summed to $10,000. For which of the following values on Thursday will productivity stay the same?a) inputs = $2000, outputs = $5000b) inputs = $5000, outputs = $10,000c) inputs = $4000, outputs = $8000d) inputs = $10,000, outputs = $4000e) inputs = $12,000, outputs = $40,000

41. Vericol, Inc. manufactures drugs using workers and automated machines. The firm has decided to replace two

workers with a new machine, while the output per day is not expected to change. Which of the following cannot be true?a) labor productivity will increaseb) machine productivity will decreasec) labor productivity will decreased) multifactor productivity will increasee) multifactor productivity will decrease

42. A manager has just replaced three workers with a machine that is cheaper to operate than the cost of the three replaced workers. Output is expected to remain the same. Which of the following is true?

a) labor productivity will decreaseb) machine productivity will increasec) multifactor productivity will decreased) multifactor productivity will increasee) the value of output will decrease

43. Suppose that in January a company produced 5000 units using 1000 labor hours. For which of the following values in February would labor productivity decrease?a) units = 5000, hours = 900b) units = 10,000, hours = 1500c) units = 10,000, hours = 2000d) units = 2500, hours = 500e) units = 5000, hours = 1100

44. Suppose that in year 1 a company produced $100 Million worth of outputs while inputs totaled $50 Million. For which of the following values in year 2 would productivity decrease?a) outputs = $90 Million, inputs = $50 Millionb) outputs = $400 Million, inputs = $200 Millionc) outputs = $250 Million, inputs = $100 Milliond) outputs = $50 Million, inputs = $25 Millione) outputs = $60 Million, inputs = $25 Million

45. If the telecommunication company sold $10,000,000 of internet service using $50,000 of labor, $25,000 of leased bandwidth, $45,000 service fees, and $80,000 or replacement parts, what is the telecommunication multifactor productivity?a) 35b) 40c) 45d) 50e) 55

46. Suppose that on Thursday a company produced 80 units using 160 labor hours. For which of the following values on Friday would daily labor productivity increase?a) units = 70, hours = 160b) units = 80, hours = 180c) units = 240, hours = 500d) units = 160, hours = 300e) units = 40, hours = 100

47. A firm produces 100 units using 800 labor hours. What is its labor productivity?

a) 0.125 units/hour

b) 8 units/hourc) 100 units/hourd) 800 units/houre) -0.125 units/hour

48 A firm produces 2000 products using 10 workers on an eight-hour shift. What is the labor productivity per worker?

a) 200 units/hourb) 25 units/hour c) 250 units/hourd) 20 units/houre) 0.04 units/hour

49. A machine shop produces metal frames on two different machines. The average daily production on machine 1 is 300 frames, and the average daily production on machine 2 is 180 frames. What is the daily machine productivity?

a) 480 frames/machineb) 330 frames/machinec) 240 frames/machined) 160 frames/machinee) 300 frames/machine

50. A machine shop produces metal brackets on two different machines. Machine 1 can produce a bracket every 10 minutes. Machine 2 can produce a bracket every 4 minutes. What is the average productivity per machine?a) 4.3 brackets/hourb) 8.6 brackets/hourc) 10.5 brackets/hourd) 21.0 brackets/houre) 7.0 brackets/hour

51. A firm produces handbags using three workers. On Tuesday, Jane completed 60 bags in 6 hours, Ron completed 50 bags in 7 hours, and Mary completed 80 bags in 5 hours. What was the overall productivity of the firm?

a) 7.92 bags/hourb) 11.05 bags/hourc) 10.00 bags/hourd) 10.56 bags/houre) 61.67 bags/hour

52. Suppose that output is worth $400, and labor and materials costs are $200 and $100, respectively. What is the materials productivity?

a) 2.00b) 1.33c) 0.25d) 0.75e) 4.00

53. A firm produces 500 units per day using five workers on a five-hour shift. On average, 15% of the units produced are defective and must be scrapped. What is the labor productivity for non-defective units?

a) 17 units/hourb) 3 units/hour

c) 20 units/hourd) 85 units/houre) 15 units/hour

54. Suppose that weekly output is worth $1000, and labor and materials costs are $300 and $200, respectively. What is the multifactor productivity ratio?

a) 1000b) 8c) 2d) 3e) 0.5

55. Each day a firm produces 50 products worth $40 each. Raw materials cost per unit are $12. The firm uses 4 workers on an eight-hour shift earning $10 per hour each. What is the multifactor productivity ratio?

a) 1.82b) 0.77c) 3.16d) 0.12e) 2.17

56. A bakery bakes bread in two different ovens. Oven 1 can bake a loaf every 30 minutes. Oven 2 can bake a loaf every 15 minutes. What is the average productivity per oven?a) 6.00 loaves/hourb) 3.00 loaves/hourc) 2.67 loaves/hourd) 1.33 loaves/houre) 0.38 loaves/hour

57. Johnny employs five painters. He collected the following data from last week.

Painter Hours Walls CompletedJulius 40 60Margaret 32 68Dave 50 78Suzy 36 70Fawn 44 74Which painter was least productive last week?a) Juliusb) Margaretc) Daved) Suzye) Fawn

58. A bakery uses five ovens to bake muffins. Yesterday’s data are provided below.

Oven Hours Muffins BakedOven 1 5 600Oven 2 10 1500Oven 3 8 1280Oven 4 8 800Oven 5 6 780Which oven was the most productive?a) Oven 1b) Oven 2c) Oven 3d) Oven 4e) Oven 5

59. The state government utilizes five workers to stamp license plates. Last month’s data are provided below.Worker Days Worked Units

StampedPete 30 1440Tommy 20 1600Laura 24 2000Julie 28 2100Susan 29 1200Which worker was the least productive?a) Peteb) Tommyc) Laurad) Juliee) Susan60. A firm uses five plants to produce its products. Each

final product has a value of $100. The following table provides last week’s output, labor hours used (at $15 per hour), and materials cost per unit.

Plant Output Labor HoursMaterials Cost per Unit

Plant 1 2000 400$20

Plant 2 5000 900$18

Plant 3 9000 2000$20

Plant 4 1000 150$30

Plant 5 2000 440$18

Which plant was most productive last week?a) plant 1b) plant 2c) plant 3d) plant 4e) plant 5

61. A firm uses five plants to produce its products. Output value and total input cost for last week are provided below.

Plant 1 Output Value Total CostPlant 1 $20,000 $25,000Plant 2 $50,000 $60,000Plant 3 $40,000 $42,000Plant 4 $80,000 $99,000Plant 5 $25,000 $29,000Which plant was least productive last week?a) plant 1b) plant 2c) plant 3d) plant 4e) plant 5

62. Last week Jason painted 11 houses in 4 days. This week he painted 14 houses in 5 days. What was his percent productivity increase?

a) 1.82%b) 1.79%c) 27.27%d) 25.00%

e) 5.00%

63. Last month a plant produced 10,000 units using 2000 labor hours. This month it produced 12,000 units using 3000 labor hours. What is the percent productivity decrease?

a) 200%b) 100%c) 50%d) 25%e) 20%

64. On Tuesday George produced 100 units in 8 hours. On Wednesday he produced 120 units in 10 hours. What was his percent productivity change?a) 0.50%b) 4.17%c) 4.17%d) 4.00%e) 4.00%

65. Last month Stacy sold 10 houses while working 20 days. This month she sold the same number of houses in 22 days. What is her percent productivity change?

a) 10.00%b) 9.09%c) 9.09%d) 10.00%e) 4.55%

66. Yesterday, John produced 100 units in 8 hours. Today he produced the same amount in 6 hours. What is his percent productivity change?

a) 33.33%b) 0.00%c) 25.55%d) 25.00%e) 4.67%

66. A company used to produce 500 units every 2 days, but 10% of the units were defective. After installing a new process, defects have been eliminated while output has remained the same. What is the percent increase in productivity due to installing the new process?

a) 10.00%b) 25.00%c) 11.11%d) 0.00%e) 5.56%

67. A company used to produce 500 units every 2 days, but 10% of the units were defective. After installing a new process, defects have been eliminated while output has remained the same. What is the percent increase in productivity due to installing the new process?

a) 10.00%b) 25.00%c) 11.11%d) 0.00%e) 5.56%

68. A company used to produce 300 units every day, but 20% of the units were defective. After installing a new process, the defect rate has been reduced to 5%, while output has remained the same. What is the percent increase in productivity due to installing the new process?

a) 15.79%b) 0.00%c) 15.00%d) 18.75%e) 75.00%

69. Last month a plant produced 1200 units using 150 labor hours. This month it produced 1500 units using 300 labor hours. What is the percent productivity decrease?

a) 37.50%b) 60.00%c) 100.00%d) 300.00%e) 200.00%

70. Which of the following has used the Internet to conduct a fashion show in order to boost sales?a) The Gapb) Eddie Bauerc) Fruit of the Loomd) Victoria’s Secrete) Sears

71. Which of the following is not described in the chapter as one of the major environmental trends that firms should monitor?a) marketplace trendsb) global climate trendsc) economic trendsd) political trendse) social trends

72. Suppose that a plant manager is only evaluated based on the partial productivity measure: output/(number of employees). If she replaces 10% of the workforce with robots (one robot per replaced worker), and output remains the same, what will be the percent change in this measure of productivity?

Ans: 11.1% increase

73. Productivity is essentially:a) something to fill out managers’ reportsb) measure of resource effectivenessc) a scorecard of how efficiently resources are usedd) a balance scorecard metrice) the current business fad

True/False1. An operations strategy covers a relatively short time horizon, whereas a business strategy covers a relatively long time

horizon. F2. To provide speed of delivery, Federal Express invested in a sophisticated bar code technology. F3. To provide dependability of delivery, Federal Express acquired its own fleet of airplanes. F4. Operations Strategy is developed before the business strategy so the company knows what it will be producing before establishing a long range business strategy. F5. Victoria’s Secret has used the Internet to conduct a fashion show in order to boost sales. T6. Market research represents a type of environmental scanning. T7. Companies that compete based on cost generally also allow a lot of product customization. F8. Firms that focus on quality as their primary competitive priority usually implement either product design quality or process quality, but not both. F9. Federal Express subcontracts its work overload to other firms during peak demand periods. F10. As long as the firm always meets the order qualifier classification it will be always be competitive and win competitive bid opportunities F11. Companies that compete based on flexibility often cannot compete based on cost. T12. Facilities decisions are part of the production process infrastructure. F13. Decisions regarding flow of goods and services through the facility are part of the production process structure. T14. Worker pay decisions are part of the production process structure. F15. Quality control approaches are part of the production process infrastructure. T16. Studies have shown that companies that invest in new technologies tend to improve their financial position over those that do not. T17. Operations management is only concerned with information technology applications within the firm. F18. Process technology is the technology that has grown the most rapidly and has had the greatest impact on business. F19. A measure of how efficiently inputs are being converted into outputs is called utilization. F20. Productivity = input/output. F21. Output/(all inputs used) is called total productivity. T22. An operations strategy should not impact the firm’s supply chain design. F23. Output/(labor + capital) is an example of a partial productivity measure. F24. Productivity gains in the service sector have been much lower than that of manufacturing. T

Essay

1. Describe the difference between operational effectiveness and strategy.Ans: Operational effectiveness is the ability to perform operations more efficiently than competitors. Strategy, on the other hand, is a plan for competing in the marketplace.

2. Define “environmental scanning.”Ans: Monitoring the external environment for changes and trends in the market, in the economic and political environment, and

in society in order to determine business opportunities and threats.

3. A mission statement answers what three overriding questions?Ans: (1) What business is the organization in?, (2) Who are the customers?, (3) How will the company’s core beliefs shape its business?

4. What are some general technological trends in the marketplace?Ans: point-of-sale scanners, automation, computer-assisted processing, electronic purchasing, electronic order tracking, and e-

commerce

5. How have U.S. tobacco companies responded to public awareness of the dangers of smoking?Ans: Many have changed their strategy to focus on customers overseas where smoking is still socially acceptable, or have

diversified into other product lines.

6. Discuss how the operation strategy categories of structure and infrastructure determine the nature of the company’s operations function.

Ans: Structure is the operations decisions related to the design of the production process while infrastructure is operations decisions related to the planning and control systems of the operations. Together they define how the firm will pursue its long range plan.

7. Suggest some core competencies that companies may have.Ans: highly trained workforce, responsive in meeting customer needs, flexible in performing a variety of tasks, strong technical

capability, creative in product design, flexible in producing a variety of products, technologically advanced, an efficient distribution system, skilled in understanding customer wants and predicting market trends, skilled in attracting and raising capital, use of latest production technology, use of information technology, and quality control techniques.

8. What is management guru Tom Peters’ famous quote regarding outsourcing? What is his main point?Ans: “Do what you do best and outsource the rest.” The point is to outsource non-core activities so that the firm can focus on

its core competencies.

9. What outsourcing activities does Total Logistics Control perform for Meijer?Ans: all deliveries, route scheduling, and all activities involved in maintaining a fleet of trucks

10. At the national level why is it important to measure productivity?Ans: The economic success of a nation and the quality of life of its citizens are related to the competitiveness in the global

marketplace. Understanding the nation’s productivity helps to define how the nation is performing as a whole/

11. Describe how Southwest Airlines competes on cost.Ans: Facilities are streamlined: only one type of aircraft is used, and flight routes are generally short. This serves to minimize

costs of scheduling crew changes, maintenance, inventories of parts, and many administrative costs. Unnecessary costs are completely eliminated: there are no meals, printed boarding passes, or seat assignments.

12. For what entities can productivity be measured?Ans: individuals, departments, organizations, industries, or even countries

Problems1. Suppose that a plant manager is only evaluated based on the partial productivity measure: output/(number of employees). If

she replaces 10% of the workforce with robots (one robot per replaced worker), and output remains the same, what will be the percent change in this measure of productivity?

Ans: 11.1% increase

2. If a company’s inputs for producing a certain product increase by 10% and the output increases by 25%, what is the percentage productivity increase for that product?

Ans: 13.6%

3. If a company’s inputs for producing a certain product increase by 50% and the output increases by 90%, what is the percentage productivity increase for that product?

Ans: 26.7%

4. The school’s cafeteria has three service lines (pizza, salads, and sandwiches). The pizza line has one server and serves 90 pizzas per hour. The salad line has two servers and they handle 140 customers in 70 minutes. The sandwich line has three servers and they supply 360 sandwiches in 90 minutes. Which service line has the highest hourly productivity?

Ans: Pizza line at 90 pizzas/server/hour

5. A new milling machine can process 2000 jobs in 8 hours. What is the productivity of the machine?Ans: 250 jobs/hour

6. A firm produces 6000 products using 12 workers on a nine-hour shift. What is the labor productivity per worker?Ans: 55.6 units/hour

7. A machine shop produces hangers on two different machines. Machine 1 can produce a hanger every 15 minutes. Machine 2 can produce a hanger every 10 minutes. What is the average productivity per machine?Ans: 5 units/hour

8. A firm produces shirts using three workers. On Wednesday, Madeline completed 110 shirts in 6 hours, Federico completed 90 shirts in 7 hours, and Susan completed 130 shirts in 9 hours. What was the overall productivity of the firm?

Ans: 15 units/hour

9. A firm produces 1500 units per day using four workers on a five-hour shift. On average, 12% of the units produced are defective and must be scrapped. What is the labor productivity for non-defective units?

Ans: 66 units/hour

10. Last week George mowed 6 lawns in two days. This week he mowed 8 lawns in three days. In which week was George more productive?

Ans: last week

11. During week one, on average, the aircraft cleaning staff was able to totally clean an airplane in 45 minutes using 3 cleaners. During week two the average time to clean an aircraft went to 40 minutes with one of the cleaning staff off sick. Week two productivity changed in which direction and by how much?

Ans: Week two productivity is 20 minutes/staff, productivity decreased

12. A company uses two plants to produce motorcycles. Plant A produces 200 per week using 20 workers and 4 machines. Plant B produces 250 per week using 10 workers and 10 machines. Which plant is more productive?

Ans: unknown—Plant A has a higher machine productivity but a lower labor productivity. The cost of labor and machines is needed.

Short Answer

1. Firms measure productivity to learn how ________________________ they are.2. Rapid technological change includes the risk of ________________________ .3. The operations function must place emphasis on those priorities that directly support the __________ ________. Therefore, it needs to make _________ between different priorities.4. Estimating productivity requires measurements of ________________________ and ________________________. 5. Operations strategy is a long range plan for the design and use of resources in support of ________________________ 6. Mass produced standard products were the main manufacturing concern until ________________________.

7. Restaurants that offer pizza to go have different ________________________ than those that do not.8. __________________ is used to improve the process of creating goods and services.9. Environmental scanning helps organizations recognize ________________________.10. Firms use ____________________ to concentrate on their________________________.11. A business strategy is like an explorer's ________________________. 12. Saying that an organization is qualified to be in its marker means it has the right__________.

File: ch03, Chapter 3: Product and Process Design

Multiple Choice

1. The ease with which the product can be made is itsa) manufacturabilityb) repeatabilityc) readiness for manufacturingd) reliabilitye) accountability

2. Service design differs from product design by including __________________________.

a) customer needsb) marketing personnel in the decision making processc) speedd) qualitye) the esthetic and psychological benefits of the product

3. A company’s product design supports it business strategies by

a) designing products that appeal to its customersb) designing as many products as possible c) including the company’s mission somewhere in the productd) designing products that aid strategic planning activitiese) designing the company’s strategy

4. Which of the following is not a step in product design?a) final designb) preliminary design and testingc) idea developmentd) conceptual designe) product screening

5. ___________ is a vital link between customers and product design.a) Engineeringb) Accountingc) The Internetd) Operationse) Marketing

6. All product designs begin with ____________________________.a) a blueprint

b) a cost analysisc) an idead) a feasibility studye) a focus group

7. Which of the following is true regarding the relative predictability of the cycle of new product introductions?a) new car models are predictable, but new fashion and new skin care products are notb) new car models and new fashion are predictable, but new skin care products are notc) new car models, new fashion, and new skin care products are all predictabled) new car models, new fashion, and new skin care products are all unpredictablee) new fashion and new skin care products are predictable, but new car models are not

8. Lands’ End is a well known benchmarking target because of its _________________________.a) catalog businessb) supply chain managementc) success at resolving complaintsd) labor relationse) environmental policies

9. In 1997, who performed a large benchmarking study for IBM?a) Boston Consulting Groupb) Anderson Consultingc) i2 Technologiesd) Mercer Management Consultantse) Manugistics

10. When designing the Taurus model, what did Ford Motor Company do with regard to BMW and Toyota?a) benchmarkingb) hired some of their employeesc) reverse engineeringd) copied their quality management techniquese) bought some of their dealerships

11. Reverse engineering is:a) altering the basic design based on user input.b) reengineering a failing product.c) acquiring a competitor’s product and relabeling it for sale.d) acquire a competitor’s product and studying its design features.e) changing your mind on the previous design.

12. Studying the practices of companies considered “best in class” and comparing the performance of our company against their performance is

a) competitionb) copyingc) frustrationd) benchmarkinge) notching

13. Involving suppliers early in the design process is called: a) reengineeringb) disaggregationc) redesignd) benchmarkinge) supplier involvement

14. Evaluating a product idea to determine its likelihood of success isa) product screeningb) estimatingc) technological forecastingd) product windowinge) product evolution

15. In product screening, issues such as “Will we need new facilities and equipment?” and “Can material for production be readily obtained?” are addressed bya) marketingb) financec) engineeringd) operationse) accounting

16. In product screening, issues such as, “What is the market size?” and “What is the long term-product potential?” are addressed by:a) marketingb) financec) engineeringd) operationse) accounting

17. Approximately what percentage of ideas do not make it past the screening stage?a) 30%b) 50%c) 60%d) 80%e) 90%

18. What technique is based on computing the quantity of goods a company needs to sell to just cover its costs?

a) net present valueb) break-even analysisc) internal rate of returnd) activity based costinge) variable costing

19. Costs that are proportional to the amount of units produced, such as materials and labor, area) fixed costsb) marginal revenuec) sunk costsd) cost driverse) variable costs

20. Which of the following is not a fixed cost?a) land rentb) materialsc) overheadd) taxese) insurance

21. In break-even analysis, what is the break-even point?a) the quantity where revenue equals total costb) the quantity where revenue equals fixed costc) the quantity where revenue equals variable costd) the quantity beyond which the firm starts to lose moneye) the quantity where variable cost equals fixed cost

22. In break-even analysis, in order to make a profit the company musta) sell above the break-even pointb) sell below the break-even pointc) sell at a lossd) sell at the break-even pointe) sell on consignment

23. For which of the following is break-even analysis not appropriate?a) deciding how much of a product must be sold to make a profitb) evaluating different processesc) deciding whether it is better to make or buy a productd) deciding between different productse) deciding how to allocate overhead

24. Which of the following is not included in the preliminary design and testing stage?

a) the product design idea is evaluated according to the needs of the major business functionsb) design engineers translate general performance specifications into technical specificationsc) “bugs” are worked outd) revising the design based on test resultse) prototypes are built and tested

25. During the final design and testing stage:a) the product design idea is evaluated according to the needs of the major business functions.b) design engineers hand the product over to the final design engineers.c) the product specifications are drawn up.d) marketing becomes involved for the first time.e) the product achieves full production.

26. Which one of these refers to reducing the number of parts and features of the product whenever possible?a) design automationb) design specificationc) design reductiond) design standardizatione) design simplification

27. What refers to the use of common and interchangeable parts?a) design automation

b) design specificationc) design reductiond) design standardizatione) design simplification

28. Which of the following is not a guideline for design for manufacture?a) use modular designb) design parts for different productsc) minimize partsd) rely on automated equipmente) simplify operations

29. Maturity and decline are also referred to as:a) the early stagesb) the life cyclec) the later stagesd) design for manufacture stagese) re-engineering stages

30. Which type of operation is used to produce many different products with varying process requirements in lower volumes?a) intermittentb) repetitivec) continuousd) downstreame) gateway

31. Which of the following is not characteristic of intermittent operations?a) produce many different products with varying processing requirementsb) capital intensivec) workers need to be able to perform different tasks depending on the processing needs of the productd) general purpose equipmente) volume of goods produced directly tied to number of customer orders

32. Building a bridge over the Mississippi River for a new highway uses aa) project processb) batch processc) line processd) continuous processe) recycle process

33. The classes that you are taking at the university use a _______________ process.a) projectb) batchc) lined) continuouse) recycle

34. What type of process is designed to produce a large volume of a standardized product for mass production, such as automobiles?a) project processesb) batch processesc) line processes

d) continuous processese) recycle processes

35. Which type of process would be least likely to produce goods for inventory rather than for a specific customer request?a) projectb) batchc) lined) continuouse) remanufacturing

36. Which of the following is a tool for evaluating an operation in terms of the sequence of steps from inputs to outputs with the goal of improving its design.a) operations analysisb) operations sequencingc) process flow analysisd) input/output analysise) sequencing analysis

37. If the third stage of a repetitive line process cannot complete its activities as fast as stage one or two it has become a:a) key work locationb) bottle neckc) place not to workd) project process locatione) none of these

38. Which of the following is correct sequence for relating product design, process selection, and arrangement of equipment in the factory?a) product design determines arrangement of equipment which determines process selectionb) product design determines process selection which determines arrangement of equipmentc) process selection determines product design which determines arrangement of equipmentd) process selection determines arrangement of equipment which determines product designe) arrangement of equipment determines process selection which determines product design

39. What type of operations focus on products in the early stage of the life cycle?a) repetitiveb) downstreamc) gatewayd) intermittente) recycle

40. With respect to competitive priorities, intermittent operations compete more on _______________ compared to repetitive operations.a) cost and featuresb) durability and costc) availability and reliabilityd) flexibility and deliverye) durability and features

41. Intermittent operations group their resources based on

a) requirements of the productb) similar operations or functionsc) shape of the shop floord) abilities of the labor forcee) the number of machines

42. Compared to intermittent operations, repetitive operationsa) have higher material handling costsb) have greater efficiencyc) have slower processing ratesd) have more flexibilitye) are less specialized

43. Which product and service strategy is used to produce standard components that can be combined to customer specifications?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package

44. Which product and service strategy has the longest delivery lead time?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package

45. Pre-fabricated furniture with choices of fabric colors is an example of which product and service strategy?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package

46. Which product and service strategy is typically seen in repetitive operations?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package

47. If a firm’s facility layout is not correct it will create:a) project processesb) optimum outputsc) equal number of productsd) inefficiencye) job satisfaction

48. Information Technology does NOT assist the firm in:a) information storageb) information processingc) information creationd) intra firm information communicatione) inter firm information communication

49. Vertical integration is a good strategic option for a manufacturing company whena) it needs several different parts and subassembliesb) it makes many different productsc) its facilities are obsoleted) it uses distributed processinge) it needs one input material in large volumes

50. Which of the following is a disadvantage of automation?a) inflexibility for product and process changesb) inconsistency of productsc) inefficiency for producing large volumesd) harder to monitor qualitye) frequent interruptions of production

51. What is a small battery-driven truck that is not operated by a human and moves material from location to location?a) CADb) AGVc) AS/RSd) FMSe) CAM

52. A technology which uses sensor tags to monitor perishable products is:

a) FMSb) CADc) RFIDd) CAMe) RF

53. What is an automated material handling system that basically is an automated warehouse?

a) CADb) AGVc) AS/RSd) FMSe) CAM

54. What is CAD short for?a) conceptually appropriate designb) computer aided designc) commercial applications designd) competitive advantage designe) completely automated design

55. What is a type of automation system that provides the flexibility of intermittent operations with the efficiency of repetitive operations?a) CADb) AGVc) AS/RSd) FMSe) CAM

56. In manufacturing, a robot typically:a) resembles a human in appearanceb) has a mechanical armc) is mobiled) has legse) is very small

57. What type of machine is controlled by a computer and can do a variety of tasks, such as drilling, boring, or turning parts of different sizes and shapes?a) numerically controlledb) variable turningc) flexible drivend) noncalculatinge) next component

58. What term is used to describe the integration of product design, process planning, and manufacturing using an integrated computer system?a) CAD/CAMb) AGVc) AS/RSd) FMSe) CIM

59. Since services are intangible, the design of the service needs _________________________.a) to be intangibleb) to be very specificc) to be in the mind of the customerd) to be explained to the customer prior to delivery of the servicee) to specify exactly what the customer is supposed to experience.

60. Services with low customer contact are called ___________________________.a) quasi-manufacturingb) quasi-servicesc) mixed servicesd) pure servicese) mixed manufacturing

61. Highly labor intensive services are called ___________________________.a) quasi-manufacturingb) quasi-servicesc) mixed services

d) pure servicese) mixed manufacturing

62. Firms that have areas that have little customer contact and others with high customer contact are classified as _________ services.a) pure servicesb) quasi-manufacturingc) quasi-servicesd) mixed servicese) manufacturing

63. What are the three elements of the service package?a) physical goods, sensual benefits, and psychological benefitsb) sales, return policy, and warrantyc) customer service, return policy, and warrantyd) kindness, information provision, and speede) physiological benefits, sensual benefits, and psychological benefits

64. What are the three different service designs that are described in the chapter?a) substitute people for technology, get the customer involved, high customer attention approachb) customer-based market research, high customer attention approach, substitute technology for peoplec) customer-based market research, high customer attention approach, get the customer involvedd) substitute people for technology, customer-based market research, high customer attention approache) substitute technology for people, get the customer involved, high customer attention approach

65. Product design decisions are:a) purely tactical decisions.b) mixed tactical and strategic decisions.c) strategic in nature.d) only made by the OM department.e) rarely made.

True/False

1. Product design and process selection decisions are typically made separately. F2. One source of new product ideas is a product manager. T3. To remain competitive, companies must be innovative and bring out new products regularly. T4. Analyzing customer preferences is an ongoing process. T5. There is a pure mathematical formula to making the decision to pursue a specific idea. F6. Benchmarking should only be performed against firms in similar lines of business with our own. F7. Buying a competitor’s new product and studying its design features by disassembling it and analyzing its parts and features is reverse engineering. T8. Net present value is based on computing the quantity of goods a company needs to sell to just cover its costs. F9. At the preliminary design and testing stage of new product design, design engineers translate technical specifications into general performance specifications. F10. Understanding the stages of the life cycle is NOT important for product design purposes. F11. Design standardization refers to the use of common and interchangeable parts. T12. One issue that design for manufacture focuses on is material durability. F13. When product and process design work together, much of the work is done in sequence rather than in parallel. F14. Remanufacturing is the concept of using components of old products in the production of new ones. T

15. Repetitive operations are used to produce many different products with varying process requirements in lower volumes. F16. A common difference between intermittent and repetitive operations is degree of product standardization. T17. Intermittent operations group their resources based on similar operations or functions. T18. The make-to-stock product and service strategy has the shortest delivery lead time among the possible strategies, but the customer has no involvement in product design. T19. Process velocity is computed as a ratio of throughput time to output. F20. Outsourcing instead of pursuing vertical integration is often a good strategic option for a firm using an intermittent operation. T21. The psychological benefits of the service package involve the sights, smells, and sounds of the experience. F

Essay

1. Define product design.Ans: The process of deciding on the unique characteristics and features of the company’s products.

2. Name some sources for ideas for new products.Ans: customers, competitors, R&D departments, suppliers, employees, and new technological developments

3. In the product screening stage of new product development, what are some questions that may need to be explored by the operations function? By marketing? By finance?Ans: Operations: What are the production needs of the proposed new product and how do they match our existing resources?

Will we need new facilities and equipment? Do we have the labor skills to make the product? Can the materials for production be readily obtained? Marketing: What is the potential size of the market for the proposed new product? How much effort will be needed to develop a market for the product and what is the long-term product potential? Finance: What is the proposed new product’s financial potential, cost, and return on investment?

4. Describe what process flow analysis is.Ans: A technique used for evaluating a process in terms of the sequence of steps from inputs to outputs with the goal of

improving its design.

5. For what types of decisions is break-even analysis appropriate?Ans: deciding how much of a product must be sold to make a profit, evaluating different processes, deciding whether it is better to make or buy a product, and deciding between different products

6. What is included in the preliminary design and testing stage of product design?Ans: design engineers translate general performance specifications into technical specifications, “bugs” are worked out, revising the design based on test results, and prototypes are built and tested

7. What are the guidelines for design for manufacture?Ans: Use modular design, design parts for different products, minimize parts, simplify operations, and avoid tools

8. What are the characteristics of intermittent operations?Ans: Produce many different products with varying processing requirements, different products have different processing needs and there is no standard route that all products take through the facility, resources are grouped by function, labor intensive, often there are skilled and semiskilled workers with a fair amount of discretion in performing their jobs, workers need to be flexible and to be able to perform different tasks depending on the processing needs of the product, general purpose equipment, and the volume of goods produced is directly tied to the number of customer orders

9. What are the characteristics of repetitive operations?Ans: Produce one or a few standardized products in high volumes, resources are organized in a line flow efficiently accommodate production of the product, capital intensive, often rely on automation and technology to improve efficiency and increase output, specialized equipment, and the volume of goods produced is based on a forecast of future demands

10. Describe three different types of service designs.Ans: (1) substituting technology for people—this provides product consistency and takes the guesswork away from employees;

(2) get the customer involved—this can speed delivery, reduce costs, and empower customers; (3) high customer attention approach—this customizes the service needs unique to each customer and has them be passive and pampered recipients of the service

11. Describe why marketing should be involved in the product design process.Ans: Marketing is impacted by product design issues because they determine the types of products that will be produced and

affect marketing’s ability to sell them. Marketing understands the types of product characteristics customers want and can provide operations with information on customer preferences, competition, and future trends.

Problems

1. What is the break-even volume given a fixed cost of $100,000, a variable cost per unit of $30, and a selling price of $35?Ans: 20,000 units (QBE = F/(SP – VC) = $100,000/($35 - $30) = 20,000)

2. What is the break-even volume given a fixed cost of $15,000,000, a variable cost per unit of $2.30, and a selling price of $12.80?Ans: 1,428,571 units (QBE = F/(SP – VC) = $15,000,000/($12.80 - $2.30) = 1,428,571)

3. What is the break-even volume given insurance costs of $30,000, materials costs of $6 per unit, taxes of $10,000, labor costs of $34 per unit, and a selling price of $80?Ans: 1000 units (QBE = F/(SP – VC) = ($30,000 + $10,000)/($80 – ($34 + $6.00)) = 1,000)

4. If a firm has fixed costs of $250,000, a market-based selling price of $50 per unit, and it expects to sell 20,000 units, how low must its variable costs be to break even? Ans: $37.50 (VC= SP – F/ QBE) = $50 - $250,000 /20,000) = $37.50/unit)

5. Blaster Radio Company is trying to decide whether or not to introduce a new model. If they introduce it, there will be additional fixed costs of $400,000 per year. The variable costs have been estimated to be $20 per radio.a) If Blaster sells the new radio model for $30 per radio, how many must they sell to break even?b) If Blaster sells 70,000 of the new radio model at the $30 price, what will the contribution to profit be?

Ans: a) 40,000 radios (QBE = F/(SP – VC) = $400,000/($30 - $20) = 40,000)b) $300,000 (Profit = total revenue – total cost = SP*A – [F+VC*Q] = $30 * 70000 – [$400,000+ ($20*70000)] = $300,000)

6. Birdie Par owns a company that makes golf gloves. She is thinking about introducing a new glove, which would require an additional fixed cost of $20,000 per year. The variable costs for the new glove have been estimated to be $5 per glove.a) If she sells the new glove for $15, how many must she sell to break even?b) If she sells 3,000 gloves at the $15 price, what will the contribution to profit be?Ans: a) 2,000 gloves (QBE = F/(SP – VC) = $20,000/($15 - $5) = 2,000)

b) $10,000 (Profit = total revenue – total cost = SP*A – [F+VC*Q] = $15 * 3000 – [$20,000+ ($5*3000)] = $10,000)

7. Bazooka Company is thinking about introducing a new type of color printer. If they introduce it, their factory will incur additional fixed costs of $37,000,000 per year. The variable costs will be $261 per printer.a) If Bazooka sells the new printer for $819, how many must they sell to break even?b) If Bazooka sells 70,000 of the new printer at the $819 price, what will the contribution to profit be?Ans: a) 66,308 printers (QBE = F/(SP – VC) = $37,000,000/($819 - $261) = 66,308)

b) $2,060,000 (Profit = total revenue – total cost = SP*A – [F+VC*Q] = $819 * 70,000 – [$37,000,000+ ($261*70,000)] = $2,060,000)

8. Sam Smear owns a manufacturing company that makes ball point pens. Currently he is trying to decide between two processes for making the pens. The first process will have a fixed cost of $200,000 per year and variable costs of $0.40 per pen. The second process will have a fixed cost of $250,000 per year and variable costs of $0.30 per pen.a) Identify which ranges of product volume are best for each process.b) If Sam makes 200,000 pens, which process provides a lower cost?Ans: a) the first process is better for volumes less than or equal to 500,000 pens, the second process is better for

volumes greater than or equal to 500,000 pens (Q = (F2 – F1)/( VC2 – VC1) = ($250,000-$200,000)/($0.40 - $0.30) = 500,000)b) the first process

9. If a firm has fixed costs of $200,000, variable costs of $100 per unit, and it hopes to sell 1000 units, what selling price must it charge in order to break even? Ans: $300 (SP = F/ QBE + VC = $200,000/1000 + $100 = $300)

10. Languages, Inc. manufactures hand held computers that translate between two languages. Based on their market research, they have developed computers for French/English, German/English, and Spanish/English. The process for making the computers will have fixed costs of $2,000,000 per year and variable costs of $50 per computer. The company believes that it can sell at least 40,000 computers per year.a) What should the price per computer be if the company wants to break even at a volume of 40,000 computers per year?b) If they sell 60,000 computers at a price of $90 per computer, what will the contribution to profit be?Ans: a) $100 (SP = F/ QBE + VC = $2,000,000/40000 + $50 = $100)

b) $400,000 (Profit = total revenue – total cost = SP*A – [F+VC*Q] = $90 * 60,000 – [$2,000,000+ ($50*60,000)] = $400,000)

11. Frank’s manufacturing firm has determined that the industry standard process velocity time is 15 seconds. Frank’s OM engineer has determined that their process velocity time is 17 seconds with a throughput time of 136 seconds. If the throughput time cannot be changed, what, how much, and by which direction does the value added time need to change so Frank’s manufacturing can match the industry standard process velocity?

Ans: Process Velocity = Throughput time/value added time; Value added time = Throughput time/process velocity Value added time = 136/17 = 8; 14.5=136/value added time: Value added time = 136/15 = 9.1Value added time must increase by 1.1 seconds

12. Tom’s hazardous material movement company limits the number of hours an individual works to 8.5 a day. Each hazardous material handler product movement time has been stopwatch analyzed to take 240 seconds. What is the hazardous material handler utilization if they make 110 moves a day?

Ans: Utilization = time a resource used/time a resource availableConvert hours available to seconds available: 8.5 hrs/day* 60 minutes/hr*60 seconds/minute = 30600 seconds/dayUtilization = (110*240) sec/30600 sec = 0.863 (86.3%)

Short Answer1. Name a company that has a good match between customer expectations ________________________ and a company that does not have a good match _____________________.

2. Name a company that hurt its business success by changing its Operations Type ___________3. What is throughput time if process velocity = 5 and Value-added time = 2? ________________________

4. What is input if Productivity = 7 and Output = 5? ________________________ 5. How efficient was a process whose Standard output = 27 while Actual output = 24? ________________________ 6. Why is delivery time longer for make to order than assembly to order processes that deliver similar products? ________________________ 7. Name a reason for using ERP and a reason it might be difficult to implement. ________________________ 8. Name three computer applications that affect product design and process selection: ________________________

9. What is the break-even price if fixed cost = 100, variable cost = 7, and selling price = 9? ________________________ 10. Substituting technology for people has been argued to reduce what in the service delivery?11. Why are services more complex to design than manufactured good? ________________________

12. Name an operational consideration that a firm must take into consideration when designing a new product

File: ch04, Chapter 4: Global Supply Chain Management

Multiple Choice

1. An organization’s supply chain is facilitated by:a) dedicated peopleb) an information systemc) specific vendorsd) specific customerse) government regulations

2. Which of the following typically represent the beginning of a supply chain:a) Wholesalersb) Retailersc) Manufacturersd) External supplierse) Inspectors

3. Supply chain management is the vital business function which does NOT coordinate and manage:a) linking suppliersb) transportersc) human resource interviewsd) internal departmentse) third-party companies

4. Typically a manufacturer will have more direct contact with which type of supplier?a) Tier one supplierb) Tier two supplierc) Tier three supplierd) Tier four suppliere) Tier five supplier

5. Consider a packaged milk products supply chain. A lumber company provides wood to a paper mill, who supplies cardboard to a container manufacturer, who supplies containers to the milk products manufacturer. The lumber company is:a) a tier one supplier.b) a tier two supplier.c) a tier three supplier.d) a tier four supplier.e) not in the supply chain.

6. Which of the following is not a typical result of the bullwhip effect?a) Absenteeismb) Lost revenuesc) Ineffective transportation used) Poor customer service levelse) Misused manufacturing capacity

7. Which term refers to inaccurate or distorted demand information created in the supply chain?a) Battle axe effectb) Cobra effectc) Bullwhip effectd) Lasso effecte) Whirlpool effect

8. Which of the following is not a remedy for the bullwhip effect?a) Allocate units based on past demandb) Price stabilizationc) Base forecasts on demand coming from the immediate downstream customerd) Eliminate order batchinge) Information sharing

9. Which of the following is not one of the four major causes of the bullwhip effect?a) Demand forecast updatingb) Order batchingc) Price fluctuationsd) The business cyclee) Rationing and shortage gaming

10 Which of the following is not one of the four major causes of the bullwhip effect?a) Demand forecast updatingb) Order batchingc) Price fluctuationsd) Government regulationse) Rationing and shortage gaming

11. Which of the following is not a remedy for the bullwhip effect?a) Allocate units based on past demandb) Price stabilizationc) Fill orders based on a set percentaged) Eliminate order batchinge) Information sharing

12. Price fluctuations follow all but which of the following marketing promotions?a) Advertisingb) Price discountsc) Quantity discountsd) Couponse) Rebates

13. When do rationing and shortage gaming occur?a) Supply exceeds demand.b) Demand exceeds supply.c) Government contracts are awarded.d) Transportation workers go on strike.e) Marginal revenue exceeds marginal cost.

14. Collection of point-of-sale (POS) information is most useful for which bullwhip effect remedy?a) Allocate units based on past demandb) Price stabilizationc) Fill orders based on a set percentaged) Eliminate order batchinge) Information sharing

15. The time between order placement and the receipt of goods is called______.a) receipt timeb) lead timec) allowance timed) processing time

e) waiting time

16. Service organization supply chains are:a) similar to manufacturing organizations.b) NOT similar to service organizations.c) very unique.d) not a consideration when planning a service organization.e) universally government regulated.

17. What is a network internal to an organization called?a) supernetb) internetc) intranetd) supranete) internalnet

18. What is an extension of an intranet to include suppliers and customers called?a) supply chain netb) supernetc) supranetd) extranete) intranet++

19. Net marketplaces are designed to: a) bring together only internal resources.b) bring together limited external resources.c) bring together significant number of purchasing firms. d) limit the number of daily transactions.e) limit cyber security risks.

20. Which of the following is open to the most users?a) an intranetb) an extranetc) a LANd) a WANe) the Internet

21. Online retailing, or B2C, has shifted:a) the cost of doing business.b) the power from the suppliers to the consumers.c) the way the internet works.d) internal corporate power to the IT department.e) corporate funding levels to the IT department.

22. Due to globalization, which of the following are NOT some commonly shared ocean shipping logistical characteristics?a) goods arrive in larger quantitiesb) greater break-bulk activity is requiredc) crossdocking is requiredd) typically have higher inventoriese) longer port times occur

23. A recent change in supply chain management has been the:a) need for faster computers.b) green supply chain management requirement.c) requirement for advanced educational degrees.d) increased government regulation.e) need for smaller ocean transportation methods.

24. Purchasing is typically responsible for:a) initiating purchasing requests.b) physically inventorying all received materials.c) developing the engineering specifications. d) analyzing the make-buy decision.e) monitoring supplier performance.

25. Which activity appears to be most frequently outsourced by large companies?a) Purchasingb) Marketingc) Financed) Accountinge) Manufacturing

26. What refers to owning or controlling sources of raw materials and components?a) Backward integrationb) Horizontal integrationc) Encapsulating integrationd) Forward integratione) Subsuming integration

27. What term refers to processes or activities that are completed in-house?a) Ownsourceb) Insourcec) Homesourced) Outsourcee) Supplysource

28. What term refers to processes or activities that are completed by suppliers?a) Vendorsourceb) Insourcec) Homesourced) Outsourcee) Supplysource

29. A higher level of vertical integration implies:a) more outsourcing.b) less outsourcing.c) more insourcing.d) less insourcing.e) b and c.

30. The quantity that equates the cost of making a product to the cost of buying the product is generally called what?a) Neutrality pointb) Point of equalityc) Indifference pointd) Point of optimalitye) No such point can exist.

31. According to the financial calculations of the make-or-buy decision, if we need fewer units than the indifference point, then which option should we definitely choose?a) Makeb) Buyc) The option with the lower variable costsd) The option with the higher variable costs

e) It is not profitable to choose either option.

32. To perform the financial calculations of the make-or-buy decision, which costs are needed?a) Fixed and variableb) Fixed and averagec) Variable and averaged) Variable onlye) Average only

33. Which of the following is NOT a positive attribute of Multiple Suppliers?a) provides a greater flexibility of volumeb) eliminates a supplier’s dependence on the purchaserc) probability of assured supply is betterd) deliveries can be schedule more easilye) allows for testing of new suppliers without jeopardizing the flow of materials

34. In general, what comprises the bulk of the cost of goods sold?a) Overheadb) Materialsc) Electricityd) Depreciatione) Labor

35. A constant concern within purchasing departments is the issue of ethics in managing_____.a) customersb) web sitesc) inventoryd) supplierse) entry-level employees

36. What are the Institute for Supply Management’s principles of ethical supply chain management conduct?a) objectivity always, loyalty to your organization, and faith in your professionb) objectivity always, justice to those with whom you deal, and faith in your professionc) objectivity always, justice to those with whom you deal, and loyalty to your organizationd) objectivity always, know the law, and justice to those with whom you deale) loyalty to your organization, justice to those with whom you deal, and faith in your profession

37. According to several studies, what are the three most important criteria for selecting suppliers?a) Price, quality, fast deliveryb) Quality, fast delivery, on-time deliveryc) Price, flexibility, on-time deliveryd) Quality, flexibility, fast deliverye) Price, quality, on-time delivery

38. What is the common term for a process of developing a long-term relationship with a supplier based on mutual trust, shared vision, shared information, and shared risks?a) Marryingb) Cohabitatingc) Sharing

d) Partneringe) Diversifying

39. Going beyond a basic partnership, an expanded partnership between a firm and its supplier implies:a) mutual respect.b) honesty.c) trust.d) open and frequent communications.e) a commitment to helping each other succeed.

40. According to the textbook, the two kinds of partnerships are basic and what?a) Expandedb) Enhancedc) Enlargedd) Elaboratede) Evolved

41. What does the textbook define as the three most critical factors in successful partnering?a) Impact, mission, visionb) Impact, intimacy, visionc) Contracting, mission, visiond) Contracting, intimacy, missione) Contracting, impact, intimacy

42. What term refers to attaining levels of productivity and competitiveness that are not possible through normal supplier relationships?a) Intimacyb) Visionc) Impactd) Powere) Collusion

43. What term refers to the working relationship between partners?a) Impactb) Visionc) Familiarityd) Intimacye) Proximity44. What term refers to the mission or objectives of a partnership?a) Impactb) Intimacyc) Dreamd) Conceptione) Vision

45. What do studies suggest are the three sources of impact?a) Reduce waste, leverage core competence, create new opportunitiesb) Provide quantity discounts, reduce waste, create new opportunitiesc) Create detailed contracts, reduce waste, create new opportunitiesd) Create detailed contracts, leverage core competence, reduce waste

e) Create detailed contracts, leverage core competence, create new opportunities

46. Leveraging core competence is about sharing:a) workers.b) knowledge.c) machines.d) expenses.e) financial hedges.

47. Which of the following is not considered to be a characteristic of partnership relations?a) Have a long-term orientationb) Are strategic in naturec) Are “arms-length” in natured) Share a common visione) Share short- and long-term plans

48. What does ESI stand for?a) Easy supplier integrationb) Early stage initiationc) Every supplier’s importantd) Early supplier involvemente) Engaged supply initiative

49. Early supplier involvement refers to the involvement of critical suppliers for what?a) Strategic planningb) Assembly line designc) Speedy delivery planningd) Selection of new supplierse) New product design

50. According to a 1996 study by the Council for Logistics Management of the third-party logistics industry, which companies are particularly likely to use third-party logistics services to handle most of their logistics needs?a) Companies engaged in international businessb) Transportation companiesc) Warehousing companiesd) Hospital equipment manufacturerse) Large retailers

51. Which of the following is least likely to be a benefit of implementing barcode scanners at retail store checkout registers?a) Improved forecastingb) More efficient packaging of customer orders c) Improved inventory controld) Faster checkout for customerse) More accurate checkout for customers

52. The discussion in the textbook implies that information sharing has shifted power in the supply chain the most to which group?a) Suppliersb) Manufacturersc) Distributorsd) Retailerse) Individual consumers

53. Which type of technology provides “point-of-sale information?”a) Automatic guided vehicles (AGV)b) Automatic storage and retrieval systems (ASRS)c) Barcode scannersd) Flexible manufacturing systems (FMS)e) Computer aided design/computer aided manufacturing (CAD/CAM)

54. What does EDI stand for?a) Easy data interchangeb) Electronic door interfacec) Electronic detachable interfaced) Elementary data integratione) Electronic data interchange

55. Which of the following is not considered to be a benefit of EDI?a) Increased human interactionb) Reduced paperworkc) Improved data accuracyd) Improved tracking capabilitye) Reduced clerical costs56. Some warehouses provide product mixing. This is referred to as:a) reduced value-added service for customers.b) value-added service for customers.c) mix and match capability.d) correcting earlier mistakes in shipping.e) storage warehouse functions.

57. What is the throughput of Fingerhut’s warehouse in St. Cloud, MN?a) 30,000 items per minuteb) 30,000 items per hourc) 30,000 items per dayd) 30,000 items per weeke) 30,000 items per month

58. What type of warehouse is used for long-term storage?a) Customizedb) Strategicc) Generald) Distributione) Tactical

59. What type of warehouse is used for short-term storage, consolidation, and product mixing?a) Customizedb) Strategicc) Generald) Distributione) Tactical

60. What does TL stand for?a) Transportation lead timeb) Transportation logisticsc) Trucking lined) Trucking lifee) Truckload (quantity)

61. What is the process whereby shipments are transferred directly from inbound trailers to outbound trailers?a) crossdockingb) directdockingc) nodockingd) simuldockinge) transferdocking

62. Crossdocking _____.a) eliminates the receiving and shipping functions of a

distribution warehouse while still performing its storage and order picking functions

b) eliminates the receiving and storage functions of a distribution warehouse while still performing its shipping and order picking functions

c) eliminates the storage and shipping functions of a distribution warehouse while still performing its order picking and receiving functions

d) eliminates the receiving and order picking functions of a distribution warehouse while still performing its storage and shipping functions

e) eliminates the storage and order picking functions of a distribution warehouse while still performing its receiving and shipping functions

63. Crossdocking allows the retailer to replace ______________ with information and coordination.a) trucksb) buildingsc) inventoryd) truck loaderse) conveyor belts

64. _________________ crossdocking is the receiving and consolidating of inbound supplies to support just-in-time manufacturing.a) Warehouseb) Manufacturingc) Distributord) Transportatione) Retail

65. _________________ crossdocking is the consolidating of shipments from LTL and small package industries to gain economies of scale.a) Warehouseb) Manufacturingc) Distributord) Transportatione) Retail

66. What is a virtual organization?a) A company that provides core functions and outsources everything elseb) An e-commerce companyc) A web server developerd) A computer manufacturere) A company with no vertical levels of management

67. Benetton is well known for the practice of assembling all white sweaters and waiting to dye them much closer to the time of sale. This is an example of what?

a) Stupidityb) Postponementc) Fractionalizationd) Partitioninge) Genericness

68. Which of the following is not an argument in favor of having a single supplier?a) Quantity discounts may be achieved.b) Partnering becomes more possible.c) Consistency of input materials is achieved.d) Probability of assured supply is better.e) Deliveries can be scheduled more easily.

69. Which of the following is not an argument in favor of having multiple suppliers?a) The Just-in-time philosophy can be better utilized.b) Supplier capacity is less important.c) Volume flexibility is obtained.d) Risks may be spread.e) New suppliers may more easily be tested.

70. Insourcing incurs an annual fixed cost of $500,000 and a variable cost of $60 per unit. Outsourcing incurs an annual fixed cost of $750,000 and a variable cost of $20 per unit. What is the indifference point between the two alternatives?a) 0 unitsb) 6250 unitsc) 6250 unitsd) 40 unitse) 12,500 units

71. What is the electronic marketplace for the auto industry?a) Carnetb) Autoexchangec) Covisintd) Citroene) Motorint

72. In January 2003, how many suppliers were members of Covisint?a) 76b) 760c) 7,600d) 76,000e) 760,000

73. Which of the following is a “buyer-side,” typically industry-specific solution?a) automated order entry systemsb) electronic data interchangec) electronic storefrontsd) net marketplacese) advertising revenue model

74. Which B2C model does MyPoints.com utilize?a) advertising revenue modelb) subscription revenue modelc) transaction fee modeld) sales revenue model

e) affiliate revenue model75. Companies want a supply chain that makes it possible to: a) manage all suppliers’ development costs.b) manage and adapt to all of the business dynamics.c) manage distribution display.d) manage distribution outlet retail prices.e) manage customer demands.

76. Which of the following is NOT one of the supply chain wastes the text book identifies?a) over productionb) delay between activities

c) procurement/purchasing delayd) unnecessary transport or conveyance of producte) unnecessary movement by people

77. Supply chain velocity refers to a) how fast the transportation vendor isb) how fast the company pays the supply chain vendorsc) how fast the purchasing department responds to a requestd) the speed at which a product moves through a pipeline from the manufacturer to the customere) the speed at which the warehouse is able to crossdock a shipment

True/False1. Supply chain management provides the company with a sustainable, competitive advantage. T2. Manufacturers typically represent the beginning of a supply chain. F3. A tier one supplier is always more important than a tier two supplier. F4. The tier one, tier two, and tier three supplier designations are based upon whom the suppliers are providing materials or services to. T5. Like “ABC inventory analysis,” the tier one, tier two, and tier three supplier designations are based upon the annual level of purchases made with the suppliers. F6. Location managers are typically responsible for managing the movement of products between locations. F7. If supply chain A has more levels than supply chain B, then the bullwhip effect will likely impact supply chain B more than supply chain A. F8. A possible remedy for the bullwhip effect is to base forecasts on demand coming from the immediate downstream customer. F9. Order batching replaces lumpy demand with constant product demand. F10. Rationing and shortage gaming occur when supply exceeds demand. F11. The time between order placement and the receipt of goods is called lead time. T12. Internet-based B2B commerce results in higher costs to the global suppliers F13. The Internet has created greater competition between suppliers. T14. A firm can hedge exchange rate risk by establishing links with suppliers in a variety of countries. T15. Service organizations can also benefit from supply chain management. T16. Global competition forces organizations to decrease their amount of product proliferation. F17. Supply chain globalization is not impacted by security requirements. F18. Recent research suggests that most large companies have not increased their level of outsourcing. T19. The amount of outsourcing in industry is increasing. T20. The greater the level of vertical integration, the higher is the level of outsourcing. F21. One of the Institute for Supply Management’s principles of ethical supply chain management conduct is “loyalty to your organization.” T22. Shipments should spend less than 24 hours in a crossdock. T23. Crossdocking eliminates the receiving and shipping functions of a distribution warehouse while still performing its storage and order picking functions. F24. A company can use traditional financial measures such as return on investment to measure supply chain performance. T25. Warehouses are sometimes used as part of their postponement in their product design process. T

Essay1. What are the three “components” of a supply chain?Ans: (1) external suppliers, (2) internal functions of the company, (3) external distributors

2. Explain how a supply chain supports the organization to be sustainable and provide a competitive advantage.Ans: It provides the ability to provide quick response times, low cost, state-of-the-art quality design, and operational flexibility.

3. Logistics includes what two major management functions?Ans: traffic management and distribution management

4. What are the four causes of the bullwhip effect?Ans: (1) demand forecast updating, (2) order batching, (3) price fluctuations, (4) rationing and shortage gaming

5. Describe how consumers can use the Internet to shop in new ways.

Ans: They can comparison shop for suppliers around the world, view color pictures in an on-line catalog, and find all the information needed about an item. They can use a credit card or electronic funds transfer to buy items on-line. They can participate in auctions, specify the options and learn the cost of a brand new car, book a trip, or buy a diamond ring.

6. List some benefits derived from E-commerce.Ans: reduced transaction costs, fewer intermediaries, reduced lead times, greater visibility for the company, more choices and

information for customers, improved customer service, virtual companies that distribute through the Web, customer preference data collection, and global market access

7. Compare the access differences among the Internet, an intranet, and an extranet.Ans: The Internet is wide open, the intranet is limited to internal users, and the extranet is expanded to include suppliers and

customers.

8. List five major factors that become important for the management of global supply chains.Ans: substantial geographical distances, forecasting accuracy, exchange rates, infrastructure issues, and product proliferation

9. What are some examples of infrastructure issues that firms managing global supply chains may encounter?Ans: inadequate transportation networks, limited telecommunication capabilities, uncertain power continuity, low worker skill,

and poor supply availability and quality

10. Provide some examples of “greening” requirements that an organization may impose on their supply chain members.Ans: Examples may include carbon emission footprint reduction, reduced energy consumption, reduced inventory levels, reduced

transportation costs, the use of sustainable farming methods, use of specified material and application of greening supporting technologies.

11. What is the big difference between crossdocking and traditional distribution warehousing?Ans: In a traditional setting, the warehouse holds stock until a customer places an order, then the item is picked, packed and

shipped. The customer typically is not known before the items arrive at the warehouse. With crossdocking, the customer is known before the items arrive at the warehouse and there is no reason to move the items into storage.

12. What are the two major advantages or crossdocking?Ans: First, the retailer reduces inventory holding costs by replacing inventory with information and coordination. Second,

crossdocking can consolidate shipments to achieve truck-load quantities and significantly reduce a company’s inbound transportation costs.

Problems

1. Derive the formula for the indifference point Q* in the make-or-buy decision.Ans: Q* = (FCMake FCBuy) / (VCBuy VCMake)

2. Will’s omelet factory produces 2,500 omelets a day. They’ve determined that their daily fixed costs are $4,000 with a variable cost of fifteen cents per omelet. (a) What is the total cost to make a day’s omelettes, and (b) what should Will charge for each omelet to make a 10% profit, rounded to the next whole dollar?Ans: (a) $4,375 TC = F +(VC*Q) = $4,000+(2,500*$0.15) = $,4,375(b) $2.00 ($1.925) Cost/omelet = TCmake/Q=$4375/2500=$1.75: Sales price @ 10% profit = Cost/omelet*1.1= $1.925 (round to $2.00)

3. Insourcing incurs a fixed cost of $1000 and a $5 variable cost. Outsourcing incurs a fixed cost of $2000 and a $2 variable cost. What is the indifference point?Ans: 333 units (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($2000 - $1000)/($5 - $2) = 333)

4. Logo, Inc., can transport its own goods for a $140,000 annual cost and $25 per unit. A logistics supplier offers a contract for a $100,000 annual cost at $30 per unit. What is the indifference point?Ans: 8000 units (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($140,000 - $100,000)/($30 - $25) = 8,000)

5. Simuelson Industries can produce its own motors for a $60,000 fixed monthly cost and a $50 variable cost per unit. Alternatively, Simuelson Industries can purchase the motors from an outside supplier for $50,000 per month and $58 per unit. a) What is the indifference point?b) What option should be chosen if monthly demand is 1200 units?

Ans: a) 1250 units, (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($60,000 - $50,000)/($58 - $50) = 1,250) b) outsourcing

6. Yannis Corporation is trying to decide whether to produce its own subassemblies or outsource them. In-house production costs would include an annual fixed cost of $250,000, materials costs per unit of $7, and labor costs per unit of $5. Teshtown, Inc. has agreed to provide the subassemblies for an annual cost of $400,000 and a unit cost of $8 per subassembly. Over what ranges of demand is each option best?Ans: insourcing is optimal between 1 and 37,500 units, outsourcing is optimal for annual demand 37,500 units(Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($250,000 - $400,000)/($8 - $12) = 37,500)

7. Insourcing incurs a periodic fixed cost of $10,000 and a $0.50 variable cost. Outsourcing incurs a periodic cost of $6000 and a $0.90 variable cost. Over what ranges of demand is each option best?Ans: outsourcing is optimal between 1 and 10,000 units. Insourcing is optimal for demand 10,000 units(Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($10,000 - $6,000)/($0.90 - $0.50) = 10,000)

8. Boys `R Us sells suits to young men. Management is considering vertical integration. It is determined that the company can produce its own suits for a fixed annual cost of $2,000,000 and a production cost of $100 per suit. The current supplier charges a $2,500,000 fixed annual cost and $120 per suit. Over what ranges of demand is each option best?Ans: insourcing is always preferable (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($2,000,000 - $2,500,000)/($120 - $100) = - 25,000)

9. Annual fixed costs are $900,000 and $800,000 for outsourcing and insourcing, respectively, and variable costs are $28 and $32 for outsourcing and insourcing, respectively. If current annual demand is 22,000 units, by how much must demand increase in order for outsourcing to become cheaper?Ans: 3000 units (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($800,000 - $900,000)/($28 - $32) = 25,000; 2500 – 22000 = 3,000)

10. Global Metalworks can produce its own hinges for a weekly cost of $96,400 and a cost per hinge of $0.10. Currently an outside supplier is used for a weekly cost of $82,500 and a cost per hinge of $0.24. Current weekly demand is 98,000 units. How much larger must weekly demand grow in order to make insourcing economical?Ans: 1286 units (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($96,400 - $82,500)/($0.24 - $0.10) = 99,286; 99,286 – 98000 = 1,286)

11. Sportsworld, Inc. currently incurs $100,000 in annual purchasing costs, and each purchase order costs the firm approximately $3. Third-Party Logistics, Inc. is willing to perform purchasing services for Sportsworld at a $50,000 annual fixed retainer plus $7 per purchase order. Sportsworld currently places 10,000 orders per year.a) What is the current total cost of purchasing for Sportsworld?b) What would the cost of purchasing be if Third-Party Logistics were used?c) What is the indifference point for the two alternatives?Ans: a) $130,000, (TC = F +(VC*Q) = $100,000 +($3 * 10,000) = $130,000) b) $120,000, (TC = F +(VC*Q) = $50,000 +($7 * 10,000) = $120,000) c) 12,500 (Q* = (FCMake FCBuy) / (VCBuy VCMake) = ($100,000 - $50,000)/($7 - $3) = 12,500)

12. Big Oil Refinery is losing money every month. They cannot shut down the refinery. What quantity of product should they make in an effort to break even? Their primary product sale price is $1.50 per gallon. The production fixed cost is $36,000/day. The variable cost per gallon is $1.20.Ans: 180,000 gal: Sales price * Quantity = F +(VC*Q); Q = FC/(Sales price – VC) = 36,000/($1.50 - $1.20) = 180,000

Short Answer

1. A firm whose variable cost of providing a function is $10 while a potential supplier will outsource the function if ________________________ _________________________________________________________________________2. Name three kinds of B2B e-commerce: ________________________________________________________________3. Name three benefits of B2B e-commerce: _______________________________________________________________4. Growth in shipments from _______________________ to the U.S. have grown particularly quickly in recent years.5. Taxation is a particularly challenging e-commerce problem because of ________________________ 6. Global competition forces firms to offer ________________________ products.7. Several studies report that the top three criteria for selecting suppliers are ____, ____, and ____.8. _____, _____, _____are critical factors in successful partnering. 9. Name three functions of a purchasing department: __________________________________________________________10. Name three things purchasing agents should avoid as they balance loyalty their own organization and those with whom they deal: __________________________________________________________________________________________________

11. Partnerships between supplier and purchaser are easier to develop when there is (are) ______________________supplier(s).12. Successful supply chain partnerships have impact when they reduce: ______________________________ and ________________________ while _____________________________ and _______________________________

File: ch05, Chapter 5: Managing Quality

Multiple Choice

1. One common definition of quality is , which focuses on measuring how well the product or service meets targets and tolerances determined by its designers.a) Fitness for useb) Value for price paidc) Technical perceptiond) Judgmental evaluatione) Conformance to specifications

2. The definition of quality that involves the product functioning as expected without failure isa) Performanceb) Conformancec) Reliabilityd) Standardizatione) Endurance

3. Which of the following specifically relates to Service Organization dimensions of quality?a) conformance to specificationsb) atmosphere c) durabilityd) featurese) serviceability

4. In six-sigma the level of defects is reduced to approximatelya) 0b) 1.4 parts per millionc) 2.4 parts per milliond) 3.4 parts per millione) 4.4 parts per million

5. The expected operational life of a product is called its __________________________.a) conformanceb) reliabilityc) performanced) durabilitye) serviceability

6. Quality has gained such prominence because organizationsa) are following the latest management fadb) have found a low cost process to keep some employees busyc) have identified an employee perk, membership in quality circlesd) understand it is minimal cost and something to doe) have gained an understanding of the high cost of poor quality

7. During World War II, qualitya) Meant inspecting products to ensure that they met specificationsb) Encompassed the entire organizationc) Was defined as it had been for more than 100 yearsd) Became customer drivene) Became more statistical in nature

8. TQM is , designed to build quality into the product and process design.a) Reactiveb) Proactivec) Strategicd) Competitivee) Standardized

9. Not only does TQM encompass the entire organization but it a) stresses quality is supplier drivenb) stresses quality is vendor drivenc) stresses quality is customer drivend) stresses the need for ISO 9000 compliancee) stressed the need to be ‘green’

10. Which of the following is not characteristic of TQM?a) Inspecting products after they have been madeb) Identifying and correcting the root causes of quality problemsc) Encompasses the entire organizationd) Attempts to embed quality in every aspect of the organizatione) Concerned with technical aspects of quality

11. The Japanese term for continuous improvement isa) Poka-yokeb) Kaizenc) Kanband) Mudae) Automation

12. Giving workers responsibility for seeking out quality problems and correcting them isa) Continuous improvementb) Passing the buckc) Brainstormingd) Employee empowermente) Employee involvement

13. Employees of the organization who receive goods or services from others in the company area) Internal customersb) Ultimate customersc) Downstream customersd) Operators

e) External customers

14. Proper training of employees in the understanding of quality tools includes all of the following excepta) How to correct problemsb) How to assess qualityc) How to develop new quality toolsd) How to use quality control toolse) How to interpret findings

15. TQM team meetings take placea) After workb) During lunch breaksc) When the boss calls themd) When all the other work is finishede) During time in the workday set aside for them

16. A quality circle isa) An approach for the use of control chartsb) An award for quality improvementsc) An inspection stamp found on meatd) A team of volunteer production employees and their supervisors who meet regularly to solve quality problemse) A symbol used on flow charts

17. Studying business practices of companies considered “best in class” is calleda) Pairwise comparisonb) Benchmarkingc) Competitiond) Dreamscapinge) Discouraging

18. When using SPC if you plot the variable of interest against a timeline you are usinga) scatter diagramsb) control chartsc) fishbone diagramsd) pareto chartse) flow charts

19. Which of the following is not an important cost of poor quality?a) Product recallsb) Litigation resulting from product liability issuesc) Loss of businessd) Overheade) Dissatisfied customers

20. Quality planning, employee training in quality measurement, and cost of maintaining records of information and data related to quality are costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement

21. Costs of quality inspections, testing, test equipment, and labs are examples of costs.

a) Internal failureb) External failurec) Appraisald) Preventione) Replacement

22. Machine downtime due to failures in the process, scrap, and rework are examples of costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement

23. External failure costs includea) Scrapb) Litigation costs resulting from product liability issuesc) Reworkd) Quality inspectionse) Employee training

24. Warranty claims, customer complaints, and costs of litigation are examples of costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement

25. The plan-do-study-act cycle is often called thea) TQM activity approachb) Deming wheelc) Continuous improvement cycled) Quality circlee) Action wheel

26. In the plan-do-study-act cycle, what is studied?a) The plans made in the plan stepb) The previous action planc) The data collected in the do stepd) The evaluation of the current processe) Procedure documentation

27. A useful tool for translating customers’ everyday language into specific technical requirements isa) Quality function deploymentb) Quality circlesc) Quality of designd) Scatter diagramse) Cause-and-effect diagrams

28. Quality function deployment begins bya) Translating scores into specific product characteristicsb) Evaluating how the product compares with its major competitorsc) Setting specific goals to address the specified problemsd) Identifying important customer requirementse) Numerically scoring customer requirements based on their importance

29. In using quality function deployment, is one way to find out precisely what features customers want in the product.a) Interviewing the company sales forceb) Analyzing the changes in features historicallyc) Asking top managementd) Talking to process engineerse) Conducting focus groups

30. The important thing in quality function deployment competitive evaluation isa) To evaluate the financial strength of competitorsb) To identify customer requirements that should be pursued and how we fare relative to our competitorsc) Speed of introductiond) The number of competitorse) Knowing our product well31. The strength of the relationship between customer requirements and product characteristics is shown in the matrix.a) Trade-offb) Productc) Relationshipd) Strengthe) Inverse

32. The last step in constructing the house of quality includesa) Determining how to advertiseb) Setting targets for our own productc) Determining how to attack our competitors’ productsd) Designing the producte) Comparing results with past sales

33. One common name for TQM based team work is:a) quality departmentb) quality support groupc) quality circled) quality team

34. What quality control tool resembles a "fishbone?"e) team onea) Checklistsb) Scatter diagramsc) Pareto analysisd) Cause-and-effect diagramse) Flowcharts

35. Cause-and-effect diagrams are often calleda) Checklistsb) Scatter diagramsc) Pareto analysisd) Fishbone diagramse) Histograms

36. For a cause-and-effect diagram, causes could be related to all of the following excepta) Analysisb) Materialsc) Measurementsd) Machines

e) Workers

37. What is a schematic diagram of the sequence of steps involved in an operation or process?a) Checklistb) Control chartc) Scatter diagramd) Flow charte) Process chart

38. What tool is useful in helping everyone develop a clear picture of how an operation or process works?a) Control chartb) Pareto analysisc) Checklistd) Flowcharte) Scatter diagram

39. A checklist is a list of common defects and of these defects.a) Number of occurrencesb) Relative importancec) Attributesd) Costse) Visibility

40 Checklists can also be used to focus on?a) replacement costsb) design documentationc) time dimensiond) upper control limitse) histogram

41. For control charts, which of the following situations means that the process is not in control?a) A measured observation is above the LCLb) A measured observation is below the UCLc) A measured observation is above the center lined) A measured observation is below the center linee) A measured observation is above the UCL

42. Scatter diagrams are particularly useful in detecting the amount of , or the degree of linear relationship, between two variables.a) Correlationb) Heteroscedasticityc) Agreementd) Disagreemente) Causality

43. analysis is a technique used to identify quality problems based on their degree of importance.a) Demingb) Paretoc) Davisd) Crosbye) Juran

44. A chart showing the number of defects that result from different causes would be used in:

a) Pareto analysisb) Flowchartsc) Cause-and-effect diagramsd) Benchmarkinge) Control charts

45. A shows the frequency distribution of observed values of a variable.a) Scatter diagramb) Control chartc) Histogramd) Flow charte) Process chart

46. If the derived scatter diagram shows a non-linear but scattered relationship it indicates thata) there is a direct correlation between the two variables.b) the two variables’ data was gathered at different timesc) a third variable needs to be added to the evaluationd) there is no direct correlation between the two variablese) you are using the wrong SPC chart

47. Quality at the source is the belief that it is far better to _______ quality problems and _____ them than to discard defective items after production.a) uncover the person generating, fireb) uncover the source of, correctc) discover new methods of , implementd) discover new processes of, implemente) allow returns of, fix

48. The Baldrige Award is intended toa) Demonstrate that American companies are better than their foreign competitorsb) Certify suppliersc) Reward and stimulate quality initiativesd) Focus national attention on manufacturinge) Add structure to TQM

49. To compete for the Baldrige Award, companies musta) Be nominated by their senatorb) Submit a lengthy applicationc) Use e-mail regularlyd) Use statistical process controle) Be a Fortune-500 company

50. The Malcolm Baldrige Award criteria include categories for all of the following excepta) Leadershipb) Process managementc) Product designd) Customer and market focuse) Business results

51. The Malcolm Baldrige Award criteria category that includes commitment by top management isa) Leadershipb) Strategic planningc) Process managementd) Business resultse) Information and analysis

52. Which of the Malcolm Baldrige Award criteria is allocated the most points?a) leadershipb) information and analysisc) human resource focusd) process managemente) business results

53. Where is the Deming prize awarded?a) U.S.b) Japanc) Englandd) Germanye) Canada

54. The Union of Japanese Scientists and Engineers named its quality award after ___________________.

a) Genichi Taguchib) Kaoru Ishikawac) Joe Jurand) Phillip Crosbye) W. Edwards Deming

55. What was the first US company to receive the Deming Prize?a) IBMb) Microsoftc) Wal-Martd) AT&Te) Florida Power & Light

56. The Malcolm Baldrige Award criteria category that includes the use of tools such as market surveys and focus groups isa) Leadershipb) Strategic planningc) Customer and market focusd) Business resultse) Information and analysis

57. The Malcolm Baldrige Award criteria category that includes continuous improvement programs, employee training, and functioning of teams isa) Leadershipb) Strategic planningc) Information and analysisd) Human resource development and managemente) Business results

58. The Malcolm Baldrige Award criteria category of business results does not includea) Percentage of defective itemsb) Progressive improvement over timec) Financial measuresd) Marketing measurese) One-time only improvements

59. If suppliers meet preset quality standards, materialsa) will need minimal arrival inspections

b) will still require full arrival inspectionsc) will be package in special approved containersd) do not have to be inspection upon arrivale) will be paid for at a premium cost

60. The purpose of the International Organization for Standardization is toa) Certify all suppliers worldwideb) Establish international quality standardsc) Spread European standards worldwided) Certify productse) Streamline documentation

61. ISO 9000 isa) An award for quality given annually by the U.S. Governmentb) An approach to quality management that was developed in Japan by Demingc) A set of international quality standards and a certification process for companiesd) An approach for managing self-directed teamse) An approach for product design

62. Which of the following is not necessary for receiving ISO 9000 certification?a) Products meet customer requirementsb) Documentation of methods used to monitor qualityc) Documentation of methods and frequency of worker trainingd) Documentation of statistical process control tools usede) An audit by an ISO 9000 examiner

63. Increases in international trade during the 1980s created a need for the development of ____________ standards of quality.a) universalb) country-specificc) lowerd) metrice) bilingual

64. What are the most widely used ISO standards?a) ISO 9000, ISO 9001, and ISO 9004b) ISO 9000, ISO 9001, and ISO 9002c) ISO 9000, ISO 9010, and ISO 9100d) ISO 9001, ISO 9002, and ISO 9003e) ISO 9000, ISO 9002, and ISO 9004

65. Who is the “grandfather of quality control?”a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Phillip Crosbye) Genichi Taguchi

66. Who developed quality control charts?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Phillip Crosbye) Genichi Taguchi

67. ISO 14000 is for evaluatinga) Automotive suppliersb) Minority suppliersc) Raw materialsd) A company’s environmental responsibilitye) Service suppliers

68. is often referred to as the father of quality control.a) W. Edwards Demingb) Joseph Juranc) Philip Crosbyd) Martin Mariettae) Count Pareto

69. Deming pointed out that 85% of quality problems are caused bya) Worker errorb) Numerical quotasc) Processes and systemsd) Carelessnesse) Suppliers

70. Deming believed that is the key to improving quality.a) Employee trainingb) Process designc) Properly functioning equipmentd) Having good supplierse) Improving the system

71. Who is famous for his “14 Points?”a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Armand Feigenbaume) Genichi Taguchi

72. For Juran’s quality trilogy, which part stresses that processes should be set up to ensure that the quality standards can be met?a) Quality planningb) Quality controlc) Quality improvementd) Quality certificatione) Quality awards

73. Juran stressed that quality improvement should be continuous as well asa) Uniqueb) Novelc) Retroactived) Breakthroughe) Ongoing

74. Which of the following is not attributed to Philip Crosby?a) The concept of the quality trilogyb) The phrase “Do it right the first time.”c) Stressed the idea of prevention of defects

d) The notion of zero defectse) The phrase “Quality is free.”

75. Who is best known for the development of cause-and-effect diagrams?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Kaoru Ishikawae) Genichi Taguchi

76. Who developed a formula for determining the cost of poor quality?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Kaoru Ishikawae) Genichi Taguchi

77. The most important factor in the success or failure of TQM efforts isa) Getting started quicklyb) The use of statistical process controlc) The genuineness of the organization’s commitmentd) The use of cause-and-effect diagramse) Employee training

78. Which of the following is a valid formula to compute the reliability of two components in parallel?a) (Reliability of 1st component) – (Reliability of 2nd Component)(1 – Reliability of 1st Component)b) 1 – (1 – Reliability of 1 st Component)(1 – Reliability of 2 nd Component) c) (1 – Reliability of 1st Component)(1 – Reliability of 2nd Component)d) (Reliability of 1st component) + (Reliability of 1st Component)(1 – Reliability of 2nd Component)e) (Reliability of 1st component)(Reliability of 2nd

Component) + (Reliability of 1st Component)(1 –Reliability of 1st Component)

79. Suppose that you have a system with one component and two backups. What is the formula for the reliability of the system?a) P(1st works) + [P(1st fails)][P(2nd works)] + [P(1st fails)][P(3rd works)]b) [P(1st works)][P(2nd works)][P(3rd works)]c) [P(1st works)] + [P(2nd works)] + [P(3rd works)]d) P(1st works) + [1 – P(1st fails)][P(2nd works)] + [1 – P(1st fails)][P(3rd works)]e) 1 – [P(1 st fails)][P(2 nd fails)][P(3 rd fails)]

80. One TQM mistake companies make is believing that the responsibility for quality and elimination of waste liesa) with the supplierb) with the return and repair shopc) with the supply chaind) with all employees but top managemente) with top management alone.

81. SPC isa) a direct substitute for continuous improvementb) a replacement of the teamwork conceptc) a substitute for middle managementd) a fully subjective processe) is not a substitute for continuous improvement

82. The decision to implement TQM will impact all of the following EXCEPTa) product designb) processesc) job designd) supply chain managemente) company product

83. TQM affects which of the followinga) marketingb) financec) accountingd) engineeringe) all of the above

True/False1. One common definition of quality is conformance to specifications, which focuses on measuring how well the product or service meets targets and tolerances determined by its designers. T2. The expected operational life of a product is called its reliability. F3. External failure costs tend to be particularly high for service organizations. T4. TQM is reactive, designed to build quality into the product and process design. F5. Quality at the source involves inspecting goods after they are produced. F6. It is not possible to develop a U shaped scatter diagram relationship. F7. A quality circle is a team of volunteer production employees and their supervisors who meet regularly to solve quality problems. T8. Quality planning, employee training in quality measurement, and cost of maintaining records of information and data related to quality, are appraisal costs. F9. Machine downtime due to failures in the process, scrap, and rework are examples of internal failure costs. T10. The later that defects are found, the less costly they are to correct. F11. A useful tool for translating customers’ everyday language into specific technical requirements is quality function deployment. T12. In using quality function deployment, conducting focus groups is one way to find out precisely what features customers want in the product. T13. In TQM the role of the employee is very similar to earlier requirements. F14. A control chart is a schematic diagram of the sequence of steps involved in an operation or process. F

15. Cause-and-effect diagrams are problem solving tools commonly used by quality control teams. T16. A checklist is a list of common defects and the relative importance of these defects. F17. Pareto analysis is a technique used to identify quality problems based on their degree of importance. T18. The Deming Prize is an American award given to companies to recognize their efforts in quality improvement. F19. ISO 9001 is the standard used for the certification of a firm’s quality management system. T20. ISO certification has become a requirement for conducting business in many industries. T21. W. Edwards Deming is often referred to as the father of quality control. T22. The concept of the quality trilogy is attributed to Philip Crosby. F23. A cause-and-effect diagram is also referred to as a Taguchi diagram. F24. Genichi Taguchi estimates that as much as 80 percent of all defective items are caused by poor product design. T25. The most important factor in the success or failure of TQM efforts is the genuineness of the organization’s commitment. T

Essay

1. Name six common definitions of quality in manufacturing.Ans: conformance, performance, reliability, features, durability, and serviceability

2. What are four dimensions of manufacturing quality?Ans: Conformance to specifications, performance, reliability, features, durability and serviceability

3. What are four dimensions of service quality?Ans: Intangible factors, consistency, responsiveness to customer needs, courtesy/friendliness, timeliness/promptness, atmosphere

4. What are the four types of quality costs?Ans: internal failure costs, external failure costs, appraisal costs, and prevention costs

5. What are the steps involved in quality function deployment?Ans: 1) identify important customer requirements; 2) the requirements are numerically scored, based on their importance; 3) the scores are translated into specific product characteristics; 4) evaluations are made of how the product compares with its main competitors relative to the identified characteristics; and 5) specific goals are set to address the identified problems;

6. What are the seven TQM tools for solving quality problems?Ans: cause-and-effect diagrams, flowcharts, checklists, control charts, scatter diagrams, Pareto analysis, and histograms

7. Explain why external failure costs tend to be very expensive for service organizations.Ans: With a service the customer spends much time in the service delivery system, and there are fewer opportunities to correct defects than there are in manufacturing.8. In using a cause-and-effect diagram, what are the primary possible causes of quality problems?Ans: machines, workers, measurements, suppliers, and materials

9. What are the seven categories for Malcolm Baldrige Award criteria?Ans: leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process

management, and business results

10. What must a company do to become ISO 9000 certified?Ans: document methods used to monitor quality, document methods and frequency of worker training, document statistical

process control tools used, provide job descriptions, document inspection programs, and have an audit by an ISO 9000 examiner

11. Who are the seven primary quality gurus?Ans: Walter Shewhart, W. Edwards Deming, Joseph Juran, Armand Feigenbaum, Phillip Crosby, Kaoru Ishikawa, and Genichi

Taguchi

12. Describe the foundation of Deming’s “14 Points.”Ans: Upper management must develop a commitment to quality, and provide a system to support this commitment. Deming

stressed that quality improvements cannot happen without organizational change that comes from upper management.

13. What are the common causes of TQM failure?Ans: lack of a genuine quality culture, lack of top management support and commitment, over-and under-reliance on statistical

process control (SPC) methods

Problems

1. Suppose that a product has three parts, each of which must work in order for the product to function. The reliabilities of the parts are .898, .933, and .946, respectively. What is the reliability of the product?Ans: 79.3% (RS = R1* R2* R3*…… Rn = .898 * .933 * .946 = .70259)

2. Suppose that a product has two parts, both of which must be working in order for the product to function. The reliability of the first part is .85, and the reliability of the second part is .82. In addition, the second part comes with a backup that is 50% reliable. What is the overall reliability of the product?Ans: 77.35% (RP =1 – [P(1st fails)][P(2nd fails)] = 1- .18*(.5) = .91 & RS = R1* R2* R3*…… Rn = .85 * .91 = .7735 or 77.35%)

3. As a design engineer you need to obtain 99.9% reliability. The first part has a reliability factor of 99.99%. What level of reliability does the series part require to achieve 99.9% overall reliability?

Ans: 99.91% (RS = R1* R2* R3*…… Rn ) 99.9% = 99.99%*x; x = 99.9%/99.99% = 99.91%

4. The design engineer in question #3 needs to improve the overall system reliability by adding another part in parallel to the unit calculated in question #3. The objective is to achieve an overall system reliability of 99.95%. What reliability must the parallel part have to meet this objective?

Ans:44,5% (RS = R1* R2* R3*…… Rn ) 99.9% = 99.99%*x; x = 99.95%/99.99% = 99.96RP =1 – [P(1st fails)][P(2nd fails)] 99.96 = 1-[.0009*x]; P(2nd fails)=(1-.99.96)/.0009 = 44,5%

Short Answer

1. TQM requires that external and internal customers receive ________________________ 2. TQM stresses the balanced use of non-quantitative (qualitative) and ________________________ tools in quality improvement.3. Redundant components are often used when product failure ________________________ 4. Quality Function Deployment (QFD) begins by ________________________ 5. Histograms report the ________________________ of a variable's observed values.6. Checklists are used to make sure all steps in a process are carried out and to ________________________ 7. Quality circles are a common application of the ________________________ 8. Products have little value if they do not ________________________ 9. Reliability is described as a ________________, __________________, or a ____________________________10. Philip Crosby believed that ________________________ because the cost of doing it right the first time is less than the cost of correcting mistakes later11. The old concept of quality involved ________________________ 12. The most important factor in the success or failure of TQM efforts is the _______________ of the organization’s ________________.

File: ch06, Chapter 6: Quality Control and Six Sigma

Multiple Choice

1. Which of the following is NOT associated with descriptive statistics?

a) meanb) standard deviationc) ranged) proportione) measure of the distribution of data

2. What technique determines whether a batch of goods should be accepted or rejected?

a) Statistical process controlb) Acceptance samplingc) Fishbone diagrammingd) Scatter plottinge) Experimental design

3. What technique answers the question of whether the process is functioning properly or not?

a) Fishbone diagrammingb) Acceptance samplingc) Statistical process controld) Scatter plottinge) Experimental design

4. Statistical process control tools are used most frequently because

a) they are mathematically basedb) they are helpful in measuring and

evaluating the quality of productsc) they are helpful in measuring and evaluating

the customers’ needsd) they are qualitative evaluation techniquese) they provide a definitive ROI calculation

5. Common causes of variation are also known as __________________________.a) frequent

b) usualc) inexpensived) ordinarye) random

6. The range is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

7. Variation in the production process leads to:a) quality defectsb) process improvement opportunitiesc) quality improvementsd) product consistencye) service improvements

8. The standard deviation is an example of what?

a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

9. A process chart is aa) graph that shows how the population was

evaluatedb) graph of the population failuresc) graph that shows whether a sample of data

falls within assignable causesd) graph that show whether a sample falls

within the common or normal rangee) table showing final inspection results

10. An x-bar chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

11. For the standard normal distribution, how much confidence is provided within 2 standard deviations above and below the mean?a) 97.22%b) 95.44%c) 99.74%d) 99.87%e) 90.00%

12. The A2 factor includes how many standard deviations of ranges?a) 1b) 2c) 3d) 4

e) 6

13. A p-chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

14. P-charts are used to measure:a) continuous variationb) intermittent random variationc) proportion of items in a sample that are

defectived) the count of defective partse) proportion of items in a sample that are

good

15. A c-chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

16. An OC curve is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

17. Causes of variation that can be identified and eliminated are called what?

a) Randomb) Assignablec) Identifiabled) Stochastice) Common

18. All processes will have what type of variation?

a) Randomb) Assignablec) Identifiabled) Stochastice) Common

19. What measures the central tendency of a set of data?

a) Coefficient of variationb) Variancec) Standard deviationd) Meane) Range

20. What measures the difference between the largest and smallest observations in a set of data?

a) Rangeb) Coefficient of variationc) Coefficient of kurtosisd) Coefficient of skewnesse) Standard deviation

21. What measures symmetry of a distribution?a) Rangeb) Skewnessc) Standard deviationd) Meane) Variance

22. Which of the following would imply that data observations are closely clustered around the mean?

a) Small range and small standard deviationb) Small range and large standard deviationc) Large range and small standard deviationd) Large range and large standard deviatione) Neither range nor standard deviation has

anything to do with “clustering.”23. What is a distribution called when the same number of observations are below the mean as are above the mean?b) Proportionalb) Equalizedc) Wholly Uniformd) Balancede) Symmetric

24. What are the four most common control charts?a) x-bar, R, p, cb) x-bar, R, p, OCc) x-bar, R, c, OCd) x-bar, p, c, OCe) R, p, c, OC

25. On a control chart, what separates common from assignable causes of variation?a) x-bar linesb) Control limitsc) Specification limitsd) Production limitse) Mean divided by standard deviation

26. The center line of a control chart represents what?a) Rangeb) Standard deviationc) Meand) Mean divided by standard deviatione) Skewness

27. What is the first step that should be taken if an observation falls below the lower control limit on a control chart?

a) Recalibrate the machineb) Perform a new process capability studyc) Try a larger standard deviation valued) Search for assignable causese) Nothing—a low value is a “good” thing

28. Upper and lower control limits are usually set at how many standard deviations from the mean?a) 0.5b) 1.0c) 2.0d) 3.0e) 6.0

29. Assuming that data exhibit a normal distribution, control limits set at 3 standard deviations from the mean capture how much common variation?a) 50.00%b) 80.00%c) 95.44%d) 99.74%e) 99.99%

30. What is the probability of a Type I error for a control chart with limits set at 3 standard deviations from the mean?a) 0.00%b) 0.26%c) 4.56%d) 20.00%e) 50.00%

31. What is the term for the probability that a value falling outside the control limits is still due to normal variation?a) Type I errorb) Type II errorc) Normalization anomalyd) Beta riske) Standard deviation irregularity

32. The different characteristics that can be measured by control charts can be divided into what two groups?a) Parameters and attributesb) Variables and attributesc) Variables and constraintsd) Variables and parameterse) Attributes and constraints

33. What is a control chart that monitors changes in the mean value of a process?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

34. What is a control chart that monitors changes in the dispersion or variability of a process?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

35. What is a control chart that monitors the proportion of defects in a sample?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

36. For which of the following would a control chart for attributes not be appropriate?a) Number of nonfunctioning light bulbsb) Proportion of broken eggs in a cartonc) Number of rotten applesd) Number of complaints issuede) Length of metal rods

37. What are the two types of control charts for attributes?a) p and cb) x-bar and pc) x-bar and Rd) R and ce) p and R

38. What are the two types of control charts for variables?a) p and cb) x-bar and pc) x-bar and Rd) R and ce) p and R

39. Consider a p-chart measuring the percentage of defective light bulbs. If the LCL is .04 and a sample has 1% defects, what is the implication?a) The process is in a state of control.b) The process is out of control even though the variation is “good.”c) The value of sigma must be increased.d) The process has too many errors.e) A calculation error must have occurred.

40. For a p-chart or c-chart, what is the implication of a negative value for the LCL?a) A calculation error must have occurred.b) The value of sigma must be reduced.c) The process has too many errors.d) The process is in a state of control.

e) The LCL can effectively be rounded up to 0.

41. What are preset ranges of acceptable quality characteristics?b) Control limits.b) Product specifications.c) Six-sigma limits.d) AQC limits.e) R-chart limits.

42. Product tolerances are often calleda) SPCb) Product drawingsc) Product descriptionsd) Process capabilitye) Product specifications

43. What process width is typically used when computing the process capability index Cp?a) 1b) 2c) 3d) 4e) 6

44. Setting up control charts to monitor whether a process is in control a) guarantees process capabilityb) guarantees process specificationsc) does not guarantee process capabilityd) does not guarantee product specificatione) guarantees meeting client needs

45. What is the formula for the process capability index Cp?a) process width / specification widthb) specification width process widthc) specification width / Type I errord) specification width / process widthe) specification width / 99.74%

46. What process capability index (Cp) value implies that the process “exceeds minimal capability?”a) 0b) < 1c) = 1d) > 1e) 6

47. A process capability index (Cp) value of 1 means that what percent of products produced will fall within the specification limits?a) 0.26%b) 90.00%c) 95.44%d) 99.74%e) 100.00%

48. According to the textbook, the way to reduce the ppm defective is toa) change product specificationsb) increase process capability c) increase the number of inspection points.d) employ more inspectors e) increase process throughput

49. What is the relationship between Cp and Cpk?a) Cp 2 Cpk

b) Cp Cpk

c) Cp Cpk

d) Cp 2Cpk

e) Cp Cpk 3

50. Which company is known for coining the term “six-sigma?”a) Ford Motor Companyb) Proctor and Gamblec) IBMd) Motorola Corporatione) Hewlett-Packard

51. Six-sigma quality implies how many average defects per million?a) 3.4b) 6c) 2600d) 3e) 6

52. What are the two aspects to implementing the six-sigma concept?a) numerically controlled machines and inventory managementb) numerically controlled machines and people involvementc) numerically controlled machines and technical toolsd) technical tools and people involvemente) inventory management and technical tools

53. In six-sigma programs, individuals who have extensive training in the use of technical tools and are responsible for carrying out the implementation of six sigma are ____________________.a) black beltsb) green beltsc) blue beltsd) red beltse) white belts

54. In six-sigma programs, individuals are given ____________________ titles that reflect their skills in the six-sigma process.a) Olympic medal b) academicc) martial arts

d) medieval joustinge) boxing

55. The Six Sigma approach is organized around a_____ plan known as ______.a) four step, PDACb) four step, DMACc) five step PDACRd) five step DMAICe) five step, DMCRA

56. The person that comes from the top ranks of the organization and is responsible for providing direction and overseeing all aspects of a six-sigma implementation process is called a ________________________.a) generalb) admiralc) directord) producere) champion

57. When should 100% inspection be used?a) Whenever attributes are being measuredb) When the expected cost of a defective item exceeds the cost of inspecting a unitc) With destructive testingd) When the cost of inspecting a unit exceeds the expected cost of a defective iteme) 100% inspection should never be used

58. What is a graph that shows the probability or chance of accepting a lot given various proportions of defects in the lot?a) S curveb) Z-chartc) OC curved) p-charte) R-chart

59. Single sampling plan is when a) a non-random sample is drawn from every lot.b) a random sample is drawn from every lot.c) a second lot is sampled due to the first sample inconclusive results.d) only one time is tested.e) a sample plan used once and discarded.

60. According to the text, generally consumers are willing to accept what percent of defects?a) 1-2%b) 2-3%c) 3-4%d) 4-5%e) 5-6%

61. Which of the following is the least important point to perform inspection?a) Incoming materialsb) Prior to costly processingc) Just after costly processingd) Prior to bottleneck (limited machine capacity) processinge) After the product is finished

62. What is the only service company to have won the Malcolm Baldrige National Quality Award twice?a) Marriottb) Nordstrom Department Storesc) Wal-Martd) Ritz-Carltone) Northwest Airlines

63. Suppose that you want to measure the percentage of candles that are cut longer than 9 inches. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

64. What is the upper control limit for a c-chart if the total defects found over 20 samples equals 150?a) 7.5b) 2.739c) 15.72d) 20e) 30

65. Suppose that Matt wants to use a process control chart to monitor the number of different types of mistakes that he makes when giving motivational speeches to student groups. Which control chart would be most appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

66. Suppose that you have calculated the control limits for a p-chart to be the following:

LCL = 0.02 and UCL = 0.08.Today you took 10 samples of 20 units each. The first nine samples each had one defect. The last sample had zero defects. What can you conclude?a) the process is out of controlb) the process is in a state of control

c) the last sample should be ignored because it was “too good”d) you calculated the limits incorrectly because the LCL must be either negative or 0e) the sample size must be increased

67. Suppose that you want to monitor the variability in ounces of a process that fills beer cans. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

68. What is the lower control limit for a c-chart if the average number of defects found over 320 samples is equal to 16?a) 6.584b) 4c) 20d) 0e) 12

69. Each day for two workweeks (10 days total), George weighs 4 bags from that day’s production. If the average of the means is 14 oz. and the average range is 0.4 oz., what is the lower control limit for an x-bar chart for this process?a) 13.7084 oz.b) 13.8768 oz.c) 14.2916 oz.d) 12.8000 oz.e) 13.5908 oz.

70. If the upper control limit for a c-chart is 28 and the lower control limit is 4, what is the average number of defects per sample?a) 16b) 12c) 5.29d) 7.29e) 471. Suppose that you want to monitor the average ounces of a process that fills beer cans. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

72. What is the upper control limit for a c-chart if the total defects found over 200 samples equals 32?a) 1.36

b) 13.75c) 0.56d) 25.00e) 48.97

73. Ritz-Carlton employees are empowered to spend up to how much money on the spot to correct any customer complaint?a) $25b) $50c) $100

d) $1000e) $2000

74. What program at Intel enforces the policy to make chips in the same way at all facilities?a) “make-same”b) “copy-exactly”c) “duplicate-same”d) “duplicate-exactly”e) “one-size-fits-all”

True/False

1 Descriptive statistics are used to describe quality characteristics and relationships. T2. Statistical quality control is a subset of statistical process control. F3. Acceptance sampling occurs after the product has been produced. T4. An important task in quality control is to find out the range of natural random variation in a process. T5. The standard deviation measures the difference between the largest and smallest observations in a set of data. F6. The range of a data set is always non-negative. T7. A small range and large standard deviation imply that data observations are closely clustered around the mean. F8. A skewed distribution implies that assignable causes of variation may be present. T9. A process that is in control has no variation. F10. A process can be considered in a state of control even if one observation is 1.75 standard deviations above the mean. T11. Upper and lower control limits are usually set at 6 standard deviations from the mean. F12. Increasing the number of standard deviations on which control chart limits are based will decrease the Type I error. T13. A variable is a product characteristic that has a discrete value and can be counted. F14. A control chart y-axis represents the quality characteristic that is being monitored. T15. The weight of a bag of sugar is an example of a variable. T16. The A2 factor includes two standard deviations of ranges. F17. Given a sample size of 2, the lower limit for the R-chart is 0. T18. A p-chart monitors the number of defects per unit. F19. Suppose that you have created control charts to measure the length of candles. The process is in a state of control if either the x-bar chart is in control or the R-chart is in control. F20. A p-chart is used when we can compute only the number of defects but not the total sample size. F21. Product specifications are preset, whereas control limits are computed after observing data. T22. Another way to construct the control limits for variables is to use the standard deviation as an estimate of variability of the process. F23. In six-sigma programs, individuals are given academic titles that reflect their skills in the six-sigma process. F24. The person that comes from the top ranks of the organization and is responsible for providing direction and overseeing all aspects of a six-sigma implementation process is called a general. F

Essay

1. What are the three broad categories of statistical quality control?Ans: traditional statistical tools, acceptance sampling, statistical process control

2. Define acceptance sampling.Ans: a technique that determines whether a batch of goods should be accepted or rejected

3. Define statistical process control.Ans: a technique that answers the question of whether the process is functioning properly or not

4. Define control limits.Ans: On a control chart, they separate common from assignable causes of variation.

5. Define attribute (as a product characteristic).Ans: a product characteristic that has a discrete value and can be counted

6. What is an R-chart?Ans: a control chart that monitors changes in the dispersion or variability of a process7. What is a p-chart?Ans: a control chart that monitors the proportion of defects in a sample

8. What is a c-chart?Ans: a control chart that monitors the number of defects per unit

9. Describe the two aspects to implementing the six-sigma concept.Ans: The first is the use of technical tools to identify and eliminate causes of quality problems. These tools include statistical quality control, cause-and-effect diagrams, flow charts, and Pareto analysis. In six-sigma programs the use of these tools is integrated throughout the entire organizational system. The second aspect is people involvement. In six-sigma all employees have the training to use technical tools and are responsible for rooting out quality problems. Employees are given martial arts titles that reflect their skills in the six-sigma process.

10. Describe the difference between black belts and green belts in a six-sigma implementation.Ans: Black belts are individuals who have extensive training in the use of technical tools and are responsible for carrying

out the implementation of six sigma. They are experienced individuals that oversee the measuring, analyzing, process controlling, and improving. They achieve this by acting as coaches, team leaders, and facilitators of the process of continuous improvement. Green belts, on the other hand, are individuals who have sufficient training in technical tools to serve on teams or on small individual projects.

11. Describe why service organizations have tended to lag manufacturing organization in the application of SQC.Ans: The primary reason is that statistical quality control requires measurement, and it is difficult to measure the quality of a service. Another issue that complicates quality control in service organizations is that the service is often consumed during the production process. The customer is often present during service delivery and there is little time to improve quality.

12. Describe how finance is associated with SQC.Ans: Finance is an integral part of the statistical quality control process because it is responsible for placing financial values on SQC efforts.

Problems

1. Mrs. Crabapple has a class with three students, and she has had four quizzes so far this semester. She has created control charts to determine if the variation in students’ scores from quiz to quiz is exhibiting only natural variation. Each of the quiz scores is shown below. The upper and lower control limits for the chart are 109.6 and 34.9, respectively. The upper and lower control limits for the R chart are 93.95 and 0, respectively.

Quiz Bart Lisa Nelson 1 75 100 50 2 62 82 72 3 90 90 90 4 60 86 10

Is the process in a state of control?Ans: Yes (X-Bar = ∑scores/n Bart = (75+62+90+60)/4 = 71.75; Lisa = (100+82+90+86)/4 = 89.5; Nelson = (50+72+90+10)/4= 55.5 all means fall within X-bar chart ranges: R-bar = ∑Upper – lower/N; Bart = 90 – 60 = 30; Lisa = 100 – 82 = 18; Nelson = 90-10 = 80; all individual ranges fall within the R-bar limits)

2. Twenty samples of n = 200 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows.

Number Number

Sample of Defects Sample of Defects 1 12 11 16 2 18 12 15 3 10 13 13 4 15 14 16 5 16 15 18 6 19 16 17 7 17 17 18 8 12 18 20 9 11 19 21 10 14 20 22

Management wants to develop a p-chart using 3-sigma limits. What are the control limits?

Ans: UCL = 0.137, (p-bar = ∑#defects/∑N = 12+18+10+15+16+19+17+12+11+14+16+15+13+16+18+1+18+20+21+22)/(20*200) = .08; σp=√[p-bar*(1-p-bar)]/n = √[.08*(1-.08)]/200 = .019UCL = p-bar + Z σp = .08 + 3 * .019 =0.137 LCL = 0.023, p-bar - Z σp = .08 - 3 * .019 = 0.0225)

3. Cans of soup are supposed to weigh exactly 16 oz. Inspectors want to develop process control charts. They take eight samples of five boxes and weigh them. They obtain the following data:

Sample Mean Range1 15.2 1.82 14.6 0.73 16.5 0.54 18.1 0.45 13.2 0.26 16.0 0.47 15.9 0.58 14.8 0.9

(a) What is the upper control limit for the x-bar chart?(b) What is the lower control limit for the x-bar chart?(c) What is the upper control limit for the R chart?(d) What is the lower control limit for the R chart?(e) Is the process in a state of control?

Ans: (a) 15.93, (x-double bar = ∑x-bar/N = (15.2+14.6+16.5+18.1+13.2+16.0+15.9+14.8)/8 = 15.5375; R-bar = ∑R/N = (1.8+0.7+0.5+0.4+0.2+0.4+0.5+0.9)/8 = 0.675; UCL = x-double bar + A2*R-bar = 15.5375 + .58*0.675 = 15.929) (b) 15.15, (LCL = x-double bar - A2*R-bar = 15.5375 + .58*.0675 = 15.146) (c) 1.42, (UCL = D4*R-bar = 2.11 * 0.675 = 1.424) (d) 0.00, (LCL = D3*R-bar = 0 * 0.675 = 0) (e) No

4. Inspectors want to develop process control charts to measure the weight of crates of wood. Data (in pounds) from three samples are:

Sample Crate 1 Crate 2 Crate 3 Crate 41 18 38 22 262 26 30 28 203 26 26 26 26

(a) What is the upper control limit for the R chart?(b) What is the lower control limit for the R chart?

(c) What is the upper control limit for the x-bar chart?(d) What is the lower control limit for the x-bar chart?(e) Is the process in a state of control? If not, why not?

Ans: (a) 20.56, R-bar = ∑R/N = (8 + 12 + 6 + 6)/4 = 8; UCL = D4*R-bar = 2.57 * 8 = 20.56) (b) 0.0, (LCL = D3*R-bar = 0 * 8 = 0) (c) 34.2, (x-double bar = ∑x-bar/N = (23.3+31.3+25.3+24)/4 = 26; UCL = x-double bar + A2*R-bar = 26 + 1.02 * 8 = 34.16 (d) 17.8, (LCL = x-double bar - A2*R-bar = 26 – 1.02 * 8 = 17.84 (e) Yes

5. Eight samples of n = 50 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows.

Number of

Sample Defects1 102 03 124 85 106 167 148 10

(a) Management wants to develop a p-chart. What are the control limits?(b) Is the process in a state of control?

Ans: (a) LCL = 0.0302, (p-bar = ∑total defects/ ∑total observations = (10+0+12+8+10+16+14+10)/(8*50) = .2; σp = √[p-bar*(1-p-bar)]/n = √[.2*(1-.2)]/50 = .0566; LCL = p-bar -Z * σp = 0.2 - 3*0.0566 = .0302) UCL = 0.3698, (UCL = p-bar +Z * σp = 0.2 + 3*0.0566 = .0.3698) (b) No (Sample 2)

6. Suppose a process has been monitored daily for the last ten days and the number of machine failures each day was noted. The results follow:

Day Number: 1 2 3 4 5 6 7 8 9 10Number of Failures: 8 9 6 10 12 4 9 11 9 12

Compute control limits for a c-chart that monitors the average number of machine failures per day. Is the process in a state of control?

Ans: UCL = 18, (Ċ= ∑failures/#observations = (8+9+6+10+12+4+9+11+9+12)/10 = 9; UCL = Ċ + Z√Ċ = 9 + 3* √9 = 18) LCL = 0, (LCL = Ċ - Z√Ċ = 9 - 3* √9 = 0) Yes, the process is in control

7. If the average range is 4.0 inches and the sample size is 18, compute the upper and lower limits for an R chart.

Ans: UCL = 6.44, (UCL = D4 * R-bar = 1.61 * 4 = 6.44) LCL = 1.56(LCL = D3 * R-bar = 0.39 * 4 = 1.56)Section Ref: Control Charts for VariablesLevel: moderate

8. Cholesterol Palace is a fast-food restaurant. Management was concerned with errors in filling orders at its drive-up window. It hired several undercover quality inspectors to randomly place 100 orders while the process

seemed to be in control. The completed orders were then checked for accuracy. The following table shows the results of the survey:

Defect Frequency Incomplete, shorted order 12Unordered items dispensed 2Wrong product dispensed 14Wrong toppings 14Wrong size drink 2Drink lid not sealed 17No drinking straw with soft drink order 0No napkins 18Far too many condiment packets 65No salt with sandwich or fries order 10Wrong change 3Other 12

(a) Use these data to estimate the average number of defects per order and determine the three-sigma control limits for a c-chart. (b) A quality inspector just used the drive-up window and now checks her order. Her cheeseburger has mustard on it although she ordered it without ketchup or mustard. Three handfuls of ketchup and mustard packets are in the sack, but no napkins. And hot coffee has spilled because the lid wasn’t properly sealed. Is the drive-up process in control?

Ans: (a) average defects per order = 1.69, (Ċ= ∑failures/#observations = (12+2+14+14+2+17+0+18+65+10+3+12)/100 = 1.69) UCL = 5.59, (UCL = Ċ + Z√Ċ = 1.69 + 3* √1.69 = 5.59) LCL = 2.21 (or 0), (LCL = Ċ - Z√Ċ = 1.69 - 3* √1.69 = -2.21) (b) Yes, the process is in control, despite producing an order with four glaring errors

9. Johnson Enterprises sells no-spill syrup in bottles. Management is evaluating four different machines with standard deviations of .006, .01, .022, and .04 ounces for Machines A, B, C, and D, respectively. The specification limits 11.95 and 12.05 ounces. Which machines should receive more detailed evaluation, i.e. which are statistically “capable?” Ans: A and B ( CP = (USL – LSL)/6σ; Machine A = (12.05 - 11.95)/6*0.006 = 2.78; Machine B =(12.05 - 11.95)/6*0.01 = 1.67; Machine C = (12.05 - 11.95)/6*0.022 = 0.7575; Machine D = (12.05 - 11.95)/6*0.04 = 0.417)

10. Julia has been assigned to develop a new product design specifications. Manufacturing has stated that the system must have a capability index of 1.2 when the product standard deviation is 1.3. What is the specification range limits?

Ans: 9.36 CP = (USL – LSL)/6σ; (USL-LSL) = CP * 6σ = 1.2*6*1.3 = 9.3611. Compute the Cpk measure of process capability for the following machine and interpret the findings. What value would you have obtained with the Cp measure?

Upper spec limit = 100 feetLower spec limit = 99.5 feetProcess = 99.8 feetProcess = .08 feet

Ans: Cpk = 0 .83 so the process is not capable, (CPK = min [(USL – μ)/3σ; (μ - LSL)/3σ]; [(100-99.8)/3*.08 = 0.833; (99.8 – 99.5)/3*.08= 1.25) Cp = 1.04, implying a capable process (CP = (USL – LSL)/6σ = (100 – 99.5)/(6*.08) = 1.04)

12. Joel’s fresh flower processing plant processes 2000 flowers in a lot. For quality control they use a sample size of 10 flowers. Joel has established a probability of accepting a given lot as 99.74% with a proportion of defective items, in a lot, of .05. What is the AOQ?

Ans: 4.96% AOQ = (Pac)p[(N-n)/N] = .9974*.05*[(2000-10)/2000] = .0496

Short Answer

1. What is the formula for the sample standard deviation? ________________________ 2. What is the formula for the sample standard deviation of a variable measured as a fraction or probability? ________________________ 3. What is the formula for an x-bar chart's control limits? ________________________ 4. What is the formula for an x-bar chart's center line? ________________________ 5. What is the formula for an R chart's center line? ________________________ 6. What is the formula for the basic capability index? ________________________ 7. Six sigma programs strive to set control limits at ________________________ 8. Consumers willingly accept defects if ________________________ 9. The probability of shipping a lot or batch of products whose proportion of defective items is greater than LTPD is called consumer's risk because ________________________ 10. The probability of rejecting a lot or batch of products whose proportion of defective items is not greater than AQL is called producer's risk because ________________________ 11. The computed AOQ provides a sense of the _____ _____ ____ of the product12. Two areas of operations management that are particularly affected by the decision to increase the level of quality and reduce the number of product defects are ____ and ___