Product and Operations Management Exam 1

Operations management refers to the direction and controls of inputs that transform processes into products and services

True

Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an organization, they are all linked together through

Processes

A process involves transforming inputs into outputs

True

Every process has a customer

True

At the level of the firm, service providers offer just services and manufacturers offer just products

False

Manufacturing processes tend to be capital intensive

True

Operations management is part of a production system that can be described as

Inputs → Processes → Outputs

Example of a production system

Furniture manufacturer: wood → sanding → chair

A set of activities that delivers value to external customers is called a

Core process

The process that facilitates the placement of orders and builds relationships with external customers is the

Customer relationship process

Productivity is a measure of how much input can be generated for a given level of output

False

The COVID-19 pandemic led to a shortage of workers, challenging operations

True

Since productivity improvements require more resources, they negatively affect sustainability

False

Labor productivity in a furniture factory assembling 600 chairs with 10 employees in 5 days

12 chairs per work per day

Actions that increase productivity

Decreased labor time and/or increase output per labor hour

Industry 5.0 is more machine-centric than Industry 4.0

False

The Internet of Things affects operations and supply chain management only in a minor way

False

False statement about “big data”

Operations managers don’t need to be involved

Using sensor data to detect deteriorating machine parts before failure is

Preventive maintenance

Interconnected objects such as sensors that exchange data over a network are

Grid technology networks

Understanding operations management concepts helps managers in any area of business

True

Managing supply chains does not involve processes external to the firm

False

Only the operations function designs and operates processes in the supply chain

False

Forecasting, inventory management, and resource planning relate to

Managing customer demand

Eliminating non–value-adding activities and improving valuable ones is part of

Managing processes

Operations managers are involved at both the strategic and tactical levels

True

The break-even quantity is the volume at which variable cost equals fixed cost

False

The variable cost is the portion of total cost that varies directly with output

True

Fixed cost is the portion of total cost that remains constant regardless of output

True

Sensitivity analysis systematically changes parameters to determine effects

True

Break-even analysis assumes the cost function is linear and equals fixed + (variable × volume)

True

A preference matrix allows managers to rate alternatives by multiple criteria

True

Preference matrix can only be used with qualitative factors

False

A payoff table shows a random payoff distribution

False

Maximin is a decision rule for the optimist

False

Choosing the alternative that is the “best of the best” is

Maximax

Choosing the alternative that minimizes lost-opportunity costs is

Minimax regret

Decision trees are typically used under uncertainty

False

In decision trees, probabilities for all branches from a chance node must sum to

1.0

Decision trees are typically used for decision making under

Risk

Drop shipping means manufacturers and distributors ship products directly to customers

True

Reduced demand for imports has spurred the need for global strategies

False

A firm’s core competencies reflect its collective learning and process coordination

True

South Korean firms keep hiking shoe production at home due to

Absence of high-skilled labor

Which element of a firm’s core competency is particularly important in service organizations, where customers come in direct contact with employees?

Workforce

The Gap, Inc. has targeted teenagers and young adults in need of casual clothes, and through its GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example of:

Market segmentation

Competitive priorities are the means by which operations implements the firm’s corporate strategies

False

A firm once made purchasing decisions based on which supplier had the lowestcost, But once cash flow was healthy, purchasing decisions were made based on the fastest delivery of goods and services by firms. In this case, delivery speed is clearly the order qualifier.

False

Using an airline example for competitive priorities, the process capability of handling service needs of all market segments and promotional programs would be best described by:

Variety

A business focusing on increasing the efficiency of its operations is more directly addressing:

Low-cost

A popular haberdashery could take a customer’s measurements in the afternoon and produce a fandy suit ready for customer pickup by the next morning. Their competitive priority was:

Delivery speed

For students not wanting a traditional major in marketing or accounting, for example, the college decided to create a general business major, which allowed any combination of the easiest business courses to comprise the program. The competitive priority achieved in this example is:

Customization

The ability of car dealerships to offer customers assistance in product selection, delivery, financing, and warranty repairs are elements of the service category related to new product development strategy

True

Concurrent engineering helps firms avoid the costly mismatch between the design of a new offering and the capability of the processes required to produce it

True

Quality Function Deployment (QFD) is a means of translating customer requirements into the appropriate technical requirements for each stage of product development and production

True

The ability of car dealerships to offer customers assistance in product selection, delivery, financing, and warranty repairs, are elements of which category related to new product development strategy?

Service

What is the tool that is used as a means of translating customer requirements into the appropriate technical requirements for each stage of product development and production called?

Quality Function Deployment

The question that asks “what technical measures relate to our customer needs?” in the house of quality chart relates directly to which component of this chart?

Voice of engineer

The product development team ensures compatibility of the proposed product with corporate strategy and regulatory standards in the:

Analysis stage

Competitive capability is the measure ability of a process or supply chain to achieve its assigned competitive priorities

True

A business focusing on increasing the efficiency of its operations is more directly addressing delivery speed

False

For a bank’s credit card division billing and payments process, producing bills consistently, making sure merchants are paid quickly for the credit card purchases would most directly relate to which competitive priority?

Delivery speed

For a bank’s credit card division billy and payments process, attaining efficiency in the processing of the bills would most directly relate to which competitive priority?

Low-cost operations

For a bank’s credit card division billing and payments process, producing bills consistently, making payments to merchants, and recording payments from the credit card holders accurately would most directly relate to which competitive priority?

Consistent quality

Process decisions are strategic in nature

True

All parts of an organization, as well as external suppliers and customers across the supply chain, need to be involved to ensure that processes are providing the most balue to their internal and external customers

True

Processes, by their nature, are found only in the operations function of an organization

False

Service providers with a line process tend to move customers, materials, or information in a fixed sequence from one operation to the next

True

Back office work is typically routine, with many steps having considerable divergence

False

An interior designer decorates homes for a clientele that wants a one-of-a-kind living space. This service process can be described as:

Divergent

Front offices typically emphasize:

Top quality and customization

A continuous flow process is characterized by a high degree of job customization

False

Line processes generally have lower volumes as compared to job processes

False

The product-process matrix brings together the elements of volume, process, and quality

False

A make-to-order strategy produces products to customer specification in large volumes

False

Which of the following is sometimes called mass production?

Line process and make-to-stock strategy

The product-process matrix used to analyze manufacturing operations brings together the elements of:

Customization, volume, and process

 Fixed automation is appropriate for both line and continuous flow operations

True

 Capital intensive automation is best suited for low volume operations

False

Economies of scope reflect the fact that it is more expensive to produce multiple products in combination than separately

False

Which of the following statements about customer involvement is best?

High task divergence and flexible process flows require more flexibility of the process’s employees, facilities, and equipment

Back offices generally emphasize low cost operation and consistent quality

True

When volume is higher, automation and capital intensity are more likely

True

A firm that chooses to compete based on delivery speed and variety would most likely have:

An assemble-to-order production and inventory strategy

Process improvement is the fundamental rethinking and radical redesign of processes to improve performance dramatically

False

More often than not, process improvement takes place whether or not a process is reegineered

True

 “Improve” is the last step in the Six Sigma Process Improvement Model

False

Process improvement teams that focus on processes that cut across departmental boundaries have the silo mentality

False

A team consisting of members from each functional area affected by the process change is referred to as a(n)

Cross-functional team

Which of the following is not a step in the Six Sigma Process Improvement Model?

Reengineer

A systematic approach to process analysis includes the step:

Define scope

Swim lane flowcharts are most appropriate to depict the process within a single department of an organization

False 

 A service blueprint is a flowchart of a service process that shows which of its steps has high customer contact

True

Time estimates for different steps in a process are useful for capacity planning and scheduling purposes

True

Data from work sampling estimates can be used to assess a process’s productivity and spot areas for process improvement

True

A learning curve is a lie showing the relationship between processing time and the cumulative quantity of a product or service produced

True

The general principle that 20% of a company’s complaints come from 80% of their customers is known as the Pareto concept

False

A scatter diagram is a graphical technique that shows whether two variables may be related

True

A fishbone diagram identifies which category is most frequently observed out of all the categories for which you have data

False

A flowchart traces the flow of all except the following

Safety regulations through a process