Test bank for heizer operations management 9e, Exam questions for Production and Operations Management. George Mason University (VA)
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Test bank for heizer operations management 9e, Exam questions for Production and Operations Management. George Mason University (VA)

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Microsoft Word - Ch01

1

CHAPTER 1: OPERATIONS AND PRODUCTIVITY

TRUE/FALSE 1. Some of the operations-related activities of Hard Rock Café include designing meals and analyzing

them for ingredient cost and labor requirements. True (Global company profile, easy)

2. The production process at Hard Rock Café is limited to meal preparation and serving customers. False (Global company profile, easy)

3. All organizations, including service firms such as banks and hospitals, have a production function.

True (What is operations management? moderate) 4. Operations management is the set of activities that create value in the form of goods and services

by transforming inputs into outputs. True (What is operations management? easy)

5. An example of a "hidden" production function is money transfers at banks. True (What is operations management? moderate)

6. One reason to study operations management is to learn how people organize themselves for productive enterprise. True (Why study OM, easy)

7. The operations manager performs the management activities of planning, organizing, staffing,

leading, and controlling of the OM function. True (What operations managers do, easy)

8. "How much inventory of this item should we have?" is within the critical decision area of

managing quality. False (What operations managers do, easy)

9. In order to have a career in operations management, one must have a degree in statistics or

quantitative methods. False (What operations managers do, easy) 10. Henry Ford is known as the Father of Scientific Management.

False (The heritage of operations management, easy) 11. Shewhart’s contributions to operations management came during the Scientific Management Era.

False (The heritage of operations management, easy)

12. Students wanting to pursue a career in operations management will find multidisciplinary knowledge beneficial. True (Where are the OM jobs? easy)

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13. Customer interaction is often high for manufacturing processes, but low for services. False (Operations in the service sector, moderate)

14. Productivity is more difficult to improve in the service sector.

True (The productivity challenge, moderate) 15. Manufacturing now constitutes the largest economic sector in postindustrial societies.

False (Operations in the service sector, moderate) 16. In the past half-century, the number of people employed in manufacturing has more or less held

steady, but each manufacturing employee is manufacturing about 20 times as much. True (Operations in the service sector, easy)

17. A knowledge society is one that has migrated from work based on knowledge to one based on manual work. False (The productivity challenge, easy)

18. Productivity is the total value of all inputs to the transformation process divided by the total value

of the outputs produced. False (The productivity challenge, easy)

19. Measuring the impact of a capital acquisition on productivity is an example of multi-factor

productivity. False (The productivity challenge, moderate)

20. Ethical and social dilemmas arise because stakeholders of a business have conflicting perspectives. True (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning}

MULTIPLE CHOICE 21. At Hard Rock Café, tasks that reflect operations or operations management include a. designing meals b. testing meals (recipes) c. analyzing meals for the cost of ingredients d. preparing employee schedules e. all of the above e (Global company profile, easy) 22. An operations task performed at Hard Rock Café is

a. borrowing funds to build a new restaurant b. advertising changes in the restaurant menu c. calculating restaurant profit and loss d. preparing employee schedules e. all of the above d (Global company profile, moderate)

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23. Operations management is applicable a. mostly to the service sector b. to services exclusively c. mostly to the manufacturing sector d. to all firms, whether manufacturing and service e. to the manufacturing sector exclusively d (What is operations management? moderate) 24. Which of the following are the primary functions of all organizations? a. operations, marketing, and human resources b. marketing, human resources, and finance/accounting c. sales, quality control, and operations d. marketing, operations, and finance/accounting e. research and development, finance/accounting, and purchasing d (Organizing to produce goods and services, moderate) 25. Budgeting, paying the bills, and collection of funds are activities associated with the a. management function b. control function c. finance/accounting function d. production/operations function e. staffing function c (Organizing to produce goods and services, moderate) 26. Which of the following would not be an operations function in a fast-food restaurant? a. advertising and promotion b. designing the layout of the facility c. maintaining equipment d. making hamburgers and fries e. purchasing ingredients a (Organizing to produce goods and services, moderate) 27. The marketing function's main concern is with a. producing goods or providing services b. procuring materials, supplies, and equipment c. building and maintaining a positive image d. generating the demand for the organization's products or services e. securing monetary resources d (Organizing to produce goods and services, moderate) 28. Reasons to study Operations Management include a. studying why people organize themselves for free enterprise b. knowing how goods and services are consumed c. understanding what human resource managers do d. learning about a costly part of the enterprise e. all of the above d (Why study OM? moderate)

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29. Reasons to study Operations Management include learning about a. why people organize themselves for productive enterprise b. how goods and services are produced c. what operations managers do d. a costly part of the enterprise e. all of the above e (Why study OM? easy) 30. The five elements in the management process are a. plan, direct, update, lead, and supervise b. accounting/finance, marketing, operations, and management c. organize, plan, control, staff, and manage d. plan, organize, staff, lead, and control e. plan, lead, organize, manage, and control d (What do operations managers do? easy) 31. Illiteracy and poor diets have been known to cost countries up to what percent of their

productivity? a. 2% b. 5% c. 10% d. 20% e. 50% d (Productivity variables, moderate) {AACSB: Multiculture and Diversity} 32. Which of the following is not an element of the management process? a. controlling b. leading c. planning d. pricing e. staffing d (What do operations managers do? easy) 33. An operations manager is not likely to be involved in a. the design of goods and services to satisfy customers' wants and needs b. the quality of goods and services to satisfy customers' wants and needs c. the identification of customers' wants and needs d. work scheduling to meet the due dates promised to customers e. maintenance schedules c (What do operations managers do? easy) 34. All of the following decisions fall within the scope of operations management except for a. financial analysis b. design of goods and processes c. location of facilities d. managing quality e. All of the above fall within the scope of operations management. a (What do operations managers do? easy)

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35. The Ten Critical Decisions of Operations Management include a. Layout strategy b. Maintenance c. Process and capacity design d. Managing quality e. all of the above e (Why study OM? easy) 36. Which of the following is not one of The Ten Critical Decisions of Operations Management? a. Layout strategy b. Maintenance c. Process and capacity design d. Mass customization e. Supply chain management d (Why study OM? moderate) 37. The Ten Critical Decisions of Operations Management include a. Finance/accounting b. Advertising c. Process and capacity design d. Pricing e. all of the above c (Why study OM? moderate) 38. Walter Shewhart is listed among the important people of operations management because of his

contributions to a. assembly line production b. measuring the productivity in the service sector c. just-in-time inventory methods d. statistical quality control e. all of the above d (The heritage of operations management, moderate) 39. Walter Shewhart, in the _____, provided the foundations for ______ in operations management. a. 1920s; statistical sampling b. United Kingdom; mass production c. U.S. Army; logistics d. nineteenth century; interchangeable parts e. none of the above a ( The heritage of operations management, moderate) 40. Eli Whitney, in the _____, provided the foundations for ______ in operations management. a. 1920s; statistical sampling b. United Kingdom; mass production c. U.S. Army; logistics d. nineteenth century; interchangeable parts e. none of the above d (The heritage of operations management, moderate)

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41. The person most responsible for popularizing interchangeable parts in manufacturing was a. Frederick Winslow Taylor b. Henry Ford c. Eli Whitney d. Whitney Houston e. Lillian Gilbreth c (The heritage of operations management, moderate) 42. The "Father of Scientific Management" is a. Henry Ford b. Frederick W. Taylor c. W. Edwards Deming d. Frank Gilbreth e. just a figure of speech, not a reference to a person b (The heritage of operations management, easy) 43. Henry Ford is noted for his contributions to a. standardization of parts b. statistical quality control c. assembly line operations d. scientific management e. time and motion studies c (The heritage of operations management, easy) 44. Who among the following is associated with contributions to quality control in operations

management? a. Charles Babbage b. Henry Ford c. Frank Gilbreth d. W. Edwards Deming e. Henri Fayol d (The heritage of operations management, moderate) 45. The field of operations management is shaped by advances in which of the following fields? a. chemistry and physics b. industrial engineering and management science c. biology and anatomy d. information technology e. all of the above e (The heritage of operations management, moderate) 46. Which of the following statements is true? a. Almost all services and almost all goods are a mixture of a service and a tangible product. b. A pure good has no tangible product component. c. A pure service has only a tangible product component. d. There is no such thing as a pure good. e. None of the above is a true statement. a (Operations in the service sector, difficult)

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47. Which of the following statements is true? a. The person most responsible for initiating use of interchangeable parts in manufacturing was

Eli Whitney. b. The origins of management by exception are generally credited to Frederick W. Taylor. c. The person most responsible for initiating use of interchangeable parts in manufacturing was

Walter Shewhart. d. The origins of the scientific management movement are generally credited to Henry Ford. e. The person most responsible for initiating use of interchangeable parts in manufacturing was

Henry Ford. a (The heritage of operations management, moderate) 48. The service industry makes up approximately what percentage of all jobs in the United States? a. 12% b. 40% c. 66% d. 79% e. 90% d (Operations in the service sector, moderate) 49. Typical differences between goods and services do not include a. cost per unit b. ability to inventory items c. timing of production and consumption d. customer interaction e. knowledge content a (Operations in the service sector, moderate) 50. Which is not true regarding differences between goods and services? a. Services are generally produced and consumed simultaneously; tangible goods are not. b. Services tend to be more knowledge-based than products. c. Services tend to have a more inconsistent product definition than goods. d. Goods tend to have higher customer interaction than services. e. None of the above is true. d (Operations in the service sector, moderate) 51. Which of the following is not a typical attribute of goods? a. output can be inventoried b. often easy to automate c. aspects of quality difficult to measure d. output can be resold e. production and consumption are separate c (Operations in the service sector, moderate)

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52. Which of the following services is least likely to be unique, i.e., customized to a particular individual's needs?

a. dental care b. hairdressing c. legal services d. elementary education e. computer consulting d (Operations in the service sector, moderate) 53. Which of the following is not a typical service attribute? a. intangible product b. easy to store c. customer interaction is high d. simultaneous production and consumption e. difficult to resell b (Operations in the service sector, moderate) 54. Which of the following statements concerning growth of services is true? a. Services now constitute the largest economic sector in postindustrial societies. b. The number of people employed in manufacturing has more or less held steady since 1950. c. Each manufacturing employee now produces about 20 times more than in 1950 d. All of the above are true. e. None of the above is true. d (Operations in the service sector, moderate) 55. Current trends in operations management include all of the following except a. just-in-time performance b. rapid product development c. mass customization d. empowered employees e. All of the above are current trends. e (Exciting new trends in operations management, moderate) 56. Which of the following is not a current trend in operations management? a. just-in-time performance b. global focus c. supply chain partnering d. mass customization e. All of the above are current trends. e (Exciting new trends in operations management, moderate) 57. One new trend in operations management is a. global focus b. mass customization c. empowered employees d. rapid product development e. All of the above are new trends in operations management. e (Exciting new trends in operations management, moderate)

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58. Which of the following statements about trends in operations management is false? a. Job specialization is giving way to empowered employees. b. Local or national focus is giving way to global focus. c. Environmentally-sensitive production is giving way to low-cost focus. d. Rapid product development is partly the result of shorter product cycles. e. All of the above statements are true. c (Exciting new trends in operations management, moderate) 59. A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in

a 10-hour shift, the productivity of the line is a. 1.2 covers/hr b. 2 covers/hr c. 12 covers/hr d. 1200 covers/hr e. none of the above c (The productivity challenge, easy) {AACSB: Analytic Skills} 60. A foundry produces circular utility access hatches (manhole covers). Currently, 120 covers are

produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be a. 14.4 covers/hr b. 24 covers/hr c. 240 valves/hr d. 1200 covers/hr e. none of the above a (The productivity challenge, moderate) {AACSB: Analytic Skills} 61. Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves are produced in an

8-hour shift, the productivity of the line is a. 2 valves/hr b. 40 valves/hr c. 80 valves/hr d. 200 valves/hr e. 1600 valves/hr d (The productivity challenge, easy) {AACSB: Analytic Skills} 62. Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves

each 8-hour shift. If the productivity is increased by 10%, it would then be a. 180 valves/hr b. 200 valves/hr c. 220 valves/hr d. 880 valves/hr e. 1760 valves/hr c (The productivity challenge, moderate) {AACSB: Analytic Skills}

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63. Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves per shift. If the production is increased to 2000 valves per shift, labor productivity will increase by

a. 10% b. 20% c. 25% d. 40% e. 50% c (The productivity challenge, moderate) {AACSB: Analytic Skills} 64. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. What is the

productivity of the plant? a. 25 boxes/hr b. 50 boxes/hr c. 5000 boxes/hr d. none of the above e. not enough data to determine productivity a (The productivity challenge, moderate) {AACSB: Analytic Skills} 65. The Dulac Box plant works two 8-hour shifts each day. In the past, 500 cypress packing boxes

were produced by the end of each day. The use of new technology has enabled them to increase productivity by 30%. Productivity is now approximately

a. 32.5 boxes/hr b. 40.6 boxes/hr c. 62.5 boxes/hr d. 81.25 boxes/hr e. 300 boxes/hr b (The productivity challenge, moderate) {AACSB: Analytic Skills} 66. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Due to higher

demand, they have decided to operate three 8-hour shifts instead. They are now able to produce 600 boxes per day. What has happened to production?

a. It has increased by 50 sets/shift. b. It has increased by 37.5 sets/hr. c. It has increased by 20%. d. It has decreased by 8.3%. e. It has decreased by 9.1%. c (The productivity challenge, moderate) {AACSB: Analytic Skills} 67. Productivity measurement is complicated by a. the competition's output b. the fact that precise units of measure are often unavailable c. stable quality d. the workforce size e. the type of equipment used b (The productivity challenge, moderate)

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68. The total of all outputs produced by the transformation process divided by the total of the inputs is a. utilization b. greater in manufacturing than in services c. defined only for manufacturing firms d. multifactor productivity e. none of the above d (The productivity challenge, moderate) 69. Which of the following inputs has the greatest potential to increase productivity? a. labor b. globalization c. management d. capital e. none of the above c (The productivity challenge, moderate) 70. Productivity can be improved by a. increasing inputs while holding outputs steady b. decreasing outputs while holding inputs steady c. increasing inputs and outputs in the same proportion d. decreasing inputs while holding outputs steady e. none of the above d (The productivity challenge, moderate) 71. The largest contributor to productivity increases is ________, estimated to be responsible for

_____ of the annual increase. a. management; over one-half b. Mr. Deming; one-half c. labor; two-thirds d. capital; 90% e. technology; over one-half a (The productivity challenge, moderate) 72. The factor responsible for the largest portion of productivity increase in the U.S. is a. labor b. management c. capital d. all three combined; it is impossible to determine the contribution of individual factors e. none of these; most productivity increases come from investment spending b (The productivity challenge, moderate) 73. Which of the following is not true when explaining why productivity tends to be lower in the

service sector than in the manufacturing sector? a. Services are typically labor-intensive. b. Services are often difficult to evaluate for quality. c. Services are often an intellectual task performed by professionals. d. Services are difficult to automate. e. Service operations are typically capital intensive. e (The productivity challenge, moderate)

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74. Three commonly used productivity variables are a. quality, external elements, and precise units of measure b. labor, capital, and management c. technology, raw materials, and labor d. education, diet, and social overhead e. quality, efficiency, and low cost b (The productivity challenge, moderate) 75. The service sector has lower productivity improvements than the manufacturing sector because a. the service sector uses less skilled labor than manufacturing b. the quality of output is lower in services than manufacturing c. services usually are labor-intensive d. service sector productivity is hard to measure e. none of the above c (The productivity challenge, moderate) 76. Productivity tends to be more difficult to improve in the service sector because the work is a. often difficult to automate b. typically labor-intensive c. frequently processed individually d. often an intellectual task performed by professionals e. all of the above e (The productivity challenge, moderate) 77. Among the ethical and social challenges facing operations managers are a. honoring community commitments b. maintaining a clean environment c. efficiently developing and producing safe quality products d. providing a safe workplace e. all of the above e (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning} 78. Among the ethical and social challenges facing operations managers are a. honoring financial commitments b. maintaining a clean environment c. developing low-cost products d. providing an efficient workplace e. all of the above b (Ethics and social responsibility, moderate) {AACSB: Ethical Reasoning} 79. Which of the following is not among the ethical and social challenges facing operations managers? a. honoring community commitments b. maintaining a clean environment c. efficiently developing and producing safe quality products d. increasing executive pay e. providing a safe workplace d (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning}

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80. A business’s stakeholders, whose conflicting perspectives cause ethical and social dilemmas, include

a. lenders b. suppliers c. owners d. employees e. all of the above e (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning}

FILL-IN-THE-BLANK 81. Starbuck’s stopped requiring signatures on credit-card purchases under $25 in an attempt to reduce

_____________________________ . transaction time (or service time) (The productivity challenge, easy)

82. _____________________________ is the set of activities that transforms inputs into goods and

services. Operations management (What is operations management? easy) 83. Marketing, Production, and _____________________________ are the three functions that all

organizations must perform to create goods and services. finance/accounting (Organizing to produce goods and services, easy)

84. "Should we make or buy this component?" is an issue in the _____________________________

critical decision area. supply chain management (What operations managers do, easy)

85. Henry Ford and _____________________________ are credited with the development of the

moving assembly line. Charles Sorensen (The heritage of operations management, easy)

86. When a tangible product is not included in a service, it is called a

_____________________________. pure service (Operations in the service sector, easy)

87. _____________________________ is the ability of the organization to be flexible enough to cater

to the individual whims of consumers. Mass customization (Exciting new trends in operations management, moderate) 88. _____________________________ is the operations management trend that moves more decision

making to the individual worker. Empowered employees (Exciting new trends in operations management, moderate) 89. ____________________________ is the total of all outputs produced by the transformation

process divided by the total of the inputs. Multifactor productivity (The productivity challenge, easy)

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90. Productivity is the ratio of ____________ to _________. Using this relationship, productivity can be improved by ______________________ or _________________________. inputs, outputs; reducing inputs while holding outputs constant; increasing outputs while holding inputs constant. (The productivity challenge, moderate)

SHORT ANSWER 91. Identify three or more operations-related tasks carried out by Hard Rock Café.

Providing custom meals; designing, testing, and costing meals; acquiring, receiving , and storing supplies; recruiting and training employees; preparing employee schedules; designing efficient restaurant layouts. (Global company profile, easy)

92. Identify two operations-related tasks carried out by Hard Rock Café. Match each to its area of the Ten Critical Decisions. Providing custom meals—design of goods and services; designing, testing, and costing meals—design of goods and services; acquiring, receiving , and storing supplies—supply chain management; recruiting and training employees—human resources and job design; preparing employee schedules—intermediate and short-term scheduling; designing efficient restaurant layouts—layout strategy. (Global company profile, moderate)

93. Define operations management. Will your definition accommodate both manufacturing and service operations? Operations management can be defined as the management of all activities directly related to the creation of goods and/or services through the transformation of inputs into outputs. (What is operations management? easy)

94. Identify the items that Fredrick W. Taylor believed management should be more responsible for.

He believed that management should be more responsible for matching employees to the right job, providing the proper training, providing proper work methods and tools, and establishing legitimate incentives for work to be accomplished. (The heritage of operations management, moderate)

95. Operations managers should be well versed in what disciplines in order to make good decisions?

Management science, information technology, and often one of the biological or physical sciences. (The heritage of operations management, moderate)

96. Why are services typically more difficult to standardize, automate, and make efficient?

Services typically require customer interaction, which makes it difficult to standardize, automate, and make efficient. (Operations in the service sector, moderate)

97. How do services differ from goods? Identify five ways.

Pick from the following: a service is usually intangible; it is often produced and consumed simultaneously; often unique; it involves high customer interaction; product definition is inconsistent; often knowledge-based; and frequently dispersed. (Operations in the service sector, moderate)

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98. Services are often knowledge-based. Provide two examples, and explain why they are knowledge- based. Answer will vary, but the textbook used educational, medical, and legal services. (Operations in the service sector, moderate)

99. Why are organizations changing from batch (large) shipments to just-in-time (JIT) shipments?

Organizations are switching to JIT shipments because inventory requires a large financial investment, and impedes the responsiveness to changes in the marketplace. (Exciting new trends in operations management, moderate)

100. Why are organizations becoming more global?

Organizations are becoming more global with the decline in the cost of communication and transportation. Additionally, resources—capital, material, talent, and labor--are also becoming more global. (Exciting new trends in operations management)

101. Identify the three productivity variables used in the text.

The three common variables are labor, capital, and management. (Productivity variables, moderate)

102. What is a knowledge society? A knowledge society is one in which much of the labor force has migrated from manual work to work based on knowledge. (The productivity challenge, moderate)

103. Why are operations managers faced with ethical and social challenges? Businesses have diverse stakeholders, which include owners, employees, lenders, and distributors. These stakeholders hold conflicting perspectives. (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning}

104. What are some of the ethical and social challenges faced by operations managers? Efficiently developing and producing safe quality products; maintaining a clean environment; providing a safe workplace; honoring community commitments. (Ethics and social responsibility, easy) {AACSB: Ethical Reasoning}

105. As the administrative manager in a law office, you have been asked to develop a system for evaluating the productivity of the 15 lawyers in the office. What difficulties are you going to have in doing this, and how are you going to overcome them?

Productivity measurers for a law office are difficult. Simple criteria, like number of cases processed, fail to consider complexity of the case. Even counting wins is difficult, as many cases are settled with some sort of compromise. External elements such as the quality of the opposing counsel and the tenacity of the opposition also make counting look rather silly. Categories of cases can help—(i.e., uncontested divorce, no personal injury auto case, etc.) However, many firms end up counting hours billed. This in turns leads to other problems, as noted by the number of false billing cases. (The productivity challenge, moderate) {AACSB: Reflective Thinking}

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PROBLEMS 106. Susan has a part-time "cottage industry" producing seasonal plywood yard ornaments for resale at

local craft fairs and bazaars. She currently works 8 hours per day to produce 16 ornaments. a. What is her productivity? b. She thinks that by redesigning the ornaments and switching from use of a wood glue to a hot-glue gun she can increase her total production to 20 ornaments per day. What is her new productivity? c. What is her percentage increase in productivity? a. 16 ornaments/8 hours = 2 ornaments/hour b. 20 ornaments/8 hours = 2.5 ornaments/hour c. Change in productivity = 0.5 ornaments/hour; percent change = 0.5/2= 25% (The productivity challenge, moderate) {AACSB: Analytic Skills} 107. A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm

typically cleaned 70 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees worked 20 days per month, 8 hours a day. The company decided to switch to a larger cleaning machine. Last April, they cleaned 60 tank cars in only 15 days. They utilized 12 gallons of solvent, and the two employees worked 6 hours a day.

1. What was their productivity with the standard equipment? 2. What is their productivity with the larger machine? 3. What is the change in productivity?

Resource Standard Equipment

Larger Machine Percent Change

Solvent 7

10

70 = 5

12

60 = %57.28

7

75 −=

Labor 22.0

320

70 = 33.

180

60 = %50

22.

22.33. =

(The productivity challenge, moderate) {AACSB: Analytic Skills} 108. The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry.

Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some small changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. These changes did not require any change in the amount of capital spending or energy use. What is the firm's new labor productivity?

600 boxes per day / 16 hours = 37.5 boxes per hour (The productivity challenge, moderate) {AACSB: Analytic Skills}

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109. Mark's Ceramics spent $4000 on a new kiln last year, in the belief that it would cut energy usage 25% over the old kiln. This kiln is an oven that turns "greenware" into finished pottery. Mark is concerned that the new kiln requires extra labor hours for its operation. Mark wants to check the energy savings of the new oven, and also to look over other measures of their productivity to see if the change really was beneficial. Mark has the following data to work with:

Last Year This Year Production (finished units) 4000 4000 Greenware (pounds) 5000 5000 Labor (hrs) 350 375 Capital ($) 15000 19000 Energy (kWh) 3000 2600

Were the modifications beneficial?

The energy modifications did not generate the expected savings; labor and capital productivity decreased. (The productivity challenge, moderate) {AACSB: Analytic Skills}

Resource Last Year This Year Change Pct.

Change Labor 4000 / 350 = 11.43 4000 / 375 = 10.67 -0.76 -6.7% Capital 4000 / 15000 = 0.27 4000 / 19000 = .21 -0.06 -22.2% Energy 4000 / 3000 = 1.33 4000 / 2600 = 1.54 0.21 15.4%

110. Martin Manufacturing has implemented several programs to improve its productivity. They have

asked you to evaluate the firm's productivity by comparing this year's performance with last year's. The following data are available:

Last Year This Year Output 10,500 units 12,100 units Labor Hours 12,000 13,200 Utilities $7,600 $8,250 Capital $83,000 $88,000

Has Martin Manufacturing improved its productivity during the past year?

Productivity improved in all three categories this year; utilities showed the greatest increase, and labor the least. (The productivity challenge, moderate) {AACSB: Analytic Skills}

Resource Last Year This Year Change Pct.

Change Labor 10500 / 12000 = 0.88 12100 / 13200 = 0.92 0.04 4.8% Capital 10500 / 7600 = 1.38 12100 / 8250 = 1.47 0.09 6.2% Energy 10500 / 83000 = 0.13 12100 / 88000 = 0.14 0.01 8.7%

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111. Felicien grows mirlitons (that's Cajun for Chayote squash) in his 100 by 100 foot garden. He then sells the crop at the local farmers' market. Two summers ago, he was able to produce and sell 1200 pounds of mirlitons. Last summer, he tried a new fertilizer that promised a 50% increase in yield. He harvested 1900 pounds. Did the fertilizer live up to its promise? Since the productivity gain was 58.3%, not 50%, the fertilizer was at least as good as advertised. (The productivity challenge, moderate) {AACSB: Analytic Skills}

Two summers ago Last summer Change 1200 ÷ 10,000 = .12 lbs/sq. ft

1900 ÷ 10,000 = .19 lbs/sq. ft

(.19 - .12) ÷ .12 = 58.3%

112. The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry.

Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. Labor costs average $10 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3,000 per day, and rose to $3,200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day. What is the firm's multifactor productivity before and after the changes?

MFP before: 500 boxes / ($10x5x16 + $3000 + $400) = 500 / 4200 = 0.119 boxes/dollar MFP after: 600 boxes / ($10x5x16 + $3200 + $400) = 600 / 4400 = 0.136 boxes/dollar (The productivity challenge, moderate) {AACSB: Analytic Skills} 113. Gibson Products produces cast bronze valves for use in offshore oil platforms. Currently, Gibson

produces 1600 valves per day. The 20 workers at Gibson work from 7 a.m. until 4 p.m., with 30 minutes off for lunch and a 15 minute break during the morning work session and another at the afternoon work session. Gibson is in a competitive industry, and needs to increase productivity to stay competitive. They feel that a 20 percent increase is needed. Gibson's management believes that the 20 percent increase will not be possible without a change in working conditions, so they change work hours. The new schedule calls on workers to work from 7:30 a.m. until 4:30 p.m., during which workers can take one hour off at any time of their choosing. Obviously, the number of paid hours is the same as before, but production increases, perhaps because workers are given a bit more control over their workday. After this change, valve production increased to 1800 units per day. a. Calculate labor productivity for the initial situation b. Calculate labor productivity for the hypothetical 20 percent increase c. What is the productivity after the change in work rules? d. Write a short paragraph analyzing these results. (a) Workers are active for eight hours per day; labor productivity is 10 valves/hour (b) Productivity rises by 20 percent, to 12 valves/hour; output will be 12x8x20 = 1920 (c) New productivity is 1800 / (20 x 8) = 11.25 valves/hour (d) Gibson did not gain the desired 20 percent increase in productivity, but they did gain over ten percent, without extra equipment or energy, and without increasing the wage bill.

(The productivity challenge, moderate) {AACSB: Analytic Skills}

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CHAPTER 2: OPERATIONS STRATEGY IN A GLOBAL ENVIRONMENT

TRUE/FALSE 1. NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico, and the United

States. True (A global view of operations, moderate) {AACSB: Multiculture and Diversity}

2. The World Trade Organization has helped to significantly reduce tariffs around the world.True (Global company profile, moderate) {AACSB: Multiculture and Diversity} 3. Production processes are being dispersed to take advantage of national differences in labor costs.

True (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 4. NAFTA seeks to phase out all trade and tariff barriers between the United States and Asia.

False (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 5. One reason for global operations is to gain improvements in the supply chain.

True (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 6. One reason to globalize is to learn to improve operations.

True (A global view of operations, easy) {AACSB: Multiculture and Diversity} 7. To attract and retain global talent, and to expand a product's life cycle, are both reasons to

globalize. True (A global view of operations, moderate) {AACSB: Multiculture and Diversity}

8. A product will always be in the same stage of its product life cycle regardless of the country.

False (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 9. The World Trade Organization helps provide governments and industries around the world with

protection from firms that engage in unethical conduct. True (A global view of operations, moderate) {AACSB: Ethical Reasoning}

10. Boeing’s development of the 787 Dreamliner is an example of a company obtaining a competitive

advantage via product differentiation/innovation.True (Global company profile, easy) 11. An organization's strategy is its purpose or rationale for an organization's existence.

False (Developing missions and strategies, easy) 12. Operations strategies are implemented in the same way in all types of organizations.

False (Developing missions and strategies, moderate)

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13. Between 1980 and 2005, the amount of money (bank deposits, government and corporate debt securities, and equity securities) invested in global capital markets more than tripled. True (Introduction, difficult) {AACSB: Multiculture and Diversity}

14. Experience differentiation is an extension of product differentiation, accomplished by using

people's five senses to create an experience rather than simply providing a service. True (Achieving competitive advantage through operations, moderate)

15. An organization's ability to generate unique advantages over competitors is central to a successful

strategy implementation. True (Achieving competitive advantage through operations, moderate)

16. Low-cost leadership is the ability to distinguish the offerings of the organization in any way that

the customer perceives as adding value. False (Ten strategic decision of OM, moderate)

17. Most services are tangible; this factor determines how the ten decisions of operations management

are handled differently for goods than for services. False (Ten strategic decisions of OM, moderate)

18. The relative importance of each of the ten operations decisions depends on the ratio of goods and

services in an organization. True (Ten strategic decisions of OM, moderate)

19. Decisions that involve what is to be made and what is to be purchased fall under the heading of

supply chain management. True (Ten strategic decision of OM, moderate)

20. Manufacturing organizations have ten strategic OM decisions, while service organizations have

only eight. False (Ten strategic decisions of OM, easy)

21. Errors made within the location decision area may overwhelm efficiencies in other areas.

True (Ten strategic decisions of OM, moderate) 22. The PIMS study indicated that high ROI firms tend to have high product quality.

True (Issues in operations strategy, easy) 23. Southwest Airlines’ core competence is operations.

True (Strategy development and implementation, moderate) 24. Critical success factors and core competencies are synonyms.

False (Strategy development and implementation, moderate) 25. SWOT analysis identifies those activities that make a difference between having and not having a

competitive advantage. False (Strategy development and implementation, moderate)

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26. For the greatest chance of success, an organization's operations management strategy must support the company's strategy. True (Strategy development and implementation, moderate)

27. Critical Success Factors are those activities that are key to achieving competitive advantage.

True (Strategy development and implementation, moderate) 28. A multinational corporation has extensive international business involvements.

True (Global operations strategy options, easy) {AACSB: Multiculture and Diversity} 29. The multidomestic OM strategy maximizes local responsiveness while achieving a significant cost

advantage. False (Global operations strategy options, moderate) {AACSB: Multiculture and Diversity}

30. Firms using the global strategy can be thought of as "world companies."

False (Global operations strategy options, moderate) {AACSB: Multiculture and Diversity}

MULTIPLE CHOICE 31. Which of the following statements regarding the Dreamliner 787 is true? a. Boeing has found partners in over a dozen countries. b. The new aircraft incorporates a wide range of aerospace technologies. c. The new aircraft uses engines from not one, but two manufacturers. d. Boeing will add only 20 to 30 percent of the aircraft's value. e. All of the above are true. e (Global company profile, moderate) 32. Boeing's new 787 Dreamliner a. is assembled in Washington, D.C. b. uses engines from Japan c. has its fuselage sections built in Australia d. has increased efficiency from new engine technology e. results from a partnership of about a dozen companies d (Global company profile, moderate) 33. Examples of response to the global environment include a. Boeing's worldwide sales and production b. Benneton's flexibility in design, production, and distribution c. A Chinese manufacturer, Haier, opening plants in the United States d. Ford's partnerships with Volvo and Mazda e. All of the above are examples. e (Introduction, easy) {AACSB: Multiculture and Diversity}

22

34. Which of the following is an example of globalization of operations strategy? a. Boeing's Dreamliner has engines with higher fuel/payload efficiency. b. Ford's new auto models have dent-resistant panels. c. A Chinese manufacturer, Haier, now operates plants in the United States. d. Hard Rock Café provides an "experience differentiation" at its restaurants. e. All of the above are examples. c (Introduction, moderate) {AACSB: Multiculture and Diversity} 35. Cost cutting in international operations can take place because of a. lower taxes and tariffs b. lower wage scales c. lower indirect labor costs d. less stringent regulations e. all of the above e (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 36. Which of the following did the authors not suggest as a reason for globalizing operations? a. reduce costs b. improve the supply chain c. stockholder approval ratings d. attract new markets e. All of the above were suggested. c (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 37. Multinational organizations can shop from country to country and cut costs through a. lower wage scales b. lower indirect labor costs c. less stringent regulations d. lower taxes and tariffs e. all of the above e (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 38. The term maquiladora is most synonymous with a. free trade zones b. Chinese forced labor camps c. home-based or cottage industry d. areas that do not meet U.S. standards for workplace safety and pollution e. none of the above a (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 39. Which of the following represent reasons for globalizing operations? a. to gain improvements in the supply chain b. to improve operations c. to expand a product's life cycle d. to attract and retain global talent e. All of the above are valid. e (A global view of operations, moderate) {AACSB: Multiculture and Diversity}

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40. Which of the following does not represent reasons for globalizing operations? a. reduce costs b. improve supply chain c. reduce responsiveness d. attract and retain global talent e. All of the above are valid reasons for globalizing operations. c (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 41. NAFTA seeks to a. substitute cheap labor in Mexico for expensive labor in the United States b. curb illegal immigration from Mexico to the United States c. phase out all trade and tariff barriers between the United States and Mexico d. phase out all trade and tariff barriers between the United States, Canada, and Mexico e. All of the above are NAFTA goals. d (A global view of operations, moderate) {AACSB: Multiculture and Diversity} 42. With reference to cultural and ethical issues, the World Trade Organization has a. succeeded in providing equal protection of intellectual property among nations b. made progress in providing equal protection of intellectual property among nations c. phased out all trade and tariff barriers between the United States and Mexico d. eliminated slave labor and child labor e. played little role in addressing cultural and ethical issues among nations b (A global view of operations, difficult) {AACSB: Ethical Reasoning} 43. Which of the following is true about business strategies? a. An organization should stick with its strategy for the life of the business. b. All firms within an industry will adopt the same strategy. c. Well defined missions make strategy development much easier. d. Strategies are formulated independently of SWOT analysis. e. Organizational strategies depend on operations strategies. c (Developing missions and strategies, moderate) 44. Which of the following activities takes place once the mission has been developed?

a. The firm develops alternative or back-up missions in case the original mission fails. b. The functional areas develop their functional area strategies. c. The functional areas develop their supporting missions. d. The ten OM decision areas are prioritized. e. Operational tactics are developed. c (Developing missions and strategies, moderate) 45. Which of the following statements about organizational missions is false? a. They reflect a company's purpose. b. They indicate what a company intends to contribute to society. c. They are formulated after strategies are known. d. They define a company's reason for existence. e. They provide guidance for functional area missions. c (Developing missions and strategies, moderate)

24

46. The impact of strategies on the general direction and basic character of a company is a. short range b. medium range c. long range d. temporal e. minimal c (Developing missions and strategies, moderate)

47. The fundamental purpose of an organization's mission statement is to a. create a good human relations climate in the organization b. define the organization's purpose in society c. define the operational structure of the organization d. generate good public relations for the organization e. define the functional areas required by the organization b (Developing missions and strategies, moderate) 48. Which of the following is true? a. Corporate mission is shaped by functional strategies. b. Corporate strategy is shaped by functional strategies. c. Functional strategies are shaped by corporate strategy. d. External conditions are shaped by corporate mission. e. Functional area missions are merged to become the organizational mission. c (Developing missions and strategies, difficult) 49. According to the authors, which of the following strategic concepts allow firms to achieve their

missions? a. productivity, efficiency, and quality leadership b. differentiation, cost leadership, and quick response c. differentiation, quality leadership, and quick response d. distinctive competency, cost leadership, and experience e. differentiation, distinctive competency, quality leadership, and capacity b (Achieving competitive advantage through operations, moderate) 50. A firm can effectively use its operations function to yield competitive advantage via all of the

following except a. customization of the product b. setting equipment utilization goals below the industry average c. speed of delivery d. constant innovation of new products e. maintain a variety of product options b (Achieving competitive advantage through operations, moderate)

51. Which of the following has progressed the furthest along its product life cycle?

a. drive-thru restaurants b. Internet search engines c. iPods d. LCD & plasma TVs e. Xbox 360 a (Issues in operations strategy, moderate)

25

52. The ability of an organization to produce goods or services that have some uniqueness in their characteristics is

a. mass production b. time-based competition c. competing on productivity d. competing on flexibility e. competing on differentiation e (Achieving competitive advantage through operations, moderate) 53. Which of the following has made the least progress along its product life cycle?

a. drive-thru restaurants b. Internet search engines c. iPods d. LCD & plasma TVs e. Xbox 360 e (Issues in operations strategy, moderate)

54. A strategy is a(n) a. set of opportunities in the marketplace b. broad statement of purpose c. simulation used to test various product line options d. plan for cost reduction e. action plan to achieve the mission e (Achieving competitive advantage through operations, moderate) 55. Which of the following statements best characterizes delivery reliability? a. a company that always delivers on the same day of the week b. a company that always delivers at the promised time c. a company that delivers more frequently than its competitors d. a company that delivers faster than its competitors e. a company that has a computerized delivery scheduling system b (Achieving competitive advantage through operations, difficult) 56. Which of the following is an example of competing on the basis of differentiation? a. A firm manufactures its product with less raw material waste than its competitors do. b. A firm's products are introduced into the market faster than its competitors’ products are. c. A firm's distribution network routinely delivers its product on time. d. A firm offers more reliable products than its competitors do. e. A firm advertises more than its competitors do. d (Achieving competitive advantage through operations, moderate)

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