Operations Management

with TQM Quizzer

Question # 1

Given the following information, what would efficiency be?

Effective capacity = 50 units per day

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

A. 40 percent
B. 50 percent
C. 60 percent
D. 80 percent
E. 90 percent
Question # 2

Given the following information, what would utilization be?

Effective capacity = 20 units per day

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

A. 25%
B. 33%
C. 50%
D. 75%
E. none of these
Question # 3

Everything else being equal, a firm considering outsourcing would

find all of the following desirable except:

A. total costs will be lower for outsources goods or services.

B. its supplier has more expertise in whatever is being
outsourced.
C. it can maintain tight control over knowledge.
D. proprietary information will be disclosed to the supplier.
E. control over operations will be maintained by the firm.
Question # 4

Which of the following is not a criterion for developing capacity

alternatives?

A. design structured, rigid systems

B. take a big-picture approach to capacity changes
C. prepare to deal with capacity in "chunks"
D. attempt to smooth out capacity requirements
E. identify the optimal operating level
Question # 5

What is the break-even quantity for the following situation?

FC = $1,200 per week

VC = $2 per unit
Rev = $6 per unit

A. 100
B. 200
C. 600
D. 1,200
E. 300
Question # 6

For fixed costs of $2,000, revenue per unit of $2, and variable cost
per unit of $1.60, the break-even quantity is:

A. 1,000.
B. 1,250.
C. 2,250.
D. 5,000.
E. 3,000.
Question # 7

The owner of a greenhouse and nursery is considering whether to spend

$6,000 to acquire the licensing rights to grow a new variety of rosebush,
which she could then sell for $6 each. Per-unit variable cost would be $3.
What would the profit be if she were to produce and sell 5,000
rosebushes?

A. $0
B. $9,000
C. $15,000
D. $10,000
E. $30,000
Question # 8

The owner of a greenhouse and nursery is considering whether to spend

$6,000 to acquire the licensing rights to grow a new variety of rosebush,
which she could then sell for $6 each. Per-unit variable cost would be $3.
How many rosebushes would she have to produce and sell in order to make
a profit of $6,000?

A. 1,600
B. 2,400
C. 3,000
D. 1,000
E. 4,000
Question #9

Computer-aided manufacturing refers to the use of computers in:

A. product design.
B. decision making.
C. data analysis.
D. quality control.
E. process control.
Question #10

Common reasons for redesign of layouts include:

(I) efficient operations.

(II) accidents or safety hazards.
(III) new products or services.
(IV) morale problems.

A. I and II
B. II and IV
C. I and III
D. II, III, and IV
E. I, II, III, and IV
Question #11

The advantages of automation include:

(I) reduced output variability.

(II) reduced variable costs.
(III) machines don't strike or file grievances.
(IV) machines are always less expensive than human labor.

A. I and IV
B. II and III
C. I, II, and III
D. I and III
E. II and IV
Question #12

Which type of processing system tends to produce the most product

variety?

A. assembly
B. job shop
C. batch
D. continuous
E. mass customization
Question #13

Layout design has many objectives, one of which is:

A. reduce bottlenecks.
B. move materials and workers simultaneously.
C. use workers and space efficiently.
D. hold material handling costs to 27 percent or less.
E. install computer terminals every 500 feet.
Question #14

A production line is to be designed for a job with three tasks. The task
times are .3 minutes, 1.4 minutes, and .7 minutes. For a single production
line with no parallel activities, the minimum cycle time in minutes is:

A. .3.
B. .7.
C. 1.4.
D. 2.4.
E. .8.
Question #15

Which of the following is not a significant concern for process

selection?

A. variety in products/services
B. flexibility of equipment
C. volume of output
D. pricing strategy
E. flexibility of personnel
Question # 16

Although they do not guarantee optimal solutions, ______________

are useful in finding reasonable solutions when the number of
possible options is overwhelming.

A. cellular layouts
B. heuristics
C. logistics
D. CAM
E. CAD
Question #17

Asking a group of employees at a particular level to take on more

responsibility is a form of ___________ loading, also known as job
__________.
A. horizontal; enlargement
B. horizontal; rotation
C. vertical; rotation
D. vertical; enrichment
E. horizontal; enrichment
Question #18

Which of the following is not an advantage of time-based pay

systems?

A. labor cost stability

B. incentives to increase output
C. ease of administration
D. stability of output
E. ease of pay computations
Question#19

A major advantage of job specialization in business is increased:

A. motivation.
B. opportunity for advancement.
C. opportunity for self-fulfillment.
D. productivity.
E. job enrichment.
Question #20

The chart used to review the overall sequence of an operation by

focusing on the movements of either the operator or materials is
called a:

A. simo chart.
B. Gantt chart.
C. worker-materials chart.
D. flow process chart.
E. multi-activity chart.
Question #21

Which of the following statements should not characterize an

operations strategy toward the design of work systems?

A. Manufacturing technology is the heart of a business.

B. Workers can make or break a business.
C. Workers can be a valuable source of insights.
D. A spirit of cooperation can contribute to success.
E. Workers can be proud and respected.
Question #22

. A methods and measurements analyst needs to develop a time standard for a certain task. In a
preliminary study, he observed one of his workers perform this task five times, with the
following results:
Observation 1 2 3 4 5
Time(Seconds) 84 76 80 84 76
What is the observed time for this task?

A. 80 seconds
B. 84 seconds
C. 160 seconds
D. 240 seconds
E. 400 seconds
Question #23

A methods and measurements analyst for Timepiece, Inc., needs to develop a time standard for
the task of attaching a watch to a wristband. In a preliminary study, he observed one of his
workers perform this task five times, with the following results:
Observation 1 2 3 4 5
Time(Seconds) 27 19 20 21 13
What is the standard time for this task if the employee worked at a 20 percent faster pace than
average, and an allowance of 20 percent of job time is used?

A. 4.5 seconds
B. 5 seconds
C. 20 seconds
D. 28.8 seconds
E. 100 seconds
Question # 24

Which of the following is typically the largest of all inventory costs?

A. shortage cost
B. purchase cost
C. holding cost
D. ordering cost
E. pipeline cost
Question # 25

Which of the following is not one of the assumptions of the basic

EOQ model?

A. Annual demand requirements are known and constant.

B. Lead time does not vary.
C. Each order is received in a single delivery.
D. Quantity discounts are available.
E. Ordering and holding costs have been estimated reasonably
accurately.
Question # 26

In a two-bin inventory system, the amount contained in the second

bin is equal to the:

A. ROP.
B. EOQ.
C. amount in the first bin.
D. optimum stocking level.
E. safety stock.
Question # 27

Which of the following is least likely to be included in order costs?

A. processing vendor invoices for payment

B. processing purchase orders
C. inspecting incoming goods for quantity
D. taking an inventory to determine how much is needed
E. temporary storage of delivered goods
Question # 27

In the A-B-C classification system, items which account for about 60

percent of the annual dollar value, but only about 10 to 15 percent
of the items in inventory, would be classified as:

A. A items.
B. B items.
C. C items.
D. A items plus B items.
E. B items plus C items.
Question 28

In the basic EOQ model, an annual demand of 40 units, an ordering

cost of $5, and a holding cost of $1 per unit per year will result in
an EOQ of:

A. 20.
B. square root of 200.
C. 200.
D. 400.
E. 600.
Question 29

Which of the following is not true for the economic production

quantity model?

A. Usage rate is constant.

B. Production rate exceeds usage rate.
C. Run size exceeds maximum inventory.
D. There are no ordering or setup costs.
E. Average inventory is one-half maximum inventory.
Question 30

If average demand for an inventory item is 200 units per day, lead
time is three days, and safety stock is 100 units, the reorder point
is:

A. 100 units.
B. 200 units.
C. 300 units.
D. 600 units.
E. 700 units.
Answers
Question # 1

Given the following information, what would efficiency be?

Effective capacity = 50 units per day

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

C. 60 percent
Efficiency is actual output divided by effective capacity. (30 / 50) ×
100% = 60%
Question # 2

Given the following information, what would utilization be?

Effective capacity = 20 units per day

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

A. 25%
Utilization is actual output divided by design capacity. (15 / 60) × 100% =
25%
Question # 3

Everything else being equal, a firm considering outsourcing would

find all of the following desirable except:
D. proprietary information will be disclosed to the supplier.

Disclosure of proprietary information to a supplier is an undesirable

risk of outsourcing.
Question # 4

Which of the following is not a criterion for developing capacity

alternatives?

A. design structured, rigid systems

The long-term nature of capacity decisions calls for flexibility, not

rigidity.
Question # 5

What is the break-even quantity for the following situation?

FC = $1,200 per week

VC = $2 per unit
Rev = $6 per unit

E. 300
Break-even quantity = FC / (Rev – VC) = $1200 / ($6 - $2) = 300. A volume
of 300 units leads to $1,200 in margin to offset fixed costs.
Question # 5

What is the break-even quantity for the following situation?

FC = $1,200 per week

VC = $2 per unit
Rev = $6 per unit

E. 300
Break-even quantity = FC / (Rev – VC) = $1200 / ($6 - $2) = 300. A volume
of 300 units leads to $1,200 in margin to offset fixed costs.
Question # 6

For fixed costs of $2,000, revenue per unit of $2, and variable cost
per unit of $1.60, the break-even quantity is:

D. 5,000.
Break-even quantity = FC / (Rev – VC) = $2000 / ($2 – $1.60) = 5000.
Dividing the fixed costs of $2,000 by the per-unit contribution
margin of $0.40 leads to a break-even quantity of 5,000 units.
Question # 7

The owner of a greenhouse and nursery is considering whether to

spend $6,000 to acquire the licensing rights to grow a new variety
of rosebush, which she could then sell for $6 each. Per-unit variable
cost would be $3. What would the profit be if she were to produce
and sell 5,000 rosebushes?

B. $9,000
Total revenue would be 5000 × $6 = $30,000. Total cost (fixed =
$6,000, variable = 5000 × $3 = $15,000) would be $21,000. Profit =
$30,000 – $21,000 = $9,000.
Question # 8

The owner of a greenhouse and nursery is considering whether to

spend $6,000 to acquire the licensing rights to grow a new variety
of rosebush, which she could then sell for $6 each. Per-unit variable
cost would be $3. How many rosebushes would she have to produce
and sell in order to make a profit of $6,000?

E. 4,000
Add the desired profit of $6,000 to the fixed cost; $6,000 + $6,000 =
$12,000. Then divide the sum by the per-unit contribution margin;
$12000/($6 – $3) = 4000.
Question #9

Computer-aided manufacturing refers to the use of computers in:

A. product design.
B. decision making.
C. data analysis.
D. quality control.
E. process control.
CAM automates process control.
Question #10

Common reasons for redesign of layouts include:

(I) efficient operations.

(II) accidents or safety hazards.
(III) new products or services.
(IV) morale problems.

D. II, III, and IV

A number of factors trigger layout planning.
Question #11

The advantages of automation include:

(I) reduced output variability.

(II) reduced variable costs.
(III) machines don't strike or file grievances.
(IV) machines are always less expensive than human labor.

C. I, II, and III

Machines can be more expensive than human labor due to large fixed costs
Question #12

Which type of processing system tends to produce the most product

variety?

B. job shop

• A job shop provides low volume of high-variety goods.

Question #13

Layout design has many objectives, one of which is:

C. use workers and space efficiently.

Layout design is focused on the efficient placement of human and
other assets.
Question #14

A production line is to be designed for a job with three tasks. The task
times are .3 minutes, 1.4 minutes, and .7 minutes. For a single production
line with no parallel activities, the minimum cycle time in minutes is:

A. .3.
B. .7.
C. 1.4.
D. 2.4.
E. .8.
Question #15

Which of the following is not a significant concern for process

selection?

D. pricing strategy
Pricing strategy does not enter into process selection decisions.
Question # 16

Although they do not guarantee optimal solutions, ______________

are useful in finding reasonable solutions when the number of
possible options is overwhelming.

B. heuristics
Heuristics often provide workable solutions to complex problems.
Question #17

Asking a group of employees at a particular level to take on more

responsibility is a form of ___________ loading, also known as job
__________.
D. vertical; enrichment
Job enrichment involves an increase in the level of responsibility for
planning and coordination tasks. It is sometimes referred to as
vertical loading.
Question #18

Which of the following is not an advantage of time-based pay

systems?

B. incentives to increase output

In a time-based system there is no incentive for workers to increase
output.
Question#19

A major advantage of job specialization in business is increased:

D. productivity.
Specialization can greatly increase productivity.
Question #20

The chart used to review the overall sequence of an operation by

focusing on the movements of either the operator or materials is
called a:

D. flow process chart.

Flow process charts focus on the overall sequence of operations
Question #21

Which of the following statements should not characterize an

operations strategy toward the design of work systems?

A. Manufacturing technology is the heart of a business.

Technology is not necessarily the heart of a business.
Question #22

. A methods and measurements analyst needs to develop a time standard

for a certain task. In a preliminary study, he observed one of his workers
perform this task five times, with the following results:
Observation 1 2 3 4 5
Time(Seconds)84 76 80 84 76
What is the observed time for this task?

A. 80 seconds
The observed time is the average time.
Question #23

A methods and measurements analyst for Timepiece, Inc., needs to develop a

time standard for the task of attaching a watch to a wristband. In a preliminary
study, he observed one of his workers perform this task five times, with the
following results:
Observation 1 2 3 4 5
Time(Seconds) 27 19 20 21 13
What is the standard time for this task if the employee worked at a 20 percent
faster pace than average, and an allowance of 20 percent of job time is used?

D. 28.8 seconds
OT  1.2  1.2.
Question # 24

Which of the following is typically the largest of all inventory costs?

A. shortage cost
B. purchase cost
C. holding cost
D. ordering cost
E. pipeline cost
Question # 25

Which of the following is not one of the assumptions of the basic

EOQ model?

D. Quantity discounts are available.

In the basic EOQ model, quantity discounts are not available
Question # 26

In a two-bin inventory system, the amount contained in the second

bin is equal to the:

A. ROP.
The second bin equals the amount needed during lead time in
addition to any safety stock.
Question # 27

Which of the following is least likely to be included in order costs?

A. processing vendor invoices for payment

B. processing purchase orders
C. inspecting incoming goods for quantity
D. taking an inventory to determine how much is needed
E. temporary storage of delivered goods

Storage costs are holding costs.

Question # 27

In the A-B-C classification system, items which account for about 60

percent of the annual dollar value, but only about 10 to 15 percent
of the items in inventory, would be classified as:

A. A items.
B. B items.
C. C items.
D. A items plus B items.
E. B items plus C items.
Question 28

In the basic EOQ model, an annual demand of 40 units, an ordering

cost of $5, and a holding cost of $1 per unit per year will result in
an EOQ of:

A. 20.
B. square root of 200.
C. 200.
D. 400.
E. 600.
Question 29

Which of the following is not true for the economic production

quantity model?

A. Usage rate is constant.

B. Production rate exceeds usage rate.
C. Run size exceeds maximum inventory.
D. There are no ordering or setup costs.
E. Average inventory is one-half maximum inventory.
Question 30

If average demand for an inventory item is 200 units per day, lead
time is three days, and safety stock is 100 units, the reorder point
is:

E. 700 units.
The ROP will be the safety stock added to the product of the
demand rate and the lead time.