Answer Key

Chapter 01 Operations and Supply Chain Management Answer Key
True / False Questions
1. Efficiency means doing the right things to create the most value for the company.
FALSE
AACSB: Analytic
Difficulty: Easy
Learning Objective: 2
Taxonomy: Knowledge
Topic: Differences Between Services and Goods
2. Effectiveness means doing the right things to create the most value for the company.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
3. A doctor completes a surgical procedure on a patient without error. The patient dies anyway.
In operations management terms, we could refer to this doctor as being efficient but not
effective.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
4. A worker can be efficient without being effective.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Comprehension
5. A process can be effective without being efficient.

TRUE
AACSB: Analytic
Difficulty: Medium
6. Operations and supply management is defined as the design, operation, and improvement of
the systems that create and deliver the firm's primary products and services.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: What is Operations and Supply Management?
7. The term "value" refers to the relationship between quality and the price paid by the
consumer.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
8. Attempting to balance the desire to efficiently use resources while providing a highly effective
service may create conflict between the two goals.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
9. Central to the concept of operations strategy are the notions of operations focus and trade-
offs.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
10. Fashion retailers, in particular, need to have plenty of inventory on hand because demand is
so unpredictable.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
11. Today's leading retailers use operations and supply chain management techniques to match
supply and demand as closely and quickly as possible.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. "Concept-to-cash" refers to the idea of generating revenue from licensing of patent rights or
other intellectual property.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
13. OSM is concerned with management of the trickiest parts of the system that produces a good
or delivers a service.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
14. OSM is a functional field of business with clear line management responsibilities.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
15. The supply network as can be thought of as a pipeline through which cash, material and
information flows.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Understanding
16. Supply networks can not be constructed for every product or service.
FALSE
AACSB: Analytic
Difficulty: Easy
17. "Operations" refers to manufacturing and service processes used to transform resources
employed by a firm into products desired by customers.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
18. "Supply" refers to supply chain processes that move information and material to and from the
manufacturing and service processes of the firm.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
19. "Supply" includes inbound freight and inventory only.

FALSE
AACSB: Analytic
Difficulty: Medium
20. It is critical that a sustainable strategy meet the needs of shareholders and employees. It is
also highly desirable that it preserves the environment.
FALSE
AACSB: Analytic
Difficulty: Medium
21. Supply and demand planning is needed to coordinate the manufacturing, service, and supply
chain processes.
TRUE
AACSB: Analytic
Difficulty: Easy
22. Supply and demand planning involves forecasting demand, making intermediate term plans
for how demand will be met, controlling different types of inventory, but not the detailed weekly
scheduling of processes.
FALSE
AACSB: Analytic
Difficulty: Easy
23. All managers should understand the basic principles that guide the design of transformation
processes.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
24. OSM changes constantly because of the dynamic nature of competing in global business and
the constant evolution of information technology.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Careers in Operations and Supply Management
25. Internet technology has made the sharing of reliable real-time information expensive.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
26. Use of systems like point-of-sale, radio-frequency identification tags, bar-code scanners, and
automatic recognition has made it more difficult to understand what all the information is
saying.
FALSE
AACSB: Analytic
Difficulty: Easy
27. Operations and supply processes can be conveniently categorized as planning, sourcing,
making, and delivering.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
28. A major aspect of planning involves developing a set of metrics to monitor the supply chain.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
29. Returning involves processes for receiving worn-out, defective, and excess products back
from customers but does not involve support for customers who have problems with the product.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
30. Delivering is not considered in supply chain analysis when outside carriers are contracted to
move products to customers.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
31. Services are intangible processes that cannot be weighed or measured.

TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
32. Service innovations can be patented.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
33. Services are homogeneous.

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
34. Services are defined and evaluated as a package of features that affect the five senses.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
35. Automobiles and appliances are classified as "pure goods."

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
36. Core service providers integrate tangible goods into their product.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
37. Servitization refers to a company building service activities into its product offerings for
current users.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
38. Servitization is a nonsense word invented to describe the disappearance of manufacturing

from the US economy.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
39. In contrast to careers in finance and marketing, careers in OSM involve hands-on
involvement with people and processes.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
40. A bank branch manager position is not an OSM-type of job.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
41. A supply chain manager is an OSM job while a purchasing manager is not.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
42. Just in time (JIT) production was a major breakthrough in manufacturing philosophy
pioneered by the Japanese.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Historical Development of Operations and Supply Management
43. Lean manufacturing refers to just in time production coupled with total quality control.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
44. The Baldrige National Quality Award was started under the direction of the National Institute
of Standards and Technology.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
45. The approach that advocates making revolutionary changes as opposed to evolutionary
changes is called creation theory.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
46. The approach that advocates making revolutionary changes as opposed to evolutionary
changes is called "business process reengineering."
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
47. Business process reengineering is contrasted to total quality management which commonly
advocates incremental change.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
48. The "triple bottom line" relates to the economic, employee, and environmental impact of a
firm's strategy.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
49. Sustainability is the ability to maintain profits in a system.

FALSE
AACSB: Analytic
Difficulty: Easy
50. Raising senior management awareness of operations as a competitive weapon is not an issue
on OSM.
FALSE
AACSB: Analytic
Difficulty: Easy
Multiple Choice Questions
51. A reason for studying operations management (OSM) is which of the following?
A. OSM is essential for understanding organizational behavior.
B. Most business graduates do OSM work regardless of their job title.
C. All managers should understand the basic principles that guide the design of transformation
processes.
D. OSM is a required course in all business degree programs.
E. OSM is the most rigorous business discipline.
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
52. The Goods-Services Continuum consists of which set of the following categories?
A. No goods, some goods, even mix, some service, no service
B. Pure goods, core goods, core services, pure services
C. No service, some service, good service, excellent service
D. Self-service, help desk service, face-to-face service, service-with-a-smile
E. None of the above
AACSB: Analytic
Difficulty: Medium
Taxonomy: Application
53. Which of the following are defined as core goods?

A. Chemicals
B. Airlines
C. Data storage systems
D. Hotels
AACSB: Analytic
Difficulty: Medium
54. Current issues in OSM do not include:
A. Coordinating relationships between organizations.
B. Making senior management aware that OSM can be a competitive weapon.
C. The triple bottom line.
D. Managing customer touch points.
E. Increasing global servitization networks.
AACSB: Analytic
Difficulty: Medium
55. Which of the following are not listed in the text as jobs in OSM?
A. Department store manager
B. Project manager
C. Hospital administrator
D. Chief Information Officer
E. Call center manager
AACSB: Analytic
Difficulty: Medium
56. Which of the following is not a characteristic that distinguishes services from goods?
A. Service jobs are unskilled.
B. A service is intangible.
C. Services are perishable.
D. Services are heterogeneous.
E. None of the above.
AACSB: Analytic
Difficulty: Medium
57. Which of the following is not a way that operations and supply processes are categorized?
A. Planning
B. Return
C. Delivery
D. Selecting
E. Making
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
58. One of the package of features that make up a service are:

A. Appearance
B. Facilitating goods
C. Packaging
D. Cost
E. Implied use
AACSB: Analytic
Difficulty: Medium
Fill in the Blank Questions
59. The ability to maintain balance in a system is referred to as _______________.

Sustainability
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
60. Processes that are used to transform the resources into products are called
________________.
Operations
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Essay Questions
61. What are the five categories of supply chain processes?

1. ___________________
2. ___________________
3. ___________________
4. ___________________
5. ___________________
Planning, sourcing, making, delivering & returning.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
62. Doing something at the lowest possible cost is called: ________________.

Efficiency
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
63. Value is the ratio of _______________________to _______________________
quality to price paid
AACSB: Analytic
Difficulty: Medium
64. A pipeline through which material and information flows is a conception of a

_______________________.
Supply network
AACSB: Analytic
Difficulty: Medium
65. List five OSM job titles.

1. ___________________
2. ___________________
3. ___________________
4. ___________________
5. ___________________
Any five from the list on page 14-15 of the text.
AACSB: Analytic
Difficulty: Medium
66. What are three current issues in operations and supply management?
1. ___________________
2. ___________________
3. ___________________
(any three): 1. Coordinating relationships between mutually supportive but separate
organizations; 2. Optimizing global supplier, production, and distribution networks; 3.
Managing customer touch points; 4. Raising senior management awareness of operations
as a significant competitive weapon; 5. Sustainability and the triple bottom line.
AACSB: Analytic
Difficulty: Hard
Essay Questions
67. Discuss the role of efficiency and effectiveness in the creation of value.
A successful response to this question requires a definition of "value" (a relationship between

"quality" or "performance" of a product and its price) and discussion of the trade-off between
efficiency and effectiveness. Creating value means striking the most appropriate balance between
efficiency and effectiveness for the market need the product will satisfy. These concepts are
discussed in the text beginning on page 12.
AACSB: Analytic
Difficulty: Medium
Chapter 02 Strategy and Sustainability Answer Key
1. An operations and supply strategy must be integrated with the organization's corporate
strategy.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: What is Operations and Supply Strategy?, Strategic Fit: Fitting Operational Activities to Strategy
2. One of the competitive dimensions that form the competitive position of a company when
planning their strategies is cost.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: What is Operations and Supply Strategy?
planning their strategies is delivery speed.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
planning their strategies is making the best trade-off.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
5. The process when a company seeks to match the benefits of a successful position while
maintaining its existing position by adding new features, services, and technologies into its
current portfolio is called flexibility.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
6. The process when a company seeks to match the benefits of a successful position while
maintaining its existing position by adding new features, services, and technologies into its
current portfolio it is called straddling
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Strategic Fit: Fitting Operational Activities to Strategy
7. By following a straddling strategy, firms can broaden their capabilities and effectively
compete with more focused firms in markets requiring low cost for success.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
8. An order winner is a set of criteria that differentiates the products or services of one firm from
another.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
9. An order winner is a set of screening criteria that permits a firm's products to be considered as
possible candidates for purchase.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
10. An order qualifier is a set of screening criteria that permits a firm's products to be considered
as possible candidates for purchase.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
11. Activity-system maps show how a company's strategy is delivered through a set of tailored
activities.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. Activity-system maps are useful in understanding how well a system of activities fits the
overall company's strategy.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
13. Activity-system maps depict the geographic reach of a company's business strategies.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
14. Operations and supply strategy are not important issues to investors who tend to focus on
growth, dividends and earnings per share.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: How Does Wall Street Evaluate Operations Performance?
15. Investors pay close attention to efficiency and productivity measures like net income per
employee because they are interested in how well the firm manages its workforce relations.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
16. During a recession, efficient firms often have an opportunity to increase market share while
maintaining profitability.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Productivity Measurement
17. An operations strategy must resist change because of the long term nature of equipment and
personnel investments.
FALSE
AACSB: Analytic
Difficulty: Easy
18. Operations and supply strategy can be viewed as part of a planning process that coordinates
operational goals with those of the larger organization.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
19. Infrastructure decisions within operations strategy include the selection of the appropriate
technology, the role of inventory and the location of facilities.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
20. Infrastructure decisions within operations strategy include the selection of the logic
associated with the planning and control systems.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
21. Once an operations strategy is adopted and articulated, the primary emphasis becomes
perfecting the system of activities that make up the strategy through detailed refinements over a
long period of time.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
22. The job of operations strategy is to deliver the most feature-rich, highest quality product at
the lowest price within specified parameters of delivery time and customization.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
23. Wall Street analysts are not particularly concerned with how efficient companies are from an
operations and supply management view.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
24. Productivity is a relative measure.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
25. In a partial measure of productivity the denominator of the ratio would include all resources
used or all inputs.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
26. In a multifactor measure of productivity the numerator of the ratio would include all
resources used or all inputs.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
27. The operations and supply activities of the firm need to strategically support the competitive
priorities of the firm.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
28. The triple bottom line considers evaluating the firm against social, economic, and
environmental criteria.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
29. Sustainability means meeting a firm's current needs without excessively compromising the
ability of future generations to meet their own needs.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
30. Which of the following is not a major strategic operational competitive dimension that forms
a company's competitive position?
A. Cost or price
B. Delivery speed
C. Delivery reliability
D. Management acumen
E. Coping with changes in demand
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
31. A major competitive dimension that forms a company's strategic operational competitive
position in their strategic planning is which of the following?
A. Cost or price
B. Focus
C. Automation
D. Straddling
E. Activity-system mapping
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
32. When developing an operations and supply strategy, which of the following is an important
product-specific criterion to consider?
A. Technical liaison
B. Learning curve
C. Competitor's product performance
D. Production lot-size
E. Total quality management
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
33. In development of an operations and supply strategy, which of the following would be an
important product-specific criteria to consider?
A. Focus
B. Production lot-size
C. Supplier after-sale support
D. Learning curve
E. Total quality management
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
34. When a company seeks to match the benefits of a successful position while maintaining its
existing position in offering customers a variety of differing services, what is this process
called?
A. Operations capability analysis
B. Straddling
C. Order qualifying
D. Order winning
E. Inter-functional analysis
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
35. An activity-based map is which of the following?

A. A network guide to route airlines
B. A listing of activities that make up a project
C. A network that shows how a company's strategy is delivered to customers
D. A facility layout schematic noting what is done where
E. A timeline displaying major planned events
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
36. Which of the following is not a measure of operations and supply management efficiency
used by Wall Street?
A. Inventory turnover
B. Revenue per employee
C. Receivable turnover
D. Earnings per share
E. Asset turnover
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
37. Which of the following is a measure of operations and supply management efficiency used
by Wall Street?
A. Dividend payout ratio
B. Current ratio
C. Receivable turnover
D. Earnings per share growth
E. Financial leverage
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
38. Which of the following is a partial measure of productivity?

A. Output/Materials
B. Output/(Labor + Capital + Energy)
C. Output/All resources used
D. Output/Inputs
E. All of the above
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
39. Which of the following is a multifactor measure of productivity?

A. Output/(Materials)
C. Output/All resources used
D. Output/Inputs
E. All of the above
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
40. Which of the following is a total measure of productivity?
A. Output/Materials
C. Output/Labor
D. Output/Inputs
E. All of the above
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
41. If all you knew about a production system was that total daily output was 400 units and the
total labor necessary to produce the 400 units was 350 hours, what kind of productivity measure
could you use to compute productivity?
A. Partial measure
B. Multifactor measure
C. Total measure
D. Global measure
E. All of the above
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
42. If all you knew about a production system was that total daily output was 400 units and the
total labor necessary to produce the 400 units was 350 hours, and the total materials used were
425 units, what kind of productivity measure could you use to compute productivity?
A. Partial measure
B. Multifactor measure
C. Total measure
D. A and B above
E. B and C above
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
43. The total output from a production system in one day is 500 units and the total labor
necessary to produce the 500 units is 350 hours. Using the appropriate productivity measure,
which of the following numbers represents the resulting productivity ratio?
A. 1.000
B. 1.428
C. 0.700
D. 0.411
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
44. The total output from a production system in one day is 900 units and the total labor
necessary to produce the 900 units is 900 hours. Using the appropriate productivity measure,
what is the resulting productivity ratio?
A. 1.000
B. 1.428
C. 0.700
D. 0.411
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
45. Larry's Auto Body Repair Shop had revenues that averaged $60,000 per week in April and
$50,000 per week in May. During both months, the shop employed six full-time (40 hours/week)
workers. In April the firm also had four part-time workers working 25 hours per week but in
May there were only 2 part-time workers and they only worked 10 hours per week. What is the
percentage change in labor productivity from April to May for Larry's Auto Body Repair?
A. 17.65
B. -15.84
C. 8.97
D. -1.76
E. 19.23
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analytic
46. Various financial data for SunPath Manufacturing for 2010 & 2011 follow.
What is the percentage change in SunPath's total productivity measure between 2010 & 2011?
A. -9.22
B. 2.33
C. -0.53
D. 2.88
E. 10.39
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
What is the percentage change in the energy partial productivity measure for SunPath between
2010 & 2011?
A. -9.22
B. 2.33
C. -0.53
D. 2.88
E. 10.39
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analytic
What is the percentage change in the labor partial productivity measure for SunPath between
2010 & 2011?
A. -9.22
B. 2.33
C. -0.53
D. 2.88
E. 10.39
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analytic
What is the percentage change in the multifactor labor and raw materials productivity measure
for SunPath between 2010 & 2011?
A. -9.22
B. 2.33
C. -0.53
D. -2.88
E. 10.39
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analytic
50. What is a criterion or product characteristic that differentiates a product from the products of
competitors in a way meaningful to the market called? ____________________
Order winner
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
51. A diagram showing how a company's strategy is delivered through a set of tailored activities
is called what? _____________________
Activity-system map
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
52. The triple-bottom-line evaluates the firm against what three criteria?
1. _____________________
2. _____________________
3. _____________________
The text provides three alternatives: social, economic, and environmental; people, planet,
and profit; or folk, work, and place.
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
53. People who provide capital to the firm through stock purchases and other financial
instruments are called: _____________________
Shareholders
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
54. Individuals or organizations that are influenced, either directly or indirectly, by the actions of
the firm are called: _____________________
Stakeholders
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
55. Name five common measures of operations and supply management efficiency used by Wall
Street.
1. _____________________
2. _____________________
3. _____________________
4. _____________________
5. _____________________
Income per employee; Revenue per employee; Inventory turnover; Asset turnover;
Receivable turnover.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Essay Questions
56. Describe a specific example of the trade-offs between any two of the competitive
dimensions.
This question requires that the student recall at least two of the seven competitive dimensions
described under the heading "Competitive Dimensions" on pages 27-29 of the text. In evaluating
the student's response the instructor should take care that the student's arguments do, indeed
illustrate a "trade-off" or a situation where an improvement in one dimension comes at the cost
of a lessening of a different dimension. A fairly common example is between achieving low cost
(or price) at the expense of quality. For this example it is necessary for the student to specify that
he is talking about reducing design quality to achieve low cost (for example) instead of process
quality where improvements typically result in lowered cost.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Synthesis
57. Explain the role that "order qualifiers" and "order winners" play as the interface between
marketing and operations.
The student's answer to this question should indicate the usefulness of articulating and
differentiating between order winners and order qualifiers. In essence, these factors should
indicate the essence of what is required to compete in the marketplace and the ways that the
product or service, itself, differentiates itself from competing products and services. This topic is
discussed in the text on pages 30 under the heading "Order Winners and Qualifiers: The
Marketing-Operations Link."
AACSB: Analytic
Difficulty: Medium
Taxonomy: Synthesis
Chapter 09 Location, Logistics, and Distribution Answer Key
1. The local government's willingness to invest in upgrading infrastructure to the levels required
by a company is an important issue in a company's decision of where to locate a new facility.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Issues in Facility Location
2. Facility location analysis considers the competitive imperative to be close to customers as to

timeliness of deliveries.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
3. Facility location analysis considers the competitive imperative of lowest total cost.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
4. Facility location analysis considers the competitive imperative of a favorable business climate
as indicated by the presence of other companies in the same industry.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
5. Facility location analysis considers the competitive imperative of locating near the appropriate
labor pool to take advantage of low wage costs and/or skill levels.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
6. Facility location analysis considers the competitive imperative of locating near the appropriate
labor pool to take advantage of high technical skills.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
7. An example of a positive business climate that might influence a facility location decision is
increasing governmental costs and increasing property taxes.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
8. A favorable business climate in facility location decision-making might include government

legislation of tax abatements.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
9. A favorable business climate in facility location decision-making might include local

government intervention to facilitate businesses locating in an area via subsidies.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
10. A favorable business climate in facility location decision-making might include local
government providing basic skill training for prospective members of the workforce.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
11. In facility location decision-making the educational and skill levels of the labor pool must
match the company's needs.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. In facility location decision-making matching the educational and skill levels of the labor
pool to a company's needs is even more important than the labor pool's willingness and ability to
learn.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
13. Because the world is becoming more highly interconnected, the proximity of an important
supplier's plants is not crucial in supporting lean production methods.
FALSE
AACSB: Analytic
Difficulty: Easy
14. Issues of Error! Hyperlink reference not valid.Error! Hyperlink reference not
valid. and capacity are strongly interconnected to the facility location decision.
TRUE
AACSB: Analytic
Difficulty: Easy
15. A free trade zone operates under different rules and laws than a foreign trade zone.
FALSE
AACSB: Analytic
Difficulty: Easy
16. A free trade zone is typically a closed facility into which foreign goods can be brought
without being subject to the usual customs requirements.
TRUE
AACSB: Analytic
Difficulty: Easy
17. The objective of facility location analysis is to select the site with the lowest total cost.
TRUE
AACSB: Analytic
Difficulty: Easy
18. Governmental barriers to enter and locate in many countries are increasing through restrictive
protectionist legislation.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
19. Quality of life in a host community is not a major factor in making the facility location
decision.
FALSE
AACSB: Analytic
Difficulty: Easy
20. In facility location decision-making the factor-rating system is one of the least used general
location techniques.
FALSE
AACSB: Analytic
Difficulty: Easy
Topic: Plant Location Methods
21. In facility location decision-making the factor-rating system is based on linear programming.
FALSE
AACSB: Analytic
Difficulty: Easy
22. A major problem in a plant location decision based on the factor-rating system is that simple
point-rating schemes do not account for the wide variance of costs that may occur within each
factor used in the analysis.
TRUE
AACSB: Analytic
Difficulty: Easy
23. Services typically have multiple site locations to maintain close contact with customers.
TRUE
AACSB: Analytic
Difficulty: Easy
24. Facility location decisions are made using analytical techniques that are able to weigh a large
number of different variables equally.
FALSE
AACSB: Analytic
Difficulty: Easy
25. A third-party logistics company is a firm that manages all or part of another company's
product delivery operations.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Logistics
26. DHL and United Parcel Service are transportation companies which are prohibited from
functioning as a third-party logistics company the way Federal Express does.
FALSE
AACSB: Analytic
Difficulty: Medium
Topic: Logistics
27. Which of the following is not a criterion that influences manufacturing plant or warehouse
facility location decisions?
A. Proximity to customers
B. Historical cost
C. Infrastructure of a country
D. Quality of labor
E. Business climate
AACSB: Analytic
Difficulty: Easy
28. Which of the following is a not criterion that influences manufacturing plant or warehouse
A. Suppliers
B. Free trade zones
C. Political risk
D. Gross national product
E. Tariffs and customs duties
AACSB: Analytic
Difficulty: Easy
29. Which of the following is not a criterion that influences manufacturing plant or warehouse
A. Government barriers
B. Trading blocs
C. Environmental regulation
D. Immigration rules
E. Local labor costs
AACSB: Analytic
Difficulty: Easy
30. Which of the following is a criterion that influences manufacturing plant or warehouse
A. Proximity to customers
B. Corporate policy
C. Competitor's locations
D. Competitive advantage
E. Host community politics
AACSB: Analytic
Difficulty: Easy
31. An important issue in facility location analysis is business climate. An unfavorable business
climate could be indicated by which of the following?
A. Similar-sized businesses nearby
B. The willingness of local politicians to provide favorable treatment for a consideration
C. The presence of other foreign companies in the case of international locations
D. The local presence of companies in the same industry
E. An established educational institution nearby
AACSB: Analytic
Difficulty: Easy
32. One of the objectives of facility location analysis is to select a site with the lowest total cost.
Which of the following costs should be excluded from the analysis?
A. Historical costs
B. Inbound distribution costs
C. Land
D. Construction
E. Regional costs
AACSB: Analytic
Difficulty: Easy
Which of the following costs should not be included in the analysis?
A. Outbound distribution costs
B. Incidental costs
C. Energy costs
D. Hidden costs
E. Costs we can pass along to our customer
AACSB: Analytic
Difficulty: Easy
Which of the following are hidden costs that should be included in the analysis?
A. Becoming less responsive to the customer
B. Supplier costs
C. Taxes
D. Construction costs
E. Product life cycle costs
AACSB: Analytic
Difficulty: Easy
35. One of the objectives in facility location analysis is to select a site with the lowest total cost.
Which of the following costs are hidden costs that should be included in the analysis?
A. Infrastructure costs
B. Movement of preproduction material between locations
C. Taxes
D. Construction costs
E. Bribery costs
AACSB: Analytic
Difficulty: Easy
36. Which of the following is not an infrastructure criteria used in facility location analysis?
A. Adequate school system
B. Adequate health care
C. Adequate transportation
D. Adequate low cost labor
E. Adequate public utility systems
AACSB: Analytic
Difficulty: Easy
37. How many free trade zones are there in the United States?
A. Less than 50
B. Less than 100
C. About 260
D. More than 412
E. About 310
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
38. An example of a trading bloc is which of the following?

A. North American Free Trade Agreement countries
B. Free trade zones
C. ISO-9000 companies
D. American Production and Inventory Control Society
E. Wal-Mart and its' suppliers
AACSB: Analytic
Difficulty: Easy
39. Which of the following is a plant location methodology good for locating a single facility
within a set of existing facilities based in distances and volumes of goods shipped?
A. Factor-rating systems
B. Centroid method
C. Decision trees
D. Linear programming
E. Regression analysis
AACSB: Analytic
Difficulty: Easy
40. In which of the following situations should we not use the transportation method of linear
programming?
A. To find a new site location for a plant
B. To minimize costs of shipping "n" units to "m" destinations
C. To maximize profits of shipping "n" units to "m" destinations
D. To determine which corner of a street intersection to locate a retail service facility
E. To locate a finished goods distribution warehouse
AACSB: Analytic
Difficulty: Easy
41. The centroid method for plant location uses which of the following data?
A. Volume of goods to be shipped between existing points
B. Inbound transportation costs
C. Transport times between facilities
D. Correlation matrix of existing facilities
E. Probabilities and payoffs
AACSB: Analytic
Difficulty: Easy
42. Plant A is located at the (X, Y) coordinates of (100, 200) and has a volume of shipping of
500 units a day. Plant B is located at the (X, Y) coordinates of (150, 400) and has a volume of
shipping of 200 units a day. Using the centroid method, which of the following is the X
coordinate for the new plant location?
A. About 100
B. About 115
C. About 130
D. About 150
E. X coordinate cannot be computed from the data given
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
43. Plant A is located at the (X, Y) coordinates of (200, 500) and has a volume of shipping of
400 units a day. Plant B is located at the (X, Y) coordinates of (300, 100) and has a volume of
shipping of 300 units a day. Using the centroid method, which of the following is the X
coordinate for the new plant location?
A. About 227
B. About 243
C. About 389
D. X coordinate cannot be computed from the data given
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
44. A company wants to determine where they should locate a new warehouse. They have two
existing production plants (i.e., Plant A and Plant B) that will ship units of a product to this
warehouse. Plant A is located at the (X, Y) coordinates of (50, 100) and will have volume of
shipping of 250 units a day. Plant B is located at the (X, Y) coordinates of (150, 200) and will
have a volume of shipping of 150 units a day. Using the centroid method, which of the following
are the X and Y coordinates for the new plant location?
A. (81,117)
B. (88, 138)
C. (117,102)
D. (76,123)
E. X and Y coordinates cannot be computed from the data given
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
45. What transportation mode has very high initial investment costs but gives a very low cost per
mile for products that are highly specialized and require no packaging?
A. Highway
B. Rail
C. Water
D. Pipeline
E. Air
AACSB: Analytic
Difficulty: Easy
46. Very few products are moved without at least part of their journey being by which mode of
transportation?
A. Highway
B. Rail
C. Water
D. Pipeline
E. Air
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
47. Name the five transportation modes discussed in the textbook.

1)____________________; 2)____________________;
3)____________________; 4)____________________;
5) ____________________
1) Highway; 2) Rail; 3) Water; 4) Air; 5) Pipeline
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
48. Name four methods of quantitative analysis that are useful in informing the facility location
decision. 1)____________________; 2)____________________; 3)____________________;
4)____________________
1) Centroid method; 2) Regression analysis; 3) Transportation method of linear
programming; 4) Factor rating system
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
49. What is a closed area or compound into which foreign goods can be brought without being
subject to the normal customs requirements? ____________________
A free trade zone (or foreign trade zone)
AACSB: Analytic
Difficulty: Easy
50. Three distribution centers, A, B, and C, are located at the following (X, Y) coordinates: A,
(20, 130); B, (180, 0); and C, (200, 200). A factory is to be constructed to distribute a new
product through these warehouses. The expected annual volumes expected to be shipped through
the three warehouses is forecast to be 20 million units through A, 100 million through B and 50
million through C. Using the centroid method, approximately what should the coordinates of the
new factory be? _________________
X = 167, Y = 74
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
51. What is the name for a group of countries that have agreed on a set of special arrangements
governing the buying and selling of goods between member countries?
________________________
Trading bloc
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
52. The text describes 14 "Issues in facility location." Name as many of these as you can.
1) ________________________ 2) ________________________
3) ________________________ 4) ________________________
5) ________________________ 6) ________________________
7) ________________________ 8) ________________________
9) ________________________ 10) ________________________
11) ________________________ 12) ________________________
13) ________________________ 14) ________________________
(1.) Proximity to customers; (2.) Business climate; (3.) Total cost; (4.) Infrastructure; (5.)
Quality of labor; (6.) Suppliers; (7.) Other facilities; (8.) Free trade zones; (9.) Political
risk; (10.) Government barriers; (11.) Trading blocs; (12.) Governmental regulation; (13.)
Host community; (14.) Competitive advantage
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
53. What are the two "hidden costs" that are often overlooked in determining the total cost of a
facility location decision?
__________________________________
__________________________________
(1.) Excessive moving of pre-production materials between locations prior to final delivery
to the customers. (2.) Loss of customer responsiveness arising from locating away from the
main customer base.
AACSB: Analytic
Difficulty: Medium
Essay Questions
54. Compare and contrast the factor-rating system and the transportation method of linear
programming as used in facility location decisions.
These two methods are discussed in the text starting on page 255. A successful response to the
question will identify that the transportation method of linear programming employs
substantially more mathematical rigor but also imposes some fairly rigid assumptions (like
linearity & certainty) and is limited in the kinds of information that is considered in making the
decision. The factor-rating system makes fewer assumptions to facilitate analytical tractability
and gives broad latitude in terms of the kinds of information used. On the other hand, to use the
factor-rating system to sort out a facility decision from a large number of candidate locations will
require gathering and assessment of large amounts of data which is measured differently and
may not necessarily be compatible. Linear programming, on the other hand, uses less data per
alternative and that data is, by definition, analyzable. Stated differently, the factor-rating method
incorporates the decision-makers judgment more explicitly than does the transportation method
of linear programming.
A strong response to this question will convey the idea that blending these methods is possible.
The transportation method can be used to help sort through a large number of candidate locations
and eliminate most of them. The factor-rating system, then, working with a relatively short list of
possibilities, each of which is acceptable from the transportation linear programming
perspective, can look more closely and in more detail to assist in the final decision.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Synthesis
55. As a facility location consultant, how would you advise a client wanting to locate a retail
service facility differently than a client wanting to locate an on-line stock trading operation?
A retail service facility requires close physical proximity to customers. An analytical method that
relates possible locations to the locations of clientele (such as the centroid method or regression
analysis) is favored here. The on-line operation, on the other hand, is relatively footloose relative
to customers. Here, a factor-rating system that considered issues like quality of labor,
infrastructure, quality of life, host community amenities, etc. would be more appropriate.
AACSB: Analytic
Difficulty: Hard
56. What weight should be given to environmental pollution control regulations that differ from
location to location or from country to country in making facility location decisions?
Environmental regulations are mentioned in passing on page 254 of the text. This question is
extremely value-laden and does not lend itself to a right-or-wrong answer. Instead it provides
your students with the opportunity to impose their own values on the issue. Hence, some latitude
must be taken in evaluating their responses. Some students will argue that, because of the costs
of being "green," the firm has a responsibility to shareholders to locate in the most
environmentally permissive location. Others will argue that the social responsibility of the firm
should dominate the decision and, wherever it locates, the firm should spare no expense to be as
"clean and green" as technology allows. Either case, argued well, should get some credit. A
slightly more thoughtful response will look not just at current regulations but toward possible
tighter regulations in the long-term future and even to the public image the firm wishes to
project. An excellent response will incorporate all of these perspectives and will add the notion
that, by being "clean and green" a firm may actually gain competitive advantage as the
environmental movement takes hold and sensitive customers become aware of the firm's
environmentally responsible stance. A second type of competitive advantage might arise. If the
"green" firm lobbies for the more strict pollution rules, competitors may be required to conform
to tougher regulations by adopting pollution controls at inflated future prices.
AACSB: Analytic
Difficulty: Hard
Chapter 10 Lean and Sustainable Supply Chains Answer Key
1. Lean production is an integrated set of activities designed to achieve high-volume production

using minimal inventories of raw materials, work in process, and finished goods.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Supply Chains
2. Henry Ford used JIT concepts as he streamlined his moving assembly lines to make
automobiles in the early 1900's.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
3. Lean production requires a "push & pull" system of inventory replenishment.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
4. Lean production replaced JIT in the 1990s because JIT did not address the problem of
reducing waste.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
5. Lean production is a management philosophy and a pull system throughout the plant.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
6. Lean production makes implementing green strategies in manufacturing processes more

difficult.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Production
7. Green strategies that save energy and fight global warming have broad consumer appeal and
political support.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
8. A recent report recommended that companies report that their emissions of Green House
Gases were generated by their supply chain.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
9. Group technology is a philosophy wherein similar parts are grouped together and the
processes required to make the parts are arranged as a work cell.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
10. Group technology cells help to eliminate movement and queue (waiting) time between
operations.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
11. Group technology includes the set of psychological tests and training exercises given to
group workers to insure a high level of teamwork.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. In the textbook the expression "quality at the source" means that we need to purchase the best
quality a supplier or vendor can provide.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Logic, Lean Supply Chains
13. "Quality at the source" requires factory workers to become their own inspectors.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
14. JIT production means that we produce the product before it is required so the customer does
not wait for the product.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: The Toyota Production System, Lean Supply Chains
15. The goal of JIT production is to drive all inventory queues lower.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
16. JIT is typically applied to non-repetitive manufacturing.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
17. JIT manufacturing forces a firm to work with a lower water level despite safety hazards.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: The Toyota Production System
18. A principle of value stream mapping is to concentrate on speeding up value-added

operations.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Value Stream Mapping
19. Value stream mapping is a technique that aims to eliminate waste in a process.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
20. Uniform plant loading is where you schedule production with different amounts of the same
product each day of the week to permit variation to meet changing demand requirements.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
21. Uniform plant loading is a process of smoothing the production activity flow to dampen the
reaction waves that normally occur in response to schedule variations.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
22. Value stream mapping is used to visualize product flows through various processing steps.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
23. A Kanban control system uses a signaling device to regulate JIT flows.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
24. Kanban means "symbol" or "box" in Japanese.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
25. Using the formula in the textbook the only parameters we need to determine the number of
Kanban card sets is the average number of units demanded over some time period, the container
size, and the safety stock.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
26. "Kanban Squares" is an educational game played in Kanban training sessions.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
27. Respect for people is a key to the Japanese improvement ideas in manufacturing.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
28. In Japanese manufacturing automation and robotics are used extensively to perform dull or
routine jobs so employees are free to focus on important improvement tasks.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
29. Subcontractor networks are not very important in Japanese manufacturing.

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
30. Company unions in Japan exist to foster a cooperative relationship with management.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
31. Firms in Japan tend to have short-term partnerships with their suppliers and customers.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
32. One of the many JIT techniques that have been successfully applied in service firms is the
upgrading of quality.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Supply Chains, Lean Supply Chain Design Principles
upgrading of housekeeping.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
34. One of the many JIT techniques that have been successfully applied in service firms is
leveling facility load.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
eliminating of unnecessary activities.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
36. One of the few JIT techniques that do not work well in service firms is demand-pull
scheduling.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
37. The term "freeze window" refers to the practice of building quality into the process and not
identifying quality by inspection.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Supply Chains, Value Stream Mapping
38. Preventive maintenance is emphasized in lean production to ensure that flows are not
interrupted by downtime or malfunctioning equipment.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Logic, The Toyota Production System, Lean Supply Chains
39. Value stream mapping is used to identify all of the value-adding as well as non-value-adding
processes that materials are subjected to within a plant.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
40. Value stream mapping involves materials, not information.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
41. A kaizen burst is a symbol on a value stream map.

TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
42. A kaizen burst is an overfilled kanban container.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
43. Which of the following are related to lean production?

A. A philosophy of waste elimination
B. Lean consumption
C. Never running out of inventory
D. The Waehi-Subaru method
E. Full use of capacity
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
44. In the textbook Toyota's Fujio Cho identified which of the following types of waste to be
eliminated?
A. Excess quality
B. Overproduction
C. Underproduction
D. Environmental
E. Over-thinking
AACSB: Analytic
Difficulty: Medium
eliminated?
A. Underproduction
B. Excess quality
C. Preventive maintenance
D. Product defects
E. Kaizen
AACSB: Analytic
Difficulty: Medium
eliminated?
A. Excess quality
B. Motion
C. Excess capacity
D. Underproduction
E. Excess demand
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
47. Which of the following is a key inventory reduction target under lean production?
A. FIFO inventory
B. Hidden inventory
C. Safety stock
D. Lost inventory
E. Ladder inventory
AACSB: Analytic
Difficulty: Easy
48. Which of the following addresses elimination of waste under lean production?
A. Info-matic warehouse networks
B. Outsourced housekeeping
C. Quality at the source
D. Backflush
E. Bottom-round management
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
49. Which of the following is an element that addresses elimination of waste under lean
production?
A. Production ahead of demand
B. Group plant loading technology
C. Kanban production control system
D. Minimized run times
E. Full capacity utilization
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
50. Group technology (GT) is credited with which of the following benefits?
A. Reducing waiting time between process operations
B. Improving inventory discipline
C. Reducing required workforce skills
D. Improved labor relations
E. Improved small group functioning
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Supply chain Design Principles
51. Which of the following statements holds true for Kanban production control systems?
A. The authority to produce or supply additional parts comes from upstream operations
B. In a paperless control system, containers can be used instead of cards
C. The cards or containers make up the Kanban push system
D. They require substantial quantitative analysis prior to implementation
E. They have not been successful outside of Japan and the United States
AACSB: Analytic
Difficulty: Easy
Topic: Lean Logic
52. In setting up a Kanban control system you need to determine the number of Kanban card sets
needed. If the expected demand during lead time is 25 per hour, the safety stock is 20% of the
demand during lead time, the container size is 5, and the lead time to replenish an order is 5
hours, what is the number of Kanban card sets needed?
A. 5
B. 20
C. 27
D. 30
E. 34
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
Topic: Lean Logic
53. In setting up a Kanban control system you need to determine the number of Kanban card sets
needed. If the expected demand during lead time is 50 per hour, the safety stock is 20% of the
demand during lead time, the container size is 4. If the lead time to replenish an order is 8 hours,
what number of Kanban card sets is needed?
A. 60
B. 80
C. 90
D. 120
E. 150
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
Topic: Lean Logic
54. You have been called in as a consultant to set up a Kanban control system. The first thing to
do is to determine the number of Kanban card sets needed. Your research shows that the
expected demand during lead time for a particular component is 150 per hour. You estimate the
safety stock should be set at 25% of the demand during lead time. The tote trays used as
containers can hold 8 units of stock and the lead time it takes to replenish an order is 2 hours.
Which of the following is the number of Kanban card sets necessary to support this situation?
A. 42
B. 47
C. 68
D. 89
E. 94
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
Topic: Lean Logic
55. You have been called in as a consultant to set up a Kanban control system. The first thing
you do is to determine the number of Kanban card sets needed. Your research shows that the
expected demand during lead time for a particular component is 1,200 per hour. You estimate the
safety stock should be set at 5% of the demand during lead time. The tote trays used as
containers can hold 2 units of stock and the lead time to replenish an order is 10 hours. Which of
the following is the number of Kanban card sets necessary to support this situation?
A. 5,000
B. 5,500
C. 6,300
D. 6,500
E. 7,000
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
Topic: Lean Logic
56. In designing a lean production facility layout a designer should do which of the following?
A. Design for work flow balance
B. Locate flexible workstations off line
C. Link operations through a push system
D. Balance capacity using job shop analysis
E. Always keep operations on a single floor of the factory
AACSB: Analytic
Difficulty: Medium
Topic: Lean Logic
57. When implementing a lean production system a stabilized schedule is achieved using which
of the following?
A. Level scheduling
B. Demand pull
C. Freeze window
D. Reduced lot sizes
E. Bottom-round management
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Lean Logic, The Toyota Production System
58. To implement a Kanban pull system a firm would do which of the following?
A. Reduce lot sizes
B. Force demand
C. Hire a consultant
D. Bottom-round management
E. Implement group technology
AACSB: Analytic
Difficulty: Medium
Topic: Lean Logic
59. In implementing a lean production system you should work with suppliers to do which of the
following?
A. Open facilities near your factory
B. Focus workstation capacities
C. Backflush
D. Provide quality at the source
E. Reduce lead times
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Lean Logic
60. In implementing a lean production system you should work with suppliers to do which of the
following?
A. Calculate lead times
B. Quality circles
C. Freeze windows
D. Make frequent deliveries
E. Achieve bottom-round management
AACSB: Analytic
Difficulty: Medium
Topic: Lean Logic
61. To implement a flow process in developing a lean system a firm might do which of the
following?
A. Improve capacity utilization
B. Build product in anticipation of demand
C. Reduce setup/changeover time
D. Eliminate some fixed costs
E. Implement groupware
AACSB: Analytic
Difficulty: Medium
62. To implement a flow process in developing a lean system a firm might do which of the
following?
A. Balance workstation capacities
B. Standardize product configurations
C. Process design with product design
D. Adopt a kaizen philosophy
E. Implement top-down management controls
F. Level: Medium
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Value Stream
63. Imagine comparing a manufacturing operation using regular lot-sizing and the same
operation with a Kanban/lean production approach. What would be your expectations of the
difference between the total cost (i.e., inventory holding costs + setup/ordering costs) of each?
A. Inventory holding cost will increase non-linearly with inventory
B. Total costs will be lower for the regular lot-size operation
C. Total costs will be lower for the Kanban/lean production operation
D. The order quantity will be larger for the Kanban/lean production approach
E. As long as the total quantity is the same, total costs will be the same
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Logic
64. In a lean production system we expect to see which of the following?
A. No extra inventory
B. Extra inventory of critical parts held "just-in-case"
C. More parts and fewer standardized product configurations
D. Managers being held responsible for quality of the work turned out
E. Closer management/labor relationships
AACSB: Analytic
Difficulty: Easy
Topic: Lean Logic
65. Which of the following is a lean production technique that is not reported in the textbook to
have been successfully applied in service firms?
A. Organize problem-solving groups
B. Upgrade housekeeping
C. Upgrade quality
D. Freeze windows
E. Eliminate unnecessary activities
AACSB: Analytic
Difficulty: Easy
Topic: Lean Logic
66. An activity where the parts that go into each unit of a product are periodically removed from
inventory and accounted for based on the number of units produced. is called which of the
following?
A. Frozen window
B. Backflush
C. Level schedule
D. Group Technology
E. Kanban
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Logic
67. Which of the following is a lean production technique that has been successfully applied in
service firms?
A. Decision trees
B. Leveling the facility load
C. Linear programming
D. Fully utilizing capacity
E. Backflushing
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Lean Logic
68. In setting up a kanban control system you need to determine the number of kanban card sets
needed. If the expected demand during lead time is 24 per hour, safety stock is 10% of the
demand during lead time, the container size is 5. If the lead time to replenish an order is 5 hours,
what number of kanban card sets is needed? ___________________
27 (26.4)
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
69. In setting up a kanban control system and you need to determine the number of kanban card
sets needed. If the expected demand during lead time is 50 per hour, the safety stock is 20% of
the demand during lead time, the container size is 4. If the lead time to replenish an order is 2
hours, what number of kanban card sets is needed? ___________________
30
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
70. Name Fujio Cho's seven prominent types of waste to be eliminated.
1) ___________________
2) ___________________
3) ___________________
4) ___________________
5) ___________________
6) ___________________
7) ___________________
(1.) Waste from overproduction; (2.) Waste of waiting time; (3.) Transportation waste; (4.)
Inventory waste; (5.) Processing waste; (6.) Waste of motion; (7.) Waste from product
defects.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
71. Name seven elements that address elimination of waste.

1) ___________________
2) ___________________
3) ___________________
4) ___________________
5) ___________________
6) ___________________
7) ___________________
(1.) Focused factory networks; (2.) Group technology; (3.) Quality at the source; (4.) JIT
Production; (5.) Uniform plant loading; (6.) Kanban production control system; (7.)
Minimized set-up times.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
Topic: Lean Logic, The Toyota Production System
72. Name the four value stream principles.
1) ___________________
2) ___________________
3) ___________________
4) ___________________
(1.) Keep the value stream moving at maximum velocity; (2.) Eliminate waste that stops,
slows down or diverts the value stream; (3.) Concentrate on removing waste rather than
speeding up value-added operations; (4.) Look for waste in the factory, office, physical,
technical and procedural operations.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
73. What are the four rules of the Toyota Production System?
1) ___________________
2) ___________________
3) ___________________
4) ___________________
(1.) All work shall be highly specified as to content, sequence, timing and outcome; (2.)
Every customer-supplier connection must be direct and there must be an unambiguous yes-
or-no way to send requests and receive responses; (3.) The pathway for every product and
service must be simple and direct; (4.) Any improvement must be made in accordance with
the scientific method under the guidance of a teacher at the lowest possible level of the
organization.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
Essay Questions
74. As lean production methods reduce changeover and setup times and thus enable smaller
economic lot sizes and less work-in-process inventory, is the importance of quality increased or
decreased? Why?
Level: Hard
Increased. The reason for this is simply that as lean production takes hold, there is a lower
margin for error. A defective component can totally shut down a production line where, with
plenty of inventory, the defect can be discarded with minimal affect on other processes. An
incorrect answer can be logically construed. An answer of "decreased" can be defended by the
notion that with very brief set-up times it doesn't take too long to set up to replace the defective
component. However brief that time is, however, it is time that several other processes are being
starved for components.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Synthesis
Topic: Lean Logic
75. Explain why lean manufacturing requires a stable demand environment.
The text refers to "uniform plant loading" on page 284. Changes in demand result in a "ripple
effect" that is echoes throughout the manufacturing system. This is similar to the "bullwhip
effect" discussed in Chapter 8, "Global Sourcing And Procurement." To avoid this, adjustments
to the schedule are made very gradually.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Synthesis
Chapter 06 Quality Management and Six Sigma Answer Key
1. TQM was defined in the textbook as managing the entire organization so that it excels on all
dimensions of products and services that are important to the customer.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Total Quality Management
2. One SPC tool used in total quality management is the run chart.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Process Control Procedures
3. An operational goal of total quality management is the careful design of the product or
service.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
4. An operational goal of total quality management is ensuring that the organization's systems
can consistently produce the product or service as it is designed.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
5. Design quality refers to the inherent value of the product in the marketplace.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Quality Specifications and Quality Costs
6. One of the tools of a quality control department that is used in a TQM program is acceptance
sampling.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
7. One of the tools of a quality control department that is used in a TQM program is leadership.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
8. In 1997 the Malcolm Baldrige National Quality Improvement Act established the U.S.'s
annual award for total quality management.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
9. Conformance quality is a strategic decision for the firm.

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
10. The Malcolm Baldrige National Quality Award represents the U. S. government's
endorsement of quality as an essential part of successful business strategy.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
11. While business organizations can seek to achieve the Baldrige National Quality Award,
educational institutions, like universities, can't.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. While small business organizations can seek to achieve the Baldrige National Quality Award,
health care organizations, like hospitals, can't.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
13. A quality guru named Philip Crosby defined quality as fitness for use.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
14. A quality guru named Philip Crosby defined quality as conformance to requirements.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
15. A quality guru named Joseph M. Juran defined quality as fitness for use.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
16. A quality guru named Philip Crosby suggested a general approach to quality management
should involve prevention, not inspection.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
17. A quality guru named Philip Crosby is well known for his "14 points" of quality.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
18. Fundamental to any quality program is the determination of quality specifications and the
costs of achieving (or not achieving) those specifications.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
19. The term "conformance quality" refers to the relative level of performance of a product as
compared to competing products. For instance, certain luxury sedans are said to be of "higher
quality" than some low-priced sub-compact automobiles.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
20. "Quality at the source" refers to the degree to which product or service design specifications
are met.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
21. Design quality in products refers to the degree to which product design specifications are
met.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
22. One of the definitions for the cost of quality is that it represents the costs attributable to the
production of quality that is not 100 percent perfect.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
23. Continuous improvement is a management philosophy that approaches the challenge of
product and process improvement as a never-ending process of achieving small wins.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
24. Six-sigma refers to the philosophy and methods that some leading companies use to
eliminate defects in their products and processes.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
25. A process that is in six-sigma control will produce no more than two defects out of every
million units.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
26. A DMPO is essentially the same thing as a DMAIC.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Six-Sigma Quality
27. An opportunity flow diagram is used to separate the value-added from the non-value-added
steps in a process.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
28. An opportunity flow diagram is a time sequenced chart showing plotted values measuring the
flow of end product or components.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
29. Variation in production systems that is caused by factors that can be clearly identified and
possibly even managed is called assignable variation.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
30. An example of assignable variation in a production system may be that workers are not
identically trained.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
31. An example of assignable variation in a production system may be that a machine is not
adjusted properly.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
32. Variation that is inherent in a production process itself is called assignable variation.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
33. Variation that is inherent in a production process itself is called common variation.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
34. It is impossible to have zero variability in production processes.

TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
35. Genichi Taguchi's view of the cost of quality is that variance is a discontinuous function.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
36. The capability index is used to gauge economic changes in service systems.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Statistical Quality Control
37. Process control is concerned with monitoring quality after the product or service has been
produced.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
38. Statistical process control involves testing random samples of output from a process to
determine whether the process is producing items within a pre-selected range.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Acceptance Sampling
39. Measurement by attributes means taking a sample, measuring the attribute in question and
determining the level of quality in the population from which the sample was drawn.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
40. Attributes are those quality characteristics that are classified as either conforming or not
conforming to specifications.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
41. A quality control chart has upper and lower control limits expressed as lines on a chart. As
long as the sample values fall between these two lines there is no need to investigate process
behavior.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
42. The "p" chart is only useful for sampling that deals with continuous variables.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
43. The value for "z" used in quality control charts is based on the degree of confidence you want
to have in the resulting UCL and LCL values.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
44. If the fraction defective is 0.12 based on a sample size of 16, the standard deviation used in
the "p" chart is about 0.08.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
the "p" chart is about 0.10.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
46. To obtain a 99.7 percent confidence level in a "p" chart we would use a value of 3 for "z".
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
47. Acceptance sampling is performed on goods that already exist to determine what percentage
of items conforms to specifications.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
48. In acceptance sampling, the number of units in the sample (n) is determined by the
interaction of the acceptable quality level (AQL), the lot tolerance percent defective (LTPD), the
probability of rejecting a high quality lot (alpha) and the probability of accepting a low quality
lot (beta).
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
49. In acceptance sampling, the value for the acceptance number (c) is determined by the
interaction of the acceptable quality level (AQL), the lot tolerance percent defective (LTPD), the
probability of rejecting a high quality lot (alpha) and the probability of accepting a low quality
lot (beta).
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
50. AQL stands for accepting questionable lots in production quality management.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
51. LTPD in acceptance sampling stands for "lots of tolerance for parts defective."
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
52. The Greek letter alpha is associated with consumer's risk.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
53. The probability associated with rejecting a high quality lot is denoted in acceptance sampling
with the Greek letter alpha.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
54. The probability associated with accepting a low quality lot is denoted in acceptance sampling
with the Greek letter alpha.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
55. The producer's risk associated with rejecting a high quality lot is denoted in acceptance
sampling with the Greek letter beta.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
56. Total, one-hundred percent, inspection can never be cost justified.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
57. One-hundred percent inspection is justified when the cost of inspection is not very much.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
58. Sampling plans are generally displayed graphically through the use of operating
characteristic (OC) curves.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
59. The capability index (Cpk) calculates the percentage of items being produced within
specifications.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
60. The capability index (Cpk) indicates the position of the mean and tails of a processes variance
relative to design specifications.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
61. Standard practice in statistical process control for variables is to set control limits so that 95
percent of the sample means will fall within the UCL and the LCL.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
62. In variables sampling the actual measurements of the variable observed are used regardless
of whether the unit is good or bad.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
63. The philosophical leaders of the quality movement, Philip Crosby, W. Edwards Deming, and
Joseph M. Juran had the same general message about what it took to achieve outstanding quality.
Which of the following was not part of that message?
A. Quality is free
B. Leadership from senior management
C. Customer focus
D. Total involvement of the workforce
E. Continuous improvement
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
64. The philosophical leaders of the quality movement, Philip Crosby, W. Edwards Deming, and
Joseph M. Juran had the same general message about what it took to achieve outstanding quality.
Which of the following was part of that message?
A. Fourteen steps for quality management
B. Quality is free
C. Customer focus
D. Zero defects
E. Six-sigma
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
65. An analytical tool used in six-sigma quality improvement programs is which of the
following?
A. Leadership
B. Continuous improvement
C. Quick response
D. Partnership development
E. Checksheets
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
66. Which of the following is not an analytical tool used in six-sigma quality improvement
programs?
A. Run charts
B. Pass charts
C. Cause-and-effect diagrams
D. Flowcharts
E. Pareto charts
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
67. A flow chart as part of a six-sigma quality improvement process might be found in which
DMAIC category?
A. Define
B. Measure
C. Analyze
D. Improve
E. Control
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
68. A fishbone diagram as part of a six-sigma quality improvement process might be found in
which DMAIC category?
A. Define
B. Measure
C. Analyze
D. Improve
E. Control
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
69. An opportunity flow diagram as part of a six-sigma quality improvement process might be
found in which DMAIC category?
A. Define
B. Measure
C. Analyze
D. Improve
E. Control
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
70. A Pareto chart as part of a six-sigma quality improvement process might be found in which
DMAIC category?
A. Define
B. Measure
C. Analyze
D. Improve
E. Control
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
71. Which of the following is an analytical tool used in six-sigma quality improvement
programs?
A. Leadership
B. Pareto Charts
C. Management by fact
D. Continuous improvement
E. Kaizen
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
72. Which of the following is not an analytical tool used in six-sigma quality improvement
programs?
A. Flowcharts
B. Run charts
C. Control charts
D. Pareto analysis
E. Tendency analysis
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
73. Failure mode and effect analysis is used in six-sigma projects. It involves which of the
following?
A. Closely examining each rejected part to determine the cause
B. A careful sampling plan
C. Calculating a risk priority number for each possible failure
D. Reporting the effect each failure has had on a customer
E. Multivariate testing
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
74. Design of experiments is a statistical methodology often used in six-sigma projects. It aims to
accomplish which of the following?
A. Keep careful track of the occurrences of each possible defect
B. Determine the cause and effect relationships between process variables and output
C. Report defects to management on a Pareto chart
D. Carefully change each individual process variable until the cause of a defect is found
E. Eliminate defects by finding out who or what is causing them
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
75. The Malcolm Baldrige award selection process helps improve quality and productivity by
which of the following means?
A. Stimulating foreign based suppliers of American companies to improve quality
B. Reporting quality levels among American firms
C. Identifying American firms with the most difficult quality problems
D. Providing feedback to applicants by the examiners
E. Helping Baldrige award winners increase their sales
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
76. Which of the following are eligible companies to be considered for the Baldrige award?
A. Auditing firms
B. Offshore suppliers to U. S. companies
C. Firms operating only outside the U. S.
D. State Government agencies
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
77. Which of the following are not eligible to be considered for the Baldrige Award?
A. Small businesses
B. Health care organizations
C. Educational institutions
D. State highway patrol organizations
E. Nuclear power plants
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
78. The primary purpose of the Malcolm Baldrige National Quality Award is which of the
following?
A. To encourage the spread of statistical quality control
B. To improve human resource development and management in manufacturing
C. To improve competitiveness of American firms
D. To prove that American firms were competitive in quality
E. To emphasize the use of quantitative methods in process management
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
79. The Grading Criteria of the Baldrige Award for total quality management includes which of
the following?
A. Future plans
B. Information and analysis
C. Standardization
D. Control
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
80. The Malcolm Baldrige National Quality Award is given to organizations that have done
which of the following?
A. Instituted a six-sigma approach to total quality control
B. Demonstrated a high level of product quality
C. Demonstrated outstanding quality in their products and processes
D. Have a world-class quality control function
E. Most significantly improved their product quality levels
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
81. Which of the following is not a category reported in applying for the Baldrige Award?
A. Corporate leadership
B. Use of statistical quality control tools
C. Business results
D. Consumer and market focus
E. Strategic planning
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
82. The dimension of design quality that concerns the sensory characteristics of the product is
A. Features
B. Serviceability
C. Perceived quality
D. Reputation
E. Aesthetics
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
83. The dimension of design quality that concerns the consistency of performance over time or
the probability of failing is which of the following?
A. Response
B. Serviceability
C. Reliability
D. Reputation
E. Perceived quality
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
84. The dimension of design quality that concerns secondary characteristics is which of the
following?
A. Features
B. Serviceability
C. Reliability
D. Reputation
E. Perceived quality
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
85. Which of the following is a dimension of design quality?

A. Price
B. Features
C. Color
D. Weight
E. Quality at the source
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
86. Which of the following is a dimension of design quality?
A. Aesthetics
B. Price
C. Quality at the source
D. Distribution
E. Leadership
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
87. Which of the following is a basic assumptions that justify an analysis of the costs of quality?
A. Failures are caused
B. Prevention is more expensive
C. Performance can be learned
D. Rules of thumb don't always work
E. Appraisal costs are less than prevention costs
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
88. A cost of quality classification is which of the following?

A. Material costs
B. Prevention costs
C. Variable overhead
D. Direct labor
E. Inventory costs
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
89. Which of the following is the cost of quality classification for costs such as scrap, rework, or
repair?
A. Appraisal costs
B. Prevention costs
C. External failure costs
D. Internal failure costs
E. Rework and wastage
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
90. Which of the following is the cost of quality classification for costs such as inspection,
testing, and other tasks to ensure that the product or process is acceptable?
A. Appraisal costs
B. Prevention costs
D. Internal failure costs
E. Checking costs
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
91. Which of the following is the cost of quality classification for costs such as defects that pass
through the system, such as customer warranty replacements, loss of customer or goodwill,
handling complaints, and product repair?
A. Appraisal costs
B. Prevention costs
D. Customer return cost
E. Workmanship costs
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
92. Which of the following tools uses a graphical representation of the production process to
suggest potential sources of process variation?
A. Process flow diagram
B. Check sheet
C. Pareto chart
D. Histogram
E. Run chart
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
93. In monitoring process quality we might use which of the following statistics?
A. Absolute values
B. Percentage deviation from tolerance centers
C. "k" values for the sample mean
D. Logarithmic control intervals
E. Difference between the highest and lowest value in a sample
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
94. You have just used the capability index (Cpk) formulas to compute the two values "min [2,
2.5]." Which of the following is the proper interpretation of these numbers?
A. The true capability index value is 2.5
B. The mean of the production process has shifted to the left of the design limits
C. The mean of the production process has shifted to the right of the design limits
D. The mean has not shifted at all
E. The true capability index value is between 2 and 2.5
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
95. You have just used the capability index (Cpk) formulas to compute the two values "min [1,
1]." Which of the following is the proper interpretation of these numbers?
A. The true capability index value is exactly 1
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
96. You have just used the capability index (Cpk) formulas to compute the two values "min [1.5,
1]." Which of the following is the interpretation of these numbers?
A. The true capability index value is 1
E. The true capability index value is between 1.5 and 1
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
97. Quality control charts usually have a central line and upper and lower control limit lines.
Which of the following is not a reason that the process being monitored with the chart should be
investigated?
A. A large number of plots are close to the upper or lower control lines
B. Erratic behavior of the plots
C. A single plot falls above or below the control limits
D. A change in raw materials or operators
E. A run of five above the central line
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
98. Quality control charts usually have a central line and upper and lower control limit lines.
Which of the following is a reason that the process being monitored with the chart should be
investigated?
A. A single plot falls above or below the control limits
B. Normal behavior
C. A large number of plots are on or near the central line
D. No real trend in any direction
E. A change in raw materials or operators
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
99. If there are 120 total defects from 10 samples, each sample consisting of 10 individual items
in a production process, which of the following is the fraction defective that can be used in a "p"
chart for quality control purposes?
A. 120
B. 10
C. 8
D. 1.2
E. 0.8
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
100. If there are 400 total defects from 8 samples, each sample consisting of 20 individual items
in a production process, which of the following is the fraction defective that can be used in a "p"
chart for quality control purposes?
A. 400
B. 160
C. 2.5
D. 1.0
E. 0.4
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
101. You want to determine the upper control line for a "p" chart for quality control purposes.
You take several samples of a size of 100 items in your production process. From the samples
you determine the fraction defective is 0.05 and the standard deviation is 0.01. If the desired
confidence level is 99.7 percent, which of the following is the resulting UCL value for the line?
A. 0.39
B. 0.08
C. 0.06
D. 0.05
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
102. You want to determine the lower control line for a "p" chart for quality control purposes.
You take several samples of a size of 50 items in your production process. From the samples you
determine the fraction defective is 0.006 and the standard deviation is 0.001. If the desired
confidence level is 99.7 percent, which of the following is the resulting LCL value for the line?
A. 0.0
B. 0.002
C. 0.003
D. 0.004
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
103. You want to determine the control lines for a "p" chart for quality control purposes. If the
desired confidence level is 99 percent, which of the following values for "z" would you use in
computing the UCL and LCL?
A. 0.99
B. 2
C. 2.58
D. 3
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
total number of defects from all samples is 2,500, the number of samples is 100, and the sample
size is 50, which of the following would be the standard deviation used in developing the control
lines?
A. 0.4900
B. 0.2499
C. 0.1556
D. 0.0707
E. 0.02499
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
total number of defects from all samples is 560, the number of samples is 70, and the sample size
is 80, which of the following would be the standard deviation used in developing the control
lines?
A. 0.9000
B. 0.4556
C. 0.0335
D. 0.0011
E. 0.0112
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
106. For which of the following should we use a "p" chart to monitor process quality?
A. Defective electrical switches
B. Errors in the length of a pencil
C. Weight errors in cans of soup
D. Temperature of entrees in a restaurant
E. Letter grades on a final examination
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
107. For which of the following should we use a "p" chart to monitor process quality?
A. The dimensions of brick entering a kiln
B. Lengths of boards cut in a mill
C. The weight of fluid in a container
D. Grades in a freshman "pass/fail" course
E. Temperatures in a classroom
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
108. With which of the following should we use an "X-bar" chart based on sample means to
monitor process quality?
A. Grades in a freshman "pass/fail" course
B. Tire pressures in an auto assembly plant
C. Vehicles passing emissions inspection
D. Computer software errors
E. Number of units with missing operations
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
109. Which of the following should we use an "R" chart to monitor process quality?
A. Grades in a freshman "pass/fail" course
B. Tire pressures in an auto assembly plant
C. Vehicles passing emissions inspection
D. Computer software errors
E. Number of units with missing operations
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
110. Which of the following should we use an "R" chart to monitor process quality?
A. Weighing trucks at a highway inspection station to determine if they are overloaded
B. Deciding whether an airliner has sufficient fuel for its trip
C. Student grades measured from 1 to 100
D. Determining whether vehicles from a motor pool will run
E. Determining the accuracy of a forecast of "snow"
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
111. You are developing an "X-bar" chart based on sample means. You know the standard
deviation of the sample means is 4, the desired confidence level is 99.7 percent, and the average
of the sample means is 24. Which of the following is your UCL?
A. 36
B. 24
C. 12
D. 4
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
deviation of the sample means is 4, the desired confidence level is 99 percent, and the average of
the sample means is 20. Which of the following is your LCL?
A. 36
B. 24
C. 9.68
D. 16.79
E. 30.32
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
113. You want to develop a three-sigma "R" chart. You know the average range is 5 based on
several samples of size 10. Which of the following is the resulting UCL?
A. 20.9
B. 8.9
C. 7.02
D. 5
E. 3.1
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
several samples of size 6. Which of the following is the resulting LCL?
A. 20.0
B. 18.3
C. 7.02
D. 5.6
E. 0.0
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
115. If you are going to develop an "X-bar" chart based on range statistics and you are using a
sample size of 12 for your charting purposes. Which of the following is the A2 factor for the "X-
bar" chart?
A. 0.37
B. 0.31
C. 0.27
D. 0.22
E. .18
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
116. If you are going to develop an "R" chart based on range statistics and you are using a
sample size of 9 for your charting purposes. Which of the following is the lower control limit D3
factor for the chart?
A. 0.08
B. 0.14
C. 0.18
D. 0.22
E. 0.29
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
117. If you are going to develop an "R" chart based on range statistics and you are using a
sample size of 15 for your charting purposes. Which of the following is the upper control limit
D4 factor for the chart?
A. 1.65
B. 1.70
C. 1.76
D. 1.87
E. 1.92
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
118. The National Quality Award in the United States is named ______________________.
The Malcolm Baldrige National Quality Award
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
119. The expenditures related to achieving product or service quality including the costs of
appraisal and prevention of defects are called ______________________.
Cost of quality
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
120. ISO-9000 standards were developed to ______________________
help companies document that they are maintaining an efficient quality system. (Text, page
140)
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
121. Six-sigma programs believe that each step in a process is an opportunity to produce defects.
These programs seek to reduce defects by working on processes to reduce
______________________.
Variance
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
122. If the fraction defective is 0.12 based on a sample size of 16, the standard deviation to be
used when constructing a "p" chart is ______________________.
0.081
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
constructing the "p" chart is ______________________.
0.049
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
total number of defects from all samples is 2,000, the number of samples is 100, and the sample
size is 50, the standard deviation used in developing the control lines would be
______________________.
0.0693
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
total number of defects from all samples is 560, the number of samples is 70, and the sample size
is 80, the standard deviation used in developing the control lines would be
______________________.
0.335
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
deviation of the sample means is 4, the desired confidence level is 99.7 percent, and the average
of the sample means is 24. The UCL is ______________________.
36
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
deviation of the sample means is 4, the desired confidence level is 99 percent, and the average of
the sample means is 20. The LCL is ______________________.
9.68
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
several samples of size 10. The resulting UCL is ______________________.
8.9
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
several samples of size 6. The resulting LCL is ____________________.
Zero
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
Short Answer Questions
130. The symbol designating the capability index is ______________________.
Cpk
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
131. All else being equal, the magnitude of the effect of lot size on sample size is
______________________.
negligible (or very small)
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
132. You have 75 total defects from 100 different samples of 15. The value of "p" is
______________________.
0.05
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
133. Lots are defined as low quality when the percentage of defective units is greater than
______________________.
Lot Tolerance Percent Defective (LTPD)
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Essay Questions
134. What is the difference between the concepts of design quality and conformance quality?
Refer to the text, page 136-137. Design quality refers to the specifications that are drawn up at
the product design stage which define the inherent value of the product in the marketplace. For
example, are we designing a service package for a cheap roadside diner or for an exclusive
French restaurant? Are we designing a set of skis for the advanced professional or for the
fledgling beginner? Conformance quality relates to the degree to which the product or service
design specifications are met.
AACSB: Analytic
Difficulty: Medium
135. What does it mean when we say that a process is capable?
From the text on page 150, "a process is capable when the mean and standard deviation of the
process are operating such that the upper and lower control limits are acceptable relative to the
upper and lower specification limits."
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
136. Explain the difference between producer's risk and consumer's risk in acceptance sampling.
Producer's risk (alpha) is the probability of rejecting a high quality lot while consumer's risk
(beta) is the probability of accepting a low-quality lot. See text, page 164.
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
137. What is the difference between statistical quality control and statistical process control?
Process control is concerned with monitoring quality while the product or service is being
produced. (text, p. 154). Statistical process control involves taking samples of output to
determine whether the process is producing product within the desired range. Statistical quality
control is designed to evaluate the product's conformance to specifications set during the design
of the products or services being produced. (text, p.146). Thus, SQC includes the idea of SPC but
also includes checking quality levels of products and services after production is complete.
AACSB: Analytic
Difficulty: Hard
Taxonomy: Synthesis
Chapter 07 Projects Answer Key
1. Project management can be defined as planning, directing, and controlling resources to meet
the technical, cost, and time constraints of the project.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: What is Project Management
2. A project may be defined as a series of related jobs directed toward some major output and
requiring a significant period of time to perform.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
3. The second step in managing a project is writing the Statement of Work.

FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Structuring Projects
4. An event unit package is a subdivision of a project.

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
5. Complex projects are often subdivided into a series of tasks that are typically configured to be
not longer than several months in duration.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
6. A work breakdown structure is used in project management but it is not used when the critical
path method is involved.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
7. The fact that organizations are flattening is one of the reasons that project management is
important.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
8. The Gantt chart is an example of a project control chart.

TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
9. Upper level management must decide between pure, functional, and matrix structures as ways
to organize projects.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
10. One of the disadvantages of a pure project organizational structure is that the project manager
has full authority over the project.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
11. One of the advantages of a functional project organizational structure is that a team member
can work on several projects.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
12. A matrix project attempts to blend properties of functional and pure project structures.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
13. A matrix project structure is often referred to as a "skunk works."

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
14. A disadvantage of a matrix project organizational structure is that a project manager is held
responsible for successful completion of the project.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
15. The critical path of activities in a project is the sequence of activities that form the shortest
chain in a project network of activities.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Networking-Planning Models
16. CPM is an abbreviation for Critical Path Method.

TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
17. In CPM the late start time estimate is the latest time you can start an activity and still keep
the entire project on schedule.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
18. The critical path in a project is that sequence of activities that consume the longest amount of
time in a project network of activities.
TRUE
AACSB: Analytic
Difficulty: Medium
19. The critical path in a CPM analysis is always the shortest path through the network.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
20. Slack activity time is the difference between the early start and the late finish of a project
activity time.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
21. In a CPM analysis if you subtract the late finish from the early finish the result is the
activity's slack time.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
22. In a CPM analysis if you subtract the early finish from the late finish the result is the
activity's slack time.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
23. The critical path in a CPM analysis is found by locating the activities times with zero slack.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
24. Calculating the early start and early finish times for each activity in a CPM analysis does not
provide any useful information.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analysis
25. The project indirect costs associated with a project include overhead, facilities, and resource
opportunity costs.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
26. The activity direct costs associated with a project might include giving workers overtime to
complete a project in less-than the expected time.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
27. You are managing a project and need to cut the cost of the project. You decide to transfer
workers to another job to cut the project's costs. Costs associated with transferring the workers
are an example of project indirect costs.
FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
28. Using the Time-Cost CPM model, the crash time is the shortest possible time allowed for
each activity in the project.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
29. In the Time-Cost CPM model, cost is a linear function of time.

FALSE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
30. When reducing the planned duration of a project using the Time-Cost CPM model we select
the activity to crash by determining the cost of each alternative and selecting the one whose cost
is the greatest.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
31. One of the assumptions made using CPM is that project activities can be identified with clear
beginning and ending points.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
32. One of the assumptions made using CPM is that project activity sequence relationships can
be specified and networked.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Analytic
33. One criticism of using CPM analysis in project management is that the zero slack path
through a network may not be the ultimate determinant of the project completion time.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
34. Project management software available today combines CPM and other scheduling aids, like
Gantt charting, to aid in tracking progress of project completion.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
35. One of the criticisms of CPM analysis is that the act of specifying the activities and
formalizing the network limits the flexibility required to handle changing situations as the project
progresses.
TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
36. A project milestone is a specific event to be reached by a particular point in time.

TRUE
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
Topic: Work Breakdown Structure
37. Breakthrough projects are those that provide fundamental improvements to existing
products.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
38. Derivative projects are those which address incremental changes to products or processes.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
39. Alliances and partnerships between organizations are focused on "breakthrough" projects.
FALSE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
40. Earned Value Management (EVM) is a technique for measuring project progress in an
objective manner.
TRUE
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
41. A project can be subdivided into which of the following?

A. Job orders
B. Subjobs
C. Work Package
D. Sub-paths
E. Events and decisions
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
42. A project starts out as which of the following?

A. A Statement of Work
B. Critical Path Method (CPM)
C. A series of milestones
D. A Gantt chart
E. A latest-start-time estimate
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
43. What is a work breakdown structure?

A. A list of the activities making up the higher levels of the project
B. A definition of the hierarchy of project tasks, subtasks, and work packages
C. A depiction of the activities making up a project
D. A Gantt chart
E. A structure that is incompatible with the Critical Path Method
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
44. Which of the following is a reason that project management is important?
A. Organizations do not allow hastily planned projects
B. Organizational hierarchies are becoming more robust
C. The firm's reputation is not a concern since projects are invisible to the outside world
D. Projects are a way to promote effective leadership
E. It is usually more important to complete a project on time than to complete it correctly
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
45. In a Gantt chart the horizontal axis is usually which of the following?
A. Activities
B. Cost
C. Profit
D. Time
E. Milestones
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
46. Which of the following is a graphic project report used in project management?
A. Project proposal
B. Approved project plan
C. Humphrey chart
D. Equipment and supplies chart
E. Cost and performance tracking schedule
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
47. An advantage of a pure project where self-contained teams work full time on a project is
A. Team members can work on several projects
B. Functional area is a "home" after the project is completed
C. There are duplicated resources
D. Lines of communication are shortened
E. Overall organizational policies and goals can be ignored
AACSB: Analytic
Difficulty: Medium
Taxonomy: Knowledge
48. Some of the advantages of a functional project where the project is housed in a functional
division include which of the following?
A. The project manager has full authority over the project
B. Team pride, motivation, and commitment are high
C. A team member can work on several projects
D. Needs of the client are secondary
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
49. A series of projects that are organized in such a way that each project utilizes people from
different functional areas is using which of the following organizational structures?
A. Matrix project
B. Integrated Task Force
C. Functional project
D. Pure project
E. Cross-functional flexible team
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
50. You are looking at a chart that has the terms BCWS, BCWP and AC indicating lines on the
chart. What kind of chart are you looking at?
A. Gantt Chart
B. PERT Chart
C. Bar/Milestone Chart
D. Total Program Cost Breakdown
E. EVM Chart
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
51. PERT is an abbreviation for which of the following methodologies?

A. Product Evaluation Result and Treatment
B. Programming and Evaluation Realization Technology
C. Program Evaluation and Review Technique
D. Process Evaluation and Review Technology
E. It is a name, not an abbreviation for anything
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
52. You have just been assigned to oversee a series of projects. Functional areas will loan you
personnel for each project and separate project managers will be responsible for separate
projects. These project managers will report to you. Which project management structure is
being used?
A. Pure Project
B. Task force
C. Matrix Project
D. Functional Project
E. PERT
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
53. You have been placed in charge of a large project. Shortened communication lines are
required to insure quick resolution of problems as they arise. You recognize that the project is
going to take a lot of time and require a lot of team pride, motivation, and commitment by all
members. Which project management strucTURE should you use in this situation?
A. Pure Project
B. Task force
C. Matrix Project
D. Functional Project
E. PERT
AACSB: Analytic
Difficulty: Hard
Taxonomy: Knowledge
54. A simple project listing of five activities and their respective time estimates are presented
below:
Using CPM, which activities make up the critical path?

A. A, C, D, E
B. A, B, D, E
C. A, C, B, D, E
D. A, D, E
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
55. A simple project listing of five activities, their predecessors and their respective time
estimates are presented below:
Using CPM, what is the Latest Finish Time for the last activity in this project (i.e., the total time
to complete the project)?
A. 10 days
B. 7 days
C. 8 days
D. 12 days
E. 9 days
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
56. A simple project listing of five activities, their predecessors and their respective time
estimates are presented below:
Using the CPM, which activities have slack in this project?

A. A
B. B
C. C
D. D
E. C and E
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
57. A company must perform a maintenance project consisting of seven activities. The activities,
their predecessors, and their respective time estimates are presented below:
Using CPM, which activities make up the critical path?

A. A, B, D, F, G
B. A, C, E, F, G
C. A, C, B, F, E
D. A, D, E
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
Using CPM, what is the Latest Finish Time for the last activity in this project (i.e., the total time
to complete the project)?
A. 9 days
B. 10 days
C. 11 days
D. 12 days
E. 13 days
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
Using CPM, which activities have slack in this project?

A. A, B, C
B. B, D
C. Only C
D. C, E
E. F, G
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
60. For an activity in a CPM analysis, the Early Finish time is 8 and the Late Finish time is 10.
Which of the following statements is true?
A. The Late Finish is 12
B. The Early Finish is 10
C. The slack for this activity is 2
D. The duration of this activity is 2
E. The activity is on the critical path
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
61. For an activity in a CPM analysis the Early Finish time is 20 and the Late Finish time is 20.
Which of the following statements is true?
A. The activity's late start must happen before its early start
B. The activity is on the critical path
C. The slack for this activity is 20
D. The duration of this task is zero
E. The duration of this task is 20
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
62. A listing of immediate predecessor activities is important information in a CPM analysis for
which of the following reasons?
A. It specifies the relationships in the CPM network of activities
B. It provides useful timing information
C. It includes cost information
D. It is the probability information required in the final step of CPM
AACSB: Analytic
Difficulty: Medium
63. You have just performed a CPM analysis and have found that more than one path through the
project network has zero slack values. What can you conclude?
A. You have incorrectly performed the analysis
B. You have multiple critical paths
C. Only one path is optimal
D. More than one path is optimal
E. The project will not be completed by the desired time
AACSB: Analytic
Difficulty: Medium
Taxonomy: Evaluation
64. You have the following time and cost information below for use in a Time-Cost CPM
Scheduling model.
What are the three costs per unit of time to expedite each activity?
A. A=$300, B=$200, C=$300
B. A=$100, B=$200, C=$400
C. A=$200, B=$200, C=$200
D. A=$100, B=$400, C=$300
E. A=$200, B=$300, C=$400
AACSB: Analytic
Difficulty: Medium
65. Below are the data for a Time-Cost CPM Scheduling model analysis. The time is in days and
the costs include both direct and indirect costs.
What are the total time of this project and total normal cost?
A. Total time is 13 days, total cost is $1200
B. Total time is 12 days, total cost is $1700
C. Total time is 11 days, total cost is $1600
D. Total time is 10 days, total cost is $1750
E. Total time is 9 days, total cost is $1700
AACSB: Analytic
Difficulty: Medium
66. Below are the data for a Time-Cost CPM Scheduling model analysis. The time is in days and
the costs include both direct and indirect costs.
If you crash this project to reduce the total time by one day what is the total time of the project
and total cost?
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
67. Below are the data for a Time-Cost CPM Scheduling analysis. The time is in days and the
costs include both direct and indirect costs.
If you crash this project to reduce the total time by four days, what is the total time of the project
and total cost?
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
68. You have collected the data for a Time-Cost CPM Scheduling model analysis. The time is in
days and the project "direct costs" are given below.
The indirect costs for the project are determined on a daily duration basis. If the project lasts 16
days the total indirect costs are $400, 15 days they will be $250, 14 days they will be $200, and
13 days they will be $100. If you crash this project by one day what is the total (i.e., direct and
indirect) project cost?
A. $2150
B. $2300
C. $2400
D. $2450
E. $2500
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
13 days they will be $100. At what day do we achieve the lowest total project cost (i.e., direct
plus indirect costs)?
A. 16 days
B. 15 days
C. 14 days
D. 13 days
E. 12 days
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
70. You know when you have arrived at the optimal solution in using the Time-Cost CPM
Scheduling model analysis when what happens?
A. You have found the critical path
B. You have run out of crash time
C. You no longer have a linear relationship with costs
D. You have reached the minimum total cost
E. You have run out of crash costs
AACSB: Analytic
Difficulty: Easy
71. In CPM analysis it is generally expected that the relationship between activity direct costs
and project indirect costs will be which of the following?
A. Positively related
B. Optimally related
C. Negatively related
D. Not related
E. Fractionally related
AACSB: Analytic
Difficulty: Medium
72. Which of the following is an assumption made in using CPM analysis?

A. Project activities flow together without distinct boundaries
B. Activities' sequential relationships can be specified and networked
C. Project management should focus on crashing activities
D. There is never a work stoppage in any activity until it is complete
E. There are no learning curve effects in setting activity time
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
73. Which of the following is a criticism made about CPM analysis?

A. Project activity sequencing relationships can be specified and networked
B. Project control should focus on the critical path
C. Projects can change over time and networks can be inaccurate
D. CPM does not foresee changes while the project is under way
E. The pessimistic time estimate is usually closest to the actual time
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
74. An assumption of CPM analysis is that project activities can be identified and have a clear
beginning and ending point. Which of the following is a valid criticism of this assumption?
A. Complex projects can change over time and networks become inaccurate
B. Project control cannot always focus on the critical path
C. The critical path through the network can change when activities are crashed
D. It is not necessarily true that the critical path is the longest path through the network
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
75. What is that sequence of activities that consume the longest amount of time in a project
network of activities called? _______________________________
The critical path
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
76. What are "project milestones?" _________________________________________

Specific events to be accomplished by specified points in time
AACSB: Analytic
Difficulty: Easy
Taxonomy: Knowledge
Topic: Work Breakdown Structure
13 days they will be $100. If you crash this project by one day what is the total (i.e., direct and
indirect) project cost? ____________________
$2150
AACSB: Analytic
Difficulty: Hard
Taxonomy: Analysis
78. Below are the data for a Time-Cost CPM Scheduling analysis. The time is in days and the
costs include both direct and indirect costs.
If you crash this project to reduce the total time by four days, what is the total time of the project
and total cost? __________________
Total time is 8 days, total cost is $2750
AACSB: Analytic
Difficulty: Medium
Taxonomy: Analysis
Essay Questions
79. Describe how CPM handles the trade-offs between time and cost in the scheduling of a
project.
This question can elicit a variety of responses. The "most correct" answers will deal with the
issues set forth on pages 199-203 under the heading "Minimum-Cost Scheduling" and should
include, as a minimum, the idea that each activity has a normal cost, normal time, crash cost and
crash time specified; that the critical path is computed, that only activities on the critical path
should be considered as candidates to "crash," that the critical path should be shortened at the
least cost and that the new solution should be checked to determine whether the critical path has
changed.
AACSB: Analytic
Difficulty: Medium
80. What is the criterion for determining whether a project activity is on the "critical path" or
not?
This question is answered by the definition of the critical path on page 192 of the text: The
critical path of activities in a project is the sequence of activities that form the longest chain in
terms of their time to complete. The simplest correct answer is perhaps that a delay in
completing the activity will result in a delay in completing the entire project (unless, of course,
later activities can be "crashed.")
AACSB: Analytic
Difficulty: Easy

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Chapter 01 Operations and Supply Chain Management Answer Key

True / False Questions

5. A process can be effective without being efficient.

19. "Supply" includes inbound freight and inventory only.

31. Services are intangible processes that cannot be weighed or measured.

33. Services are homogeneous.

35. Automobiles and appliances are classified as "pure goods."

38. Servitization is a nonsense word invented to describe the disappearance of manufacturing

49. Sustainability is the ability to maintain profits in a system.

53. Which of the following are defined as core goods?

58. One of the package of features that make up a service are:

Fill in the Blank Questions

59. The ability to maintain balance in a system is referred to as _______________.

61. What are the five categories of supply chain processes?

Planning, sourcing, making, delivering & returning.

Fill in the Blank Questions

62. Doing something at the lowest possible cost is called: ________________.

64. A pipeline through which material and information flows is a conception of a

65. List five OSM job titles.

A successful response to this question requires a definition of "value" (a relationship between

True / False Questions

Multiple Choice Questions

35. An activity-based map is which of the following?

38. Which of the following is a partial measure of productivity?

39. Which of the following is a multifactor measure of productivity?

Fill in the Blank Questions

True / False Questions

2. Facility location analysis considers the competitive imperative to be close to customers as to

8. A favorable business climate in facility location decision-making might include government

9. A favorable business climate in facility location decision-making might include local

38. An example of a trading bloc is which of the following?

Fill in the Blank Questions

47. Name the five transportation modes discussed in the textbook.

True / False Questions

1. Lean production is an integrated set of activities designed to achieve high-volume production

3. Lean production requires a "push & pull" system of inventory replenishment.

6. Lean production makes implementing green strategies in manufacturing processes more

18. A principle of value stream mapping is to concentrate on speeding up value-added

26. "Kanban Squares" is an educational game played in Kanban training sessions.

29. Subcontractor networks are not very important in Japanese manufacturing.

41. A kaizen burst is a symbol on a value stream map.

42. A kaizen burst is an overfilled kanban container.

43. Which of the following are related to lean production?

Fill in the Blank Questions

71. Name seven elements that address elimination of waste.

75. Explain why lean manufacturing requires a stable demand environment.

True / False Questions

9. Conformance quality is a strategic decision for the firm.

26. A DMPO is essentially the same thing as a DMAIC.

34. It is impossible to have zero variability in production processes.

52. The Greek letter alpha is associated with consumer's risk.

56. Total, one-hundred percent, inspection can never be cost justified.

Multiple Choice Questions

85. Which of the following is a dimension of design quality?

88. A cost of quality classification is which of the following?

Fill in the Blank Questions

130. The symbol designating the capability index is ______________________.

Fill in the Blank Questions

135. What does it mean when we say that a process is capable?

True / False Questions

3. The second step in managing a project is writing the Statement of Work.

4. An event unit package is a subdivision of a project.

8. The Gantt chart is an example of a project control chart.