Problem Set #1 (Chap 1 & 2)

Name:_____________________________________

1) Operations management is the set of activities that creates value in the form of
_goods_____ and _services_____ by transforming inputs into outputs.

2) Which of the following are the primary functions of all organizations? __D___
A) production/operations, marketing, and human resources
B) marketing, human resources, and finance/accounting
C) sales, quality control, and production/operations
D) marketing, production/operations, and finance/accounting
E) research and development, finance/accounting, and purchasing

3) Which of the following tasks within an airline company are related to operations? __A___
A) crew scheduling
B) international monetary exchange
C) sales
D) advertising
E) accounts payable

4) Which of the following are among the 10 strategic operations management decisions?
__D___
I. design of goods and services
II. managing quality
III. layout strategy
IV. marketing
V. pricing of goods and services
A) I, II, V B) I, II, IV C) II, III, V
D) I, II, III E) All of the above

5) Which of the following is NOT a typical service attribute? __B___

A) intangible product
B) easy to store
C) customer interaction is high
D) simultaneous production and consumption
E) difficult to resell

6) Gibson Valves produces cast bronze valves on an assembly line, currently producing
1600 valves each 8-hour shift. If the productivity is increased by 10%, it would then be:
__C___
A) 180 valves/hr.
B) 200 valves/hr.
C) 220 valves/hr.
D) 380 valves/hr.
E) 460 valves/hr.

7) Martin Manufacturing has implemented several programs to improve its productivity.

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

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
 Last Year This Year
Output 10,500 units 12,100 units
Labor Hours 12,000 13,200
Utilities $7,600 $8,250
Capital $83,000 $88,000

Has Martin Manufacturing improved its productivity during the past year? Explain how
could you come to this conclusion. _____________________________ Productivity improved in all
three categories this year; utilities showed the greatest increase, and labor the least (Labor
4.55%, Utilities 7.69%, Capital 6.52%).______

8) Which of the following does NOT represent a valid reason for globalizing operations?
__C___
A) reduce costs
B) improve the Long-range forecasting

C) reduce responsiveness
D) attract and retain global talent
E) understand markets

9) Which of the following OM strategy/issues should a firm with a product in the maturity
stage of its life cycle be LEAST concerned with at the present time? __A____
A) increase capacity
B) long production runs
C) standardization
D) cost cutting
E) fewer rapid product changes

10) An operations manager is performing a factor-rating analysis to help him choose an

outsourcing provider. He is focusing on two factors: A and B, using a weight of 75% for
factor A and 25% for factor B. He has scored five different potential providers on both
factors, using a scale of 1-5, with 1 representing the BEST score. Based on the scores
provided in the table below, which provider should be chosen? ___D____

Provider Factor A Factor B

Alpha 1 5
Beta 3 3
Gamma 4 1
Phi 2 1
Omega 3 5

A) Alpha
B) Beta
C) Gamma
D) Phi
E) Omega
1) Which of the following is NOT one of the phases of project management? __D__
A) planning
B) scheduling
C) controlling
D) budgeting
E) All of the above are project management phases.

2) The critical path for the network activities shown below is ( ) with duration ( ).
___D___
Activity Duration Immediate Predecessors

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
A 4 ---
B 2 A
C 7 --
D 4 A
E 5 B,C,D

A) A-B-D; 10
B) A-B-E; 11
C) C-E; 12
D) A-D-E; 13
E) A-B-C-D-E; 22

3) A project being analyzed by PERT has 38 activities, 16 of which are on the critical path.
If the estimated time along the critical path is 90 days with a project variance of 25, what is
the probability that the project will be completed in 88 days or less? _ B____
A) 0.0228
B) 0.3446
C) 0.6554
D) 0.9772
E) 18

4) The network below represents a project being analyzed by the critical path method.
Activity durations are A=5, B=2, C=12, D=3, E=5, F=1, G=7, H=2, I=10, and J=6.

What are slack time at activity H and the Late Finish of activity H? ___B ____
A) 0; 13
B) 5; 24
C) 7; 22
D) 10; 24
E) 12;30

5) In the graph above, if activity C were delayed by two time units, what would happen to
the project duration? ___A____
A) No delay
B) Delay by 2
C) Delay by 4
D) Delay by 5
E) It depends, and is not deterministic
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
6) Convert the following AOA Network to AON

7) Convert the AON diagram to AOA diagram

8) Draw the AON network for the following project

Activity Duration Immediate

(days) Predecessors
A 10 ---
B 8 ---
C 2 A
D 4 A
E 5 B,C, D

9) Calculate the minimum project duration, for the table above.

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Minimum duration is the longest of the three paths, ADE, or a total of 19 days.

10) An activity on a PERT network has these time estimates: optimistic = 1, most likely = 2,
and pessimistic = 5. What is its expected activity time? ___B___
A) 2.00
B) 2.33
C) 2.67
D) 4.67
E) 14.00

1) As compared to long-range forecasts, short-range forecasts: ___B___

A) are less accurate.
B) deal with less comprehensive issues supporting management decisions.
C) employ similar methodologies.
D) all of the above
E) none of the above

2) Which of the following most requires long-range forecasting (as opposed to short-range
or medium-range forecasting) for its planning purposes? ___D____
A) job scheduling
B) production levels
C) cash budgeting
D) capital expenditures
E) purchasing

3) The fundamental difference between cycles and seasonality is the: __A____

A) duration of the repeating patterns.
B) magnitude of the variation.
C) ability to attribute the pattern to a cause.
D) all of the above
E) none of the above

4) What is the forecast for May using a four-month moving average? __D___
Nov. Dec. Jan. Feb. Mar. April
39 36 40 42 48 46
A) 38
B) 42
C) 43
D) 44
E) 47

5) Given an actual demand this period of 103, a forecast value for this period of 99, and an
alpha of .4, what is the exponential smoothing forecast for next period? ___C__
A) 94.6
B) 97.4
C) 100.6
D) 101.6
E) 103.0

6) Identify two advantages of the moving average forecasting model. Identify two
disadvantages of the moving average forecasting model.

Answer: Advantages of the model include: it uses simple calculations, it smoothes out
sudden fluctuations, and it is easy for users to understand. Disadvantages include:
increasing the size of n makes the method less sensitive to real changes in demand, they
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
require extensive record keeping of past data, and they do not pick up on trends very well.

7) A forecasting method has produced the following over the past five months. What is the
mean absolute deviation? ___D___

Actual Forecast Error |Error|

10 11 -1 1
8 10 -2 2
10 8 2 2
6 6 0 0
9 8 1 1

A) -0.2
B) -1.0
C) 0.0
D) 1.2
E) 8.6

8) If two variables were perfectly correlated, what would the coefficient of correlation r
equal? ___D__
A) 0
B) -1
C) 1
D) B or C
E) none of the above

9) A time-series trend equation is 25.3 + 2.1x. What is your forecast for period 7? __D___
A) 23.2
B) 25.3
C) 27.4
D) 40.0
E) 179.2

10) What is the forecast for May based on a weighted moving average applied to the
following past demand data and using the weights: 4, 3, 2 (largest weight is for most recent
data)?

Nov. Dec. Jan. Feb. Mar. April

37 36 40 42 47 43

Answer: 2 × 42 + 3 × 47 + 4 × 43 = 84 + 141 + 172 = 397; 397/9 = 44.1

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

2) ___F___ In order to have a career in operations management, one must have a degree in
statistics or quantitative methods.

3) ___F____ Reselling of services is, in general, more common than reselling of goods.

4) ___T___ Productivity is generally more difficult to improve in the service sector than in the
manufacturing sector.

5) ___F____ Professor Jon Sung has a brother named “Sam.”

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
6) ___F____ Core competencies are good candidates for outsourcing.

7) ___T____ NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico,
and the United States.

8) ___T___ The World Trade Organization has helped to significantly reduce tariffs around the
world.

9) ___F____ SWOT analysis is a method of determiningexternal strengths and weaknesses

and internalopportunities and threats.

10) ___T____ Outsourcing is the practice of transferring a firm's activities that have
traditionally been internal to external suppliers.

In-Class Quiz #2 (True/False)

1) ___T___ Outsourcing is the practice of transferring a firm's activities that have traditionally
been internal to external suppliers.

2) ___F___ An organization's strategy is the purpose or rationale for its existence.

3) ___F____ Work breakdown structure is a useful tool in project management because it

addresses the timing of individual work elements.

4) ___F____ The shortest of all paths through the network is the critical path.

5) ___T____ One responsibility of a project manager is to make sure that the project meets its
quality goals.

6) ___T____ PERT Stands for Program evaluation and review technique

7) ___T____ Gantt charts give a timeline for each of a project's activities, but they do not
adequately illustrate the interrelationships between the activities and the resources.

8) ___T____ Slack is the amount of time an activity can be delayed without delaying the
entire project.

9) ___F____ A project organization works best for an organization when the project resides in
only one of its functional areas.

10) ___T____ Every network has at least one critical path.

In-Class Quiz #3 (True/False)

1) ___T___ The ES of an activity that has only one predecessor is simply the EF of that
predecessor.

2) ___T___ Every network has at least one critical path.

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
3) ___F___ Shortening the project's duration by deleting unnecessary activities is called
"project crashing."

4) ___F___ Forecasts of individual products tend to be more accurate than forecasts of

product families.

5) ___T__ In exponential smoothing, you should choose high values of lpha (a) when
underlying average is likely to change.

6) ___T__ The sales force composite forecasting method relies on salespersons' estimates of
expected sales.

7) ___T___ Qualitative forecasting methods are used when the situation is vague and little
data exist.

8) ___T____ A naïve forecast for September sales of a product would be equal to the sales for
August.

9) ___F____ The larger the standard error of the estimate, the more accurate the forecasting
model.

10) __T_____ Linear-regression analysis is a straight-line mathematical model to describe the

functional relationships between independent and dependent variables.

1. Demand for individual products can be driven by product life

cycles. TRUE
2. What are the realities of forecasting that companies face?

First, forecasts are seldom perfect. Second, most forecasting techniques

assume that there is some underlying stability in the system. Finally, both
product family and aggregated forecasts are more accurate than
individual product forecasts.

3. The best way to forecast a business cycle is by finding a leading variable

True

4. For the purposes of production planning, product families should be

established on the basis of

A. market segments
B. similarity of manufacturing process
C. the availability of materials
D. the availability of machinery

5. Product Families are defined by and why?

Product families are defined by the resources shared, which produces efficient
production runs.

Why- to meet demand, business objectives and profitability.

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
6. Why is production planning done at the product family level?
Product families place demand on the same resources; equipment, labor, and
material need in each period.
Manufacturing must determine what resources are needed to meet demand.

Once the required resources are decided, the next step is to compare required
resources with AVAILABLE RESOURCES.

7. Material requirements plans specify

a. the quantities of the product families that need to be produced
b. the quantity and timing of planned order releases
c. the capacity needed to provide the projected output rate
d. the costs associated with alternative plans
e. whether one should use phantom bills of material or not

8. Using an exponential smoothing model with smoothing constant • = .20,

how much weight would
be assigned to the 2nd most recent period? .16

10. Which time series model uses past forecasts and past demand data to
generate a new forecast?
d. exponential smoothing

12. Which of the following smoothing constants would make an

exponential smoothing forecast
equivalent to a naive forecast? d. 1.0

13. Mean squared error and exponential smoothing are two measures of the
overall error of a forecasting model.
Answer: FALSE

14. Which of the following statements comparing exponential smoothing to

the weighted moving average technique is TRUE?
A) Exponential smoothing is more easily used in combination with the Delphi
method.
B) More emphasis can be placed on recent values using the weighted
moving average.
C) Exponential smoothing is considerably more difficult to implement on a
computer.
D) Exponential smoothing typically requires less record keeping of past data.
E) Exponential smoothing allows one to develop forecasts for multiple
periods, whereas the weighted moving average technique does not.

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
15. Which time-series model uses BOTH past forecasts and past demand
data to generate a new forecast?
A) naïve
B) moving average

C) weighted moving average

D) exponential smoothing
E) trend projection

16. Which of the following is NOT a characteristic of exponential smoothing?

A) smoothes random variations in the data
B) uses an easily altered weighting scheme
C) weights each historical value equally
D) has minimal data storage requirements
E) uses the previous period's forecast

17. iven an actual demand this period of 103, a forecast value for this period
of 99, and an alpha of .4, what is the exponential smoothing forecast for next
period?
A) 94.6
B) 97.4
C) 100.6
D) 101.6
E) 103.0

18. A forecast based on the previous forecast plus a percentage of the

forecast error is a(n):
A) qualitative forecast.
B) naive forecast.
C) moving average forecast.
D) weighted moving average forecast.
E) exponential smoothing forecast.

19. Given an actual demand this period of 61, a forecast for this period of 58,
and an alpha of 0.3, what would the forecast for the next period be using
exponential smoothing?
A) 45.5
B) 57.1
C) 58.9
D) 61.0
E) 65.5

20. One advantage of exponential smoothing is the limited amount of record

keeping involved.
True
21. Mean squared error and exponential smoothing are two measures of the
overall error of a forecasting model. False

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
22. The sales force composite forecasting method relies on salespersons'
estimates of expected sales. True
23. The two general approaches to forecasting are
a. qualitative and quantitative

24. Which of the following is not a type of qualitative forecasting?

e. moving average

25. When do you use qualitative forecasts?

Data as a historical series is not available, or is not relevant to future needs.
An unusual product or a unique project is being contemplated.
Forecast horizon is longer than the safe extrapolation of a quantitative method.
Trying to forecast beyond 1 or 2 years.

26. Outsourcing: Transferring activities that traditionally been internal to

external suppliers

27. Outsourcing is a form of specialization that allows the outsourcing firm to

focus on its critical success factors. True

28. Vendor Managed Inventory is a form of outsourcing. True

29. Outsourcing
a. transfers traditional internal activities to outside vendors
b. utilizes the efficiency which comes with specialization
c. lets the outsourcing firm focus on its critical success factors
d. None of the above are true of outsourcing.
e. All of the above are true of outsourcing.

30. Outsourcing has expanded to become a major strategy in business due

to the continuing move toward specialization in an increasingly technological
society True

31. Outsourcing is simply an extension of the long-standing practice of

a. exporting
b. postponement
c. importing
d. e-procurement
e. subcontracting

32. The decline in customer satisfaction for outsourced call centers

highlights which aspect of outsourcing risk?
a. technological
b. quality
c. cost
d. core competency
e. erratic utility functionality

33. Nearly any business activity can be outsourced True

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
34. Research data suggest that foreigners outsource far more services to the
US than American companies send abroad True

35. Some organizations use outsourcing to replace entire purchasing,

information systems, marketing, finance and operations departments
True

36. Outsourcing is the practice of moving a business process to a foreign

country but retaining control of it
False

37. Advantages of outsourcing do not include

a. renewed focus on core competencies
b. creating future competition
c. gaining outside technologies
d. outside expertise
e. cost savings

38. Which of the following is the number-one reason driving outsourcing for
many firms?
a. focusing on core competencies
b. gaining outside technology
c. improving operations and service
d. cost savings
e. gaining outside expertise

39. Which of the following statements is most accurate?

a. nearly all US firms that outsourced processes to India have backsourced
them
b. outsourcing is a relatively risk-free activity
c. approximately half of all outsourcing agreements fail
d. nearly all outsourcing relationships do not last beyond two years
e. more than 90% of outsourcing agreements succeed

40. Some business activities, such as human resources and legal processes,
cannot be outsourced
False

41. Outsourcing is a form of specialization that allows the outsourcing firm to

focus on its key success factors
True

42. The operations manager performs the management activities of planning,

organizing, staffing, leading, and controlling of the OM function.
True

43. Why study OM?

- A major function of any organization
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
- we want to know how goods and services are produced
- we want to understand what operations managers do
- It’s a costly part of any organization

44. services: Economic activities that typically produce an intangible product

(such as education, entertainment, lodging, government, financial, and health
services).

45. productivity: Productivity is the ratio of outputs (goods and services)

divided by the inputs (resources, such as labor and capital). Improving
productivity means improving efficiency.

46. Why has productivity in the service sector proven difficult?

typically labor intensive; frequently focused on unique individual attributes or
desires; often an intellectual task performed by professionals; often difficult to
mechanize and automate; often difficult to evaluate for quality

47. Production is the creation of goods and services.

48. What is operations? The part of a business organization that is responsible

for producing goods or services

49. Operating management: 1. Te set of activities that create value in the

form of goods and services by transforming inputs into outputs
2. The management of systems or processes that create goods and/or provide
services

50. An organization's ability to generate unique advantages over competitors

is central to a successful strategy implementation. True

51. For the greatest chance of success, an organization's operations

management strategy must support the company's strategy. T/F
True

52. The multidomestic OM strategy maximizes local responsiveness while

achieving a significant cost advantage. T/F
False

53. Firms using the global strategy can be thought of as "world companies."
T/F
False

54. Which of the following is an example of globalization of operations

strategy?
a. Boeing's Dreamliner has engines with higher fuel/payload efficiency.
b. Ford's new auto models have dent-resistant panels.
c. A Chinese manufacturer, Haier, now operates plants in the United States.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
d. Hard Rock Café provides an "experience differentiation" at its restaurants.
e. All of the above are examples.

55. Which of the following is true about business strategies?

a. An organization should stick with its strategy for the life of the business.
b. All firms within an industry will adopt the same strategy.
c. Well defined missions make strategy development much easier.
d. Strategies are formulated independently of SWOT analysis.
e. Organizational strategies depend on operations strategies

56. Which of the following is true?

a. Corporate mission is shaped by functional strategies.
b. Corporate strategy is shaped by functional strategies.
c. Functional strategies are shaped by corporate strategy.
d. External conditions are shaped by corporate mission.
e. Functional area missions are merged to become the organizational
mission.

57. A strategy is a(n)

a. set of opportunities in the marketplace
b. broad statement of purpose
c. simulation used to test various product line options
d. plan for cost reduction
e. action plan to achieve the mission

58. Which of the following activities takes place once the mission has been
developed?
a. The firm develops alternative or back-up missions in case the original
mission fails.
b. The functional areas develop their functional area strategies.
c. The functional areas develop their supporting missions.
d. The ten OM decision areas are prioritized.
e. Operational tactics are developed

59. Which of the following statements about organizational missions is false?

a. They reflect a company's purpose.
b. They indicate what a company intends to contribute to society.
c. They are formulated after strategies are known.
d. They define a company's reason for existence.
e. They provide guidance for functional area missions.

60. The fundamental purpose of an organization's mission statement is to

a. create a good human relations climate in the organization
b. define the organization's purpose in society
c. define the operational structure of the organization
d. generate good public relations for the organization
e. define the functional areas required by the organization

61. According to the authors, which of the following strategic concepts allow
firms to achieve their missions?
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
a. productivity, efficiency, and quality leadership
b. differentiation, cost leadership, and quick response
c. differentiation, quality leadership, and quick response
d. distinctive competency, cost leadership, and experience
e. differentiation, distinctive competency, quality leadership, and capacity

62. The project organization works best when which conditions are met?
1. Work can be defined with a specific goal and deadline.
2. The work contains interrelated tasks requiring specialized skills
3. the project cuts across organizational lines

63. Which of the following statements regarding project management is

false?
Project organization works well when the work contains simple, independent
tasks.

64. A project organization

A and E are both true
(is effective for companies with multiple large projects AND is formed to ensure
that programs/projects get proper management and attention)

65. Scope of Operations Management

Forecasting
Capacity planning
Facilities and layout
Scheduling
Managing inventories
Assuring quality
Motivating employees
Deciding where to locate facilities
And more ...

66. All of the following decisions fall within the scope of operations
management except for
a. financial analysis
b. design of goods and processes
c. location of facilities
d. managing quality
e. All of the above fall within the scope of operations management.

67. Southwest Airlines' core competence is:

Operations

68. One phase of a large project is scheduling. True

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
69. Which of the following does NOT belong to the planning phase of project
management?

-goal setting
-team organization
-defining the project
-monitoring resources
70. Which of the following does NOT belong to the controlling phase of
project management?
-monitor resources, costs, quality, budgets
-revise plans
-shift resources
-define the project

71. The Supply Chain

- A global network of organizations and activities that supply a firm with goods
and services.

- Members of the supply chain collaborate to achieve high levels of customer

satisfaction, efficiency and competitive advantage.

72. supply-chain management

-integrate supply chain into the firm's strategy
-determine what is to be purchased, from whom, and under what conditions

73. Which of the following is not a typical attribute of goods?

a. output can be inventoried
b. often easy to automate
c. aspects of quality difficult to measure
d. output can be resold
e. production and consumption are separate

74. Which of the following is not a typical service attribute?

a. intangible product
b. easy to store
c. customer interaction is high
d. simultaneous production and consumption
e. difficult to resell

75. The 10 strategic operations management decisions include:

All of the above (managing quality, maintenance, layout strategy, process and
capacity design, design of goods and services, location strategy, human
resources and job design, supply-chain management, inventory/JIT, intermediate
and short-term scheduling)

76. The Ten Critical Decisions of Operations Management include

a. Layout strategy
b. Maintenance
c. Process and capacity design

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
d. Managing quality
e. all of the above

77. Which of the following is not one of The Ten Critical Decisions of
Operations Management?
a. Layout strategy
b. Maintenance
c. Process and capacity design
d. Mass customization
e. Supply chain management

78. The Ten Critical Decisions of Operations Management include

a. Finance/accounting
b. Advertising
c. Process and capacity design
d. Pricing
e. all of the above

79. As compared to long-range forecasts, short-range forecasts:

A) are less accurate.
B) deal with less comprehensive issues supporting management decisions.
C) employ similar methodologies.
D) all of the above
E) none of the above

80. Forecasts are usually classified by time horizon into which three
categories?
A) short-range, medium-range, and long-range
B) finance/accounting, marketing, and operations
C) strategic, tactical, and operational
D) exponential smoothing, regression, and time series
E) departmental, organizational, and industrial

81. A forecast with a time horizon of about 3 months to 3 years is typically

called a:
A) long-range forecast.
B) medium-range forecast.
C) short-range forecast.
D) weather forecast.
E) strategic forecast.

82. Forecasts used for new product planning, capital expenditures, facility
location or expansion, and R&D typically utilize a:
A) short-range time horizon.
B) medium-range time horizon.
C) long-range time horizon.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
D) naive method, because there is no data history.
E) trend extrapolation.

83. Which of the following most requires long-range forecasting (as opposed
to short-range or medium-range forecasting) for its planning purposes?
A) job scheduling
B) production levels
C) cash budgeting
D) capital expenditures
E) purchasing

84. Short-range forecasts tends to ________ longer-range forecasts.

A) be less accurate than
B) be more accurate than
C) have about the same level of accuracy as
D) employ the same methodologies as
E) deal with more comprehensive issues than

85. what are the 3 time horizon categories?

1. Short-range forecast.
2.Medium- range forecast.
3.Long- range forecast.

86. Long-range forecast

*this forecast generally is 3 years or more in time span.
*it is used in planning for new products, capital expenditures, facility location
or expansion, and research and development.

87. Medium and long forecast are different from short range forecast by 3
features?
1. Intermediate and long forecast deal with more comprehensive issues
supporting management decisions.
2.Short term forecasting usually employs different methodologies than longer
term forecasting.
3.Short term forecast tend to be more accurate than longer range forecast.

88. The largest contributor to productivity increases is ________, estimated to

be responsible for _____ of the annual increase.
a. management; over one-half
b. Mr. Deming; one-half
c. labor; two-thirds
d. capital; 90% e. technology; over one-half

89. A weighted moving average forecast will always lag behind a trend T or F
True

90. Moving average forecasts are very efficient at picking up trends T or F

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
False

91. The weighted moving average technique is not well suited for forecasting
the demand for a very new product T or F True
92. Moving average: forecast uses an average of the most recent periods of
data to forecast the next period

93. Distinguish between a moving average model and an exponential

smoothing model
Exponential smoothing is a weighted moving average model wherein previous
values are weighted in a specific manner-in particular, all previous values are
weighted with a set of weights that decline exponentially.

94. What are some of the drawbacks of the moving average forecasting
model?
The disadvantages of moving average forecasting models are that the
averages always stay within past ranges, that they require extensive record
keeping of past data, and that they cannot be used to develop a forecast
several periods into the future

95. What is the forecast for May based on a weighted moving average
applied to the following past demand data and using the weights; 4, 3, 2
(largest weight is for the most recent data)?
Nov.-37 Dec.-36 Jan.-40 Feb.-42 Mar.-47 April-43
44.1

96. What are the types of qualitative forecasts?

Sales force composites. Consumer surveys. Jury of executive opinion. Delphi
method.

97. Which of the following is not a type of qualitative forecasting?

Moving average

98. Strategies for Competitive Advantage

Differentiation, Cost Leadership, Response

99. Competing on Differentiation

Uniqueness can go beyond both the physical characteristics and service
attributes to encompass everything that impacts customer's perception of value

100. Boeing's development of the 787 Dreamliner is an example of a

company obtaining a competitive advantage via product
differentiation/innovation. T/F
True

101. Experience differentiation is an extension of product differentiation,

accomplished by using people's five senses to create an experience rather
than simply providing a service. T/F

True
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
102. Which of the following is an example of competing on the basis of
differentiation?
a. A firm manufactures its product with less raw material waste than its
competitors do.
b. A firm's products are introduced into the market faster than its
competitors' products are.
c. A firm's distribution network routinely delivers its product on time.
d. A firm offers more reliable products than its competitors do.
e. A firm advertises more than its competitors do.

103. The ability of an organization to produce services that, by utilizing the

consumer's five senses, have some uniqueness in their characteristics is
a. mass production
b. time-based competition
c. differentiation
d. flexible response
e. experience differentiation

104. Experience Differentiation

a. isolates the consumer from the delivery of a service
b. is an extension of product differentiation in the service sector
c. uses only the consumer's senses of vision and sound
d. keeps consumers from becoming active participants in the service
e. is the same as product differentiation, but applied in the service sector

105. A seasonal index for a monthly series is about to be calculated on the

basis of three years'
accumulation of data. The three previous July values were 110, 150, and 130.
The average over all
months is 190. The approximate seasonal index for July is
b. 0.684

106. Seasonal Index

Index number that indicates how a particular seasons compares with an
average time period (with an index of 1 indicating an average season)

107. If the seasonal index for January is 0.80, then...

Janurary sales tend to be 20% lower than an average month.

108. permanent structure called Matrix organization. There are multiple

reporting lines-that is, people have more than one formal boss. This may
incorporate solid lines (direct strong reporting) and dotted lines (a weaker
reporting relationship, but still indicating some formal level of right to the
individual time. Many types of complex structure. Resource coordination:
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
focus on their areas of expertise. Specialization, placing employee in
functional areas allow them to specialize in a particular field, communication,
flexibiltiy
Disad: confusion of management (supervisor), expensive

109. Forecasting provides a competitive advantage for Disney:

V Global portfolio includes parks in Hong Kong, Paris,
Tokyo, Orlando, and Anaheim
V ▶ Revenues are derived from people – how many
visitors and how they spend their money
V ▶ Daily management report contains only the
forecast and actual attendance at each park
V Disney generates daily, weekly, monthly, annual,
and 5-year forecasts
V ▶ Forecast used by labor management,
maintenance, operations, finance, and park scheduling
V ▶ Forecast used to adjust opening times, rides,
shows, staffing levels, and guests admitted
V 20% of customers come from outside the USA
V ▶ Economic model includes gross domestic product,
cross-exchange rates, arrivals into the USA
V ▶ A staff of 35 analysts and 70 field people survey
1 million park guests, employees, and travel professionals
each year
V nputs to the forecasting model include airline
specials, Federal Reserve policies, Wall Street trends,
vacation/holiday schedules for 3,000 school districts around
the world
V ▶ Average forecast error for the 5-year forecast is
5%
V ▶ Average forecast error for annual forecasts is
between 0% and 3%

110. OM is one of three major functions of any organization, we want to

study how people organize themselves for productive enterprise
 ­We want (and need) to know how goods and services are produced
- We want to understand what operations managers do
- OM is such a costly part of an organization

111. Time-Series Forecasting

- set of evenly spaced numerical data (obtained by observing response
variable at regular time periods)
- forecast based only on past values, no other variables important (assumes
that factors influencing past and present will continue influence in the future)

112. Time-Series Components

Trend, cyclical, seasonal, random

113. Time series forecast is base on ____ values

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Past

114. Overview of Quantitative Approaches

1. Naive approach (time-series model)
2. Moving averages (time-series model)
3. Exponential smoothing (time-series model)
4. Trend projection (time-series model)
5. Linear regression (associative model)

115. Reasons to study Operations Management include

a. studying why people organize themselves for free enterprise
b. knowing how goods and services are consumed
c. understanding what human resource managers do
d. learning about a costly part of the enterprise
e. all of the above

116. Reasons to study Operations Management include learning about

a. why people organize themselves for productive enterprise
b. how goods and services are produced
c. what operations managers do
d. a costly part of the enterprise
e. all of the above

117. Which of the following represent reasons for globalizing operations?

a. to gain improvements in the supply chain
b. to improve operations
c. to expand a product's life cycle
d. to attract and retain global talent
e. All of the above are valid.

118. Which of the following does not represent reasons for globalizing
operations?
a. reduce costs
b. improve supply chain
c. reduce responsiveness
d. attract and retain global talent
e. All of the above are valid reasons for globalizing operations.

119. One reason for global operations is to gain improvements in the supply
chain.

True

120. One reason to globalize is to learn to improve operations. True

121. 2. Delphi method - panel of experts, queried iteratively

122. Delphi Method

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
- iterative group process, continues until consensus is reached
- 3 types of participants: decision makers, staff, respondents

123. Factor Rating offers a way for a team to compare projects on multiple
dimensions, which are weighted to reflect their relative importance. Have the
team brainstorm selection criteria and then reduce the number of criteria to
a manageable number.

124. Shortening the duration of the project is called _project

crashing_____________

125. 32) The primary purpose of the mean absolute deviation (MAD) in
forecasting is to:
A) estimate the trend line.
B) eliminate forecast errors.
C) measure forecast accuracy.
D) seasonally adjust the forecast.
E) remove random variations.

Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015