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1) All organizations, including service firms such as banks and hospitals, have a production
function.
Answer: TRUE
2) Operations management is the set of activities that creates value in the form of goods and
services by transforming inputs into outputs.
Answer: TRUE
3) Competition in the twenty-first century is no longer between companies; it is between supply
chains.
Answer: TRUE
4) An accounting firm that provides tax services for a company would be considered to be part of
that company's supply chain.
Answer: TRUE
5) One reason to study operations management is to learn how people organize themselves for
productive enterprise.
Answer: TRUE
The operations manager performs the management activities of planning, organizing,staffing,
leading, and controlling of the OM function.
Answer: TRUE
6) "Considers inventory ordering and holding decisions" is within the strategic operations
management decision area of managing quality.
Answer: FALSE
7) In order to have a career in operations management, one must have a degree in statistics or
quantitative methods.
Answer: FALSE
8) Customer interaction is often high for manufacturing processes, but low for services.
Answer: FALSE
9) Manufacturing now constitutes the largest economic sector in postindustrial societies.
Answer: FALSE
10) Productivity is the total value of all inputs to the transformation process divided by the total
value of the outputs produced.
Answer: FALSE

1) The transportation model is an excellent tool for minimizing shipping costs among existing
facilities, but it is not useful when firms consider new facility locations.
Answer: FALSE
2) The transportation model seeks satisfactory, but not necessarily optimal, solutions for shipping
goods from several origins to several destinations.
Answer: FALSE
3) The transportation model is a special class of linear programming models.
Answer: TRUE
4) A transportation problem requires exactly as many origins as destinations.
Answer: FALSE
5) Neither the northwest-corner rule nor the intuitive method considers shipping cost in making
initial allocations.
Answer: FALSE

6) The intuitive method of generating an initial solution has different results for each problem
solver because "intuition" varies from person to person.
Answer: FALSE
7) A feasible solution in transportation models is one in which all of the supply and demand
constraints are satisfied.
Answer: TRUE

1) Fixed costs are those costs that continue even if no units are produced.
Answer: TRUE
2) Break-even analysis identifies the volume at which fixed costs and revenue are equal.
Answer: FALSE
3) Break-even analysis is a powerful analytical tool, but is useful only when the organization
produces a single product.
Answer: FALSE

1) Forecasts may be influenced by a product's position in its life cycle.

Answer: TRUE

2) Demand forecasts serve as inputs to financial, marketing, and personnel planning.

Answer: TRUE

3) Forecasts of individual products tend to be more accurate than forecasts of product families.
Answer: FALSE

4) Most forecasting techniques assume that there is some underlying stability in the system.
Answer: TRUE
5) The sales force composite forecasting method relies on salespersons' estimates of expected
sales.
Answer: TRUE

6) A time-series model uses a series of past data points to make the forecast.

Answer: TRUE

7) The quarterly "make meeting" of Lexus dealers is an example of a sales force composite
forecast.
Answer: TRUE
8) A naive forecast for September sales of a product would be equal to the forecast for August.
Answer: FALSE

9) Cycles and random variations are both components of time series.

Answer: TRUE

10) A naive forecast for September sales of a product would be equal to the sales in August.
Answer: TRUE

11) One advantage of exponential smoothing is the limited amount of record keeping involved.
Answer: TRUE

12) The larger the number of periods in the simple moving average forecasting method, the
greater the method's responsiveness to changes in demand.
Answer: FALSE

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

14) In trend projection, the trend component is the slope of the regression equation.
Answer: TRUE

15) In trend projection, a negative regression slope is mathematically impossible.

Answer: FALSE

16) Seasonal indices adjust raw data for patterns that repeat at regular time intervals.
Answer: TRUE

17) A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y per
period.
Answer: TRUE

18) Demand for individual products can be driven by product life cycles.
Answer: TRUE