Test Bank

CHAPTER 1
1) Which of the following is a reason for studying operations and supply chain management
(OSCM)?
A) OSCM is essential for understanding organizational behavior.

B) Most business graduates do OSCM work regardless of their job title.
C) All managers should understand the basic principles that guide the design of
transformation processes.
D) OSCM is a required course in all business degree programs.
E) OSCM is the most rigorous business discipline.
2) Which of the following sets of categories the Goods-Services Continnuum consists of?
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 these.
3) Which of the following are defined as core goods?
A) Chemicals.
B) Airlines.
C) Data storage systems.
D) Hotels.
E) None of these.
4) Current issues in OSCM do not include blank.
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A) coordinating relationships between organizations
B) making senior management aware that OSCM can be a competitive weapon
C) managing customer touch points
D) increasing global supply chain employment
5) Which of the following are not listed in the text as jobs in OSCM?
A) Department store manager.

B) Project manager.
C) Hospital administrator.
D) Data center manager.
E) Call center manager.
6) 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 these.
7) Which of the following is not a way that operations and supply processes are
categorized?
A) Planning.
B) Returning.
C) Delivering.
D) Selecting.
E) Making.
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8) One of the "package of features" that makes up a service is blank.
A) appearance.
B) facilitating goods.
C) packaging.
D) cost.
E) implied use.
9) Which of the following is not a measure of operations and supply chain management
efficiency used by Wall Street?
A) Inventory turnover.
B) Days inventory.
C) Receivable turnover.
D) Earnings per share.
E) Asset turnover.
10) 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) Receivables turnover.
D) Earnings per share growth.
E) Financial leverage.
11) Managing customer touch points becomes a concern under current issues in OCSM when
blank.
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A) complaints arise about shaking hands with customers in cultures that is frowned upon
B) firms striving to become superefficient begin to scrimp on staffing and training
customer support personnel
C) a firm has a workforce trained in specifically diverse situations and the correct level of
service may be hard to discern
D) firms market global products
E) senior executives fail to recognize the contribution OCSM can make to their success
12) When considering the concept of value, how is quality defined?
A) By the price of the product.

B) By the producer’s reputation in the industry.
C) By the weight of the product.
D) By the attractiveness of the product, considering its features and durability.
E) By the product’s uniqueness relative to other similar products.
13) All other things remaining the same, if the revenue or sales decreases, asset turnover ratio
will .
A) decrease
B) increase
C) stay the same
D) will decrease, but the amount of change will depend on the profit margin
E) decrease and will decrease, but the amount of change will depend on the profit margin
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14) Which of the following is the most appropriate regarding inventory turnover?
A. Inventory turnover increases as average inventory decreases, while other things remain the
same.
B. Inventory turnover is an efficiency measure.
C. Inventory turnover is unaffected by changes in annual sales.
A) Choice A
B) Choice B
C) Choice C
D) Choices A and B only
E) Choices A, B and C will hold
15) Identify the most appropriate answer regarding cash conversion cycle.
A. Is also known as cash-to-cash cycle.
B. Cash conversion cycle goes down if payable period goes up.
C. Cash conversion cycle goes up if average inventory goes up.
A) Choice A
B) Choice B
C) Choice C
D) Choices A and B are correct
E) Choices A, B and C are all correct
16) Efficiency means doing the right things to create the most value for the company.
⊚ true
⊚ false
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17) Effectiveness means doing the right things to create the most value for the company.
⊚ true
⊚ false
18) 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
⊚ false
19) A worker can be efficient without being effective.

⊚ true
⊚ false
20) A process can be effective without being efficient.

⊚ true
⊚ false
21) Operations and supply chain management is defined as the design, operation, and
improvement of the systems that create and deliver the firm's primary products and services.
⊚ true
⊚ false
22) The term "value" refers to the relationship between quality and the price paid by the
consumer.
⊚ true
⊚ false
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23) Attempting to balance the desire to efficiently use resources while providing a highly
effective service may create conflict between the two goals.
⊚ true
⊚ false
24) Central to the concept of operations strategy are the concepts of operations focus and
trade-offs.
⊚ true
⊚ false
25) OSCM is concerned with management of the trickiest parts of the system that produces a
good or delivers a service.
⊚ true
⊚ false
26) OSCM is a functional field of business with clear line management responsibilities.
⊚ true
⊚ false
27) The supply network can be thought of as a pipeline through which cash, material, and
information flow.
⊚ true
⊚ false
28) Supply networks cannot be constructed for every product or service.

⊚ true
⊚ false
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29) "Operations" refers to manufacturing and service processes used to transform resources
employed by a firm into products desired by customers.
⊚ true
⊚ false
30) "Supply Chain" refers to processes that move information and material to and from the
manufacturing and service processes of the firm.
⊚ true
⊚ false
31) "Supply Chain" includes only inbound freight and inventory.

⊚ true
⊚ false
32) It is critical that a sustainable strategy meet the needs of shareholders and employees. It is
also highly desirable that it preserves the environment.
⊚ true
⊚ false
33) Planning is where a firm must determine how anticipated demand will be met with
available resources.
⊚ true
⊚ false
34) Although planning involves determining how the various supply chain processes
(sourcing, making, delivering, and returning) will be met, planning itself is not considered a
supply chain process.
⊚ true
⊚ false
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35) The supply chain processes mentioned in the textbook are: planning, sourcing, delivering,
and returning only.
⊚ true
⊚ false
36) All managers should understand the basic principles that guide the design of
transformation processes.
⊚ true
⊚ false
37) Operations and supply management changes constantly because of the dynamic nature of
competing in global business and the constant evolution of information technology.
⊚ true
⊚ false
38) Internet technology has made the sharing of reliable real-time information expensive.
⊚ true
⊚ false
39) Capturing information directly from the source through such systems as point-of-sale,
radio-frequency identification tags, bar-code scanners, and automatic recognition has had little
impact on Operations and Supply Chain Management.
⊚ true
⊚ false
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40) 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.
⊚ true
⊚ false
41) Operations and supply chain processes can be conveniently categorized as planning,
sourcing, making, and delivering only.
⊚ true
⊚ false
42) A major aspect of planning involves developing a set of metrics to monitor the supply
chain.
⊚ true
⊚ false
43) 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.
⊚ true
⊚ false
44) Delivering is not considered in supply chain analysis when outside carriers are contracted
to move products to customers.
⊚ true
⊚ false
45) Services are intangible processes that cannot be weighed or measured.

⊚ true
⊚ false
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46) Service innovations can be patented.
⊚ true
⊚ false
47) Services are homogeneous.

⊚ true
⊚ false
48) Services are defined and evaluated as a package of features that affect the five senses.
⊚ true
⊚ false
49) Automobiles and appliances are classified as "pure goods."

⊚ true
⊚ false
50) Core service providers integrate tangible goods into their product.
⊚ true
⊚ false
51) "Product-service bundling" refers to a company building service activities into its product
offerings for its customers.
⊚ true
⊚ false
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52) In contrast to careers in finance and marketing, careers in OSCM include hands-on
involvement with people and processes.
⊚ true
⊚ false
53) A bank branch manager position is not an OSCM job.

⊚ true
⊚ false
54) A supply chain manager is an OSCM job while a purchasing manager is not.
⊚ true
⊚ false
55) Just-in-time (JIT) production was a major breakthrough in manufacturing philosophy

pioneered by the Japanese.
⊚ true
⊚ false
56) Lean manufacturing refers to just-in-time production coupled with total quality control.
⊚ true
⊚ false
57) The Baldrige National Quality Award was started under the direction of the National
Institute of Standards and Technology.
⊚ true
⊚ false
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58) The approach that advocates making revolutionary changes as opposed to evolutionary
changes is called creation theory.
⊚ true
⊚ false
59) The approach that advocates making revolutionary changes as opposed to evolutionary
changes is called "Business Process Reengineering."
⊚ true
⊚ false
60) Business Process Reengineering, which seeks revolutionary change, is contrasted with
total quality management which commonly advocates incremental change.
⊚ true
⊚ false
61) The "triple bottom line" relates to the economic, employee, and environmental impact of
a firm's strategy.
⊚ true
⊚ false
62) Sustainability is the ability to maintain profits in a system.

⊚ true
⊚ false
63) Raising senior management awareness of OSCM as a competitive weapon is not an

important issue.
⊚ true
⊚ false
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64) Green and Black Belt Programs teach Six-Sigma quality tools to managers at many
corporations.
⊚ true
⊚ false
65) The central idea of supply chain management is to apply a total system approach to
managing the flow of information, materials, and services from raw material suppliers through
factories and warehouses to the end customer.
⊚ true
⊚ false
66) The term "electronic commerce" refers to the buying and selling of electronic products
and devices.
⊚ true
⊚ false
67) The term "electronic commerce" refers to the use of the Internet as an essential element
of business activity.
⊚ true
⊚ false
68) "Business Analytics" involves the analysis of data through a unique combination of linear
programming, game theory, and queuing theory to better solve business problems.
⊚ true
⊚ false
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69) The mathematical results of Business Analytics are used to automate decision making
and eliminate the decision maker.
⊚ true
⊚ false
70) Operations and supply chain strategy are not important issues to investors who tend to
focus on growth, dividends, and earnings per share.
⊚ true
⊚ false
71) 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.
⊚ true
⊚ false
72) During a recession, efficient firms often have an opportunity to increase market share
while maintaining profitability.
⊚ true
⊚ false
73) Wall Street analysts are not particularly concerned with how efficient companies are from
an operations and supply management view.
⊚ true
⊚ false
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Answer Key
Test name: Chap 01_6e
1) C
2) B
3) C
4) D
5) D
6) A
7) D
8) B
9) D
10) C
11) B
12) D
13) A
14) D
15) E
16) FALSE
17) TRUE
18) TRUE
19) TRUE
20) TRUE
21) TRUE
22) TRUE
23) TRUE
24) TRUE
25) FALSE
26) TRUE
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27) FALSE
28) FALSE
29) TRUE
30) TRUE
31) FALSE
32) FALSE
33) TRUE
34) FALSE
35) FALSE
36) TRUE
37) TRUE
38) FALSE
39) FALSE
40) FALSE
41) FALSE
42) TRUE
43) FALSE
44) FALSE
45) TRUE
46) FALSE
47) FALSE
48) TRUE
49) FALSE
50) TRUE
51) TRUE
52) TRUE
53) FALSE
54) FALSE
55) TRUE
56) TRUE
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57) TRUE
58) FALSE
59) TRUE
60) TRUE
61) TRUE
62) FALSE
63) FALSE
64) TRUE
65) TRUE
66) FALSE
67) TRUE
68) FALSE
69) FALSE
70) FALSE
71) FALSE
72) TRUE
73) FALSE
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CHAPTER 2
1) Which of the following is not a major strategic operational competitive dimension that
forms a company's competitive position?
A) Management acumen.
B) Coping with changes in demand.
C) Cost or price.
D) Delivery speed.
E) Delivery reliability.
2) Which of the following major competitive dimension forms a company's strategic

operational competitive position in their strategic planning?
A) Cost or price.
B) Focus.
C) Automation.
D) Straddling.
E) Activity-system mapping.
3) When developing an operations and supply chain 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.
4) In development of an operations and supply chain strategy, which of the following may
be an important product-specific criterion to consider?
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A) Focus.
B) Production lot-size.
C) Supplier after-sale support.
D) Learning curve.
E) Total quality management.
5) A company seeks to match the benefits of a successful position while maintaining its
existing position in offering customers a variety of differing services. How is this process called?
A) Operations capability analysis.

B) Straddling.
C) Order qualifying.
D) Order winning.
E) Inter-functional analysis.
6) Which of the following is an activity-system map?
A) A network guide to route airlines.

B) A listing of activities that make up a project.
C) A diagram 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.
7) 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
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A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) All of these
8) Which of the following is a multifactor measure of productivity?

A. Output / (Materials)
C. Output / All resources used
D. Output / Inputs
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) All of these
9) Which of the following is a total measure of productivity?

A. Output / Materials
C. Output / Labor
D. Output / Inputs
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A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) All of these
10) 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
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) All of these
11) 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
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A) Choice A
B) Choice B
C) Choice C
D) Choice A and B
E) Choice B and C
12) 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) 1.429
C) 0.700
D) 0.411
E) None of these
13) 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
E) None of these
14) 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 two 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?
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A) −20.00%
B) −15.82%
C) 8.98%
D) 2.3%
E) −25.00%
F) None of these
15) Various financial data for SunPath Manufacturing for 2015 and 2016 follow.
2015 2016
Output: Sales $300,000 $330,000

Input: Labor $ 40,000 $ 43,000
Raw Materials: $ 45,000 $ 51,000
Energy: $ 10,000 $ 9,000
Capital Employed: $250,000 $262,000
Other: $ 2,000 $ 6,000
What is the percentage change in SunPath’s total productivity measure between 2015 and 2016?
A) − 9.22%
B) 2.33%
C) − 0.53%
D) 2.88%
E) 10.39%
F) None of these
2015 2016
Output: Sales $300,000 $330,000

Input: Labor $ 40,000 $ 43,000
Raw Materials: $ 45,000 $ 51,000
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Energy: $ 10,000 $ 9,000
Other: $ 2,000 $ 6,000
What is the percentage change in the energy partial productivity measure for SunPath between
2015 and 2016?
A) −9.22%
B) 2.33%
C) −0.53%
D) 2.88%
E) 22.2%
F) None of these
2015 2016
Output: Sales $300,000 $330,000

Input: Labor $ 40,000 $ 43,000
Raw Materials: $ 45,000 $ 51,000
Energy: $ 10,000 $ 9,000
Other: $ 2,000 $ 6,000
What is the percentage change in the labor partial productivity measure for SunPath between
2015 and 2016?
A) −9.22%
B) 2.27%
C) −0.53%
D) 2.88%
E) 10.39%
F) None of these
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2015 2016
Output: Sales $300,000 $330,000

Input: Labor $ 40,000 $ 43,000
Raw Materials: $ 45,000 $ 51,000
Energy: $ 10,000 $ 9,000
Other: $ 2,000 $ 6,000
What is the percentage change in the multifactor labor and raw materials productivity measure
for SunPath between 2015 and 2016?
A) −9.22%
B) 2.33%
C) −0.51%
D) −2.88%
E) 10.39%
F) None of these
19) What is meant by the term "operations effectiveness?"
A) Products produced in sufficient volume to meet demand.

B) Products produced at the lowest price in the industry.
C) Operations that run without error and with no surprises for top management.
D) Operations that can adapt quickly and efficiently to new and evolving conditions.
E) Performing activities in a manner that best implements strategic priorities at minimum
cost.
20) Decisions that relate to the design of the processes and the infrastructure needed to
support these processes relate to which OSCM concept?
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A) Sustainability.
B) Competitive dimensions of OSCM.
C) Making trade-offs.
D) integrating operations and supply chain strategy with a firm's operational capabilities.
E) Supply chain risk.
21) Triple bottom line is a phrase that captures which of the following?
A. The concept that shareholders like economic, environmental and societal stewardship
affecting shareholders and stake holders.
B. The concept that firms should consider economic prosperity, environmental stewardship and
social responsibility affecting shareholders and stake holders.
C. The concept that sustainability, social awareness and profitability are three important
measures for a firm affecting shareholders and stake holders.
D. The concept that firms should consider economic prosperity, environmental stewardship and
social responsibility affecting only shareholders.
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) None of the above
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22) Which of the following lists contains only competitive dimensions of a firm discussed in
the text?
A. Cost or price, Triple bottom line, order winners
B. Delivery speed, delivery reliability, order qualifiers
C. Cost or price, delivery speed, delivery reliability, new product design
D. Cost or price, delivery speed, delivery reliability, flexibility and new product introduction
speed
E. Triple bottom line, delivery speed, deliver reliability, supplier after sale support
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E
23) Choose the most accurate description in the context of operations and supply chain from
the following lists.
A. Order winners and order qualifiers are two ways of describing market-oriented dimensions of
a product.
B. Order winners differentiates a product or service from another while order qualifiers are built
in features.
C. Order winners are built in features and order qualifiers are necessary features.
D. Order qualifier is a screening criterion while order winner is a differentiating criterion.
E. Order winners may have been order qualifiers before.
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A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E
24) In a firm, if the employees attend a training program, then the time to assemble one unit
reduces by 10%. Training program will blank.
A. increase the labor productivity only
B. increase the multifactor productivity only
C. increase both labor and multifactor productivity
D. decrease capital productivity
E. have no effect on productivity.
A) Choice A
B) Choice B
C) Choice C
D) Choice D
E) Choice E
25) In a firm, all other things remaining the same, if the material usage per unit of final
product decreases to half of the current usage, then the firm will blank.
A) double the material productivity

B) increase the multifactor productivity
C) double the material productivity and increase the multifactor productivity
D) decrease capital productivity
E) have no effect on productivity.
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26) An operations and supply chain strategy must be integrated with the organization's
corporate strategy.
⊚ true
⊚ false
27) One of the competitive dimensions that form the competitive position of a company when
planning their strategies is cost.
⊚ true
⊚ false
planning their strategies is delivery speed.
⊚ true
⊚ false
planning their strategies is making the best trade-off.
⊚ true
⊚ false
30) 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.
⊚ true
⊚ false
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31) 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
⊚ false
32) Following a straddling strategy, firms can broaden their capabilities and effectively
compete with more focused firms in markets requiring low cost for success.
⊚ true
⊚ false
33) An order winner is a set of criteria that differentiates the products or services of one firm
from another.
⊚ true
⊚ false
34) An order winner is a set of screening criteria that permits a firm's products to be
considered as possible candidates for purchase.
⊚ true
⊚ false
35) An order qualifier is a screening criterion that permits a firm's products to even be
considered as possible candidates for purchase.
⊚ true
⊚ false
36) Activity-system maps show how a company's strategy is delivered through a set of
tailored activities.
⊚ true
⊚ false
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37) Activity-system maps are useful in understanding how well a system of activities fits the
overall company's strategy.
⊚ true
⊚ false
38) Activity-system maps depict the geographic reach of a company's business strategies.
⊚ true
⊚ false
39) An operations strategy must resist change because of the long-term nature of equipment
and personnel investments.
⊚ true
⊚ false
40) Operations and supply strategy can be viewed as part of a planning process that
coordinates operational goals with those of the larger organization.
⊚ true
⊚ false
41) Infrastructure decisions within operations strategy include the selection of the appropriate
technology, the role of inventory, and the location of facilities.
⊚ true
⊚ false
42) Infrastructure decisions within operations strategy include the selection of the logic
associated with the planning and control systems.
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⊚ true
⊚ false
43) 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.
⊚ true
⊚ false
44) The job of operations and supply chain strategy is to deliver the most feature-rich, highest
quality product at the lowest price within specified parameters of delivery time and
customization.
⊚ true
⊚ false
45) Productivity is a relative measure.

⊚ true
⊚ false
46) In a partial measure in productivity, the denominator of the ratio would include all
resources used or all inputs.
⊚ true
⊚ false
47) In a multifactor measure in productivity, the numerator of the ratio would include all
resources used or all inputs.
⊚ true
⊚ false
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48) The triple bottom line considers evaluating the firm against social, economic, and
environmental criteria.
⊚ true
⊚ false
49) Sustainability means meeting a firm's current needs without excessively compromising
the ability of future generations to meet their own needs.
⊚ true
⊚ false
50) The social impact of the triple bottom line concept pertains to fair and beneficial business
practices toward labor, the community, and the region in which a firm conducts its business.
⊚ true
⊚ false
51) A firm's business practices toward its labor force pertain mainly to the economic aspect
of the triple bottom line concept.
⊚ true
⊚ false
52) According to the economic aspect of the triple bottom line concept, the firm is required to
compensate shareholders by paying dividends and growing the value of their common stock
faster than their competitors.
⊚ true
⊚ false
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53) Within a sustainability framework, the economic dimension of the triple bottom line
concept goes beyond just profit for the firm but also provides lasting economic benefit to society.
⊚ true
⊚ false
54) Within a sustainability framework, the environmental dimension of the triple bottom line
concept has to do with labor, the community, and the region in which a firm conducts its
business.
⊚ true
⊚ false
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Answer Key
1) A
2) A
3) A
4) C
5) B
6) C
7) A
8) B
9) D
10) A
11) D
12) B
13) A
14) C
15) D
16) E
17) B
18) C
19) E
20) D
21) B
22) D
23) D
24) C
25) C
26) TRUE
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27) TRUE
28) TRUE
29) FALSE
30) FALSE
31) TRUE
32) FALSE
33) TRUE
34) FALSE
35) TRUE
36) TRUE
37) TRUE
38) FALSE
39) FALSE
40) TRUE
41) FALSE
42) TRUE
43) FALSE
44) FALSE
45) TRUE
46) FALSE
47) FALSE
48) TRUE
49) FALSE
50) TRUE
51) FALSE
52) FALSE
53) TRUE
54) FALSE
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CHAPTER 5
1) Which of the following is an advantage of a pure project where self-contained teams
work full time on a project?
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.
2) 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.
E) None of these.
3) 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.
4) A project can be subdivided into which of the following?
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A) Job orders.
B) Sub-jobs.
C) Work packages.
D) Sub-paths.
E) Events and decisions.
5) A project starts out with 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.
6) 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.
7) In a Gantt chart the horizontal axis is usually .
A) activities
B) cost
C) profit
D) time
E) milestones
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8) 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.
9) 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.
10) 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.
11) 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?
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A) Pure Project.
B) Task force.
C) Matrix Project.
D) Functional Project.
E) PERT.
12) You have been placed in charge of a large project. Shortened communication lines are
required to ensure 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.
13) What does "EVM" stand for?
A) Extra Value Materials—premium quality raw materials at the project site.

B) Enterprise Vacation Matrix—a chart indicating team members planned vacation
absences
C) Earned Value Management–a technique for measuring project progress objectively.
D) Early Vision Management—a technique used in early project planning meetings for
activities that set expectations to highlight and avoid "scope creep."
E) External Variance Measurement—identifying the degree to which project time and
cost variances were due to forces and issues uncontrollable by the project manager.
14) The major goal of critical path analysis is to .
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A) Estimate the project's completion date
B) Identify and manage the critical path
C) Determine the latest feasible start date
D) Provide a visual aid that indicates precedent and antecedent relationships
E) To determine when each activity in the project should be scheduled
15) A simple project listing of five activities and their respective time estimates are presented
below:
Activity Immediate Predecessor Time in Days
A None 1
B A 2
C A 1
D B and C 3
E D 2
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
E) None of these
16) A simple project listing of five activities, their predecessors, and their respective time
estimates are presented below:
A None 3
B A 2
C A 1
D B and C 3
E D 4
Using CPM, what is the Latest Finish Time for the last activity in this project (i.e., the total time
to complete the project)?
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A) 10 days
B) 7 days
C) 8 days
D) 12 days
E) 9 days
17) A simple project listing of five activities, their predecessors, and their respective time
estimates are presented below:
A None 2
B A 2
C A 1
D B and C 3
E D 1
Using the CPM, which activities have slack in this project?
A) A
B) B
C) C
D) D
18) A company must perform a maintenance project consisting of seven activities. The
activities, their predecessors, and their respective time estimates are presented below:
Activity Designation Immediate Time in
Predecessor Days
Break down both machines A None 3
Clean machine 1 B A 3
Clean machine 2 C A 3
Re-set machine 1 D B 4
Re-set machine 2 E C 2
Re-calibrate both F D and E 1
machines
Final test G F 2
Using CPM, which activities make up the critical path?
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A) A, B, D, F, G
B) A, C, E, F, G
C) A, C, B, F, E
D) A, D, E
E) None of these
Predecessor Days
Re-calibrate both machines F D and E 1
Final test G F 2
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
Predecessor Days
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Re-calibrate both machines F D and E 1
Final test G F 1
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
21) For an activity in a CPM analysis, the early start time is 8 and the late start 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.
22) 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.
23) A listing of immediate predecessor activities is important information in a CPM analysis

for which of the following reasons?
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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.
E) None of these.
24) 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) The analysis is performed incorrectly.

B) There are 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.
25) 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?
Activity Normal Time Crash Time Normal Cost Crash Cost
A 3 2 $400 $ 600
B 5 3 $600 $1200
C 4 1 $300 $1500
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
26) 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?
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Activity Immediate Predecessor Normal Crash Normal Crash
Time Time Cost Cost
A None 3 2 $200 $400
B A 4 3 $300 $600
C A 1 1 $200 $200
D B and C 3 2 $500 $550
E D 2 1 $500 $900
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.
27) 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?
Activity Immediate Normal Crash Normal Crash
Predecessor Time Time Cost Cost
A None 3 2 $200 $400
B A 4 3 $300 $600
C A 1 1 $300 $300
D B and C 3 2 $500 $550
E D 2 1 $500 $900
A) Total time is 13 days, total cost is $1500.

B) Total time is 12 days, total cost is $2000.
C) Total time is 12 days, total cost is $2300.
D) Total time is 11 days, total cost is $1850.
28) 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?
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Predecessor Time Time Cost Cost
A None 3 2 $200 $400
B A 4 3 $300 $600
C A 1 1 $300 $300
D B and C 3 2 $500 $550
E D 2 1 $500 $900
A) Total time is 10 days, total cost is $2,500.

B) Total time is 9 days, total cost is $2,300.
C) Total time is 8 days, total cost is $2,750.
D) Total time is 8 days, total cost is $14,800.
29) 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?
Predecessor Time Time Cost(Direct) Cost(Direct)
A None 3 2 $300 $400
B A 3 3 $100 $100
C A 1 1 $200 $200
D B and C 3 2 $400 $550
E D 2 1 $500 $900
F E 3 3 $200 $200
G F 2 2 $100 $100
A) $2,150
B) $2,300
C) $2,400
D) $2,450
E) $2,500
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30) 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. At what day do we achieve the lowest total project cost (i.e., direct
plus indirect costs)?
Predecessor Time Time Cost(Direct) Cost(Direct)
A None 3 2 $300 $400
B A 3 3 $100 $100
C A 1 1 $200 $200
D B and C 3 2 $400 $550
E D 2 1 $500 $900
F E 3 3 $200 $200
G F 2 2 $100 $100
A) 16 days
B) 15 days
C) 14 days
D) 13 days
E) 12 days
31) You have arrived at the optimal solution using Time-Cost CPM Scheduling model
analysis. When it had happened?
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.
32) In CPM analysis it is generally expected that the relationship between activity direct costs
and project indirect costs will be .
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A) positively related
B) optimally related
C) negatively related
D) not related
E) fractionally related
33) In a project analysis using three time estimates with more than one critical path existing,
how does the project manager decide which variances to use in arriving at the probability of
meeting the project due date?
A) The project manager averages the variances and uses that.

B) The project manager uses the smallest variance in order to get the highest probability
of on-time completion.
C) The project manager uses the variances considered most correct.
D) The project manager uses the largest variances in order to understate the probability of
on-time completion.
E) The project manager uses the most likely estimate plus the amount of slack time in the
project.
34) You have just used the network planning model and found the critical path length is 30
days and the variance of the critical path is 25 days. The probability that the project will be
completed in 33 days or less is equal to (2 decimal accuracy) .
A) 0.73
B) 0.55
C) 0.12
D) 0.27
E) 0.60
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35) You have just used the network planning model and found the critical path length is 60
days and there are two critical paths. The standard deviation of the first critical path is 10 days
and the s.d. of the second critical path is 15 days. The probability that the project will be
completed in 70 days or less is equal to (2 decimal accuracy) .
A) 0.84
B) 0.25
C) 0.16
D) 0.75
E) 0.66
36) You have just used the network planning model for a county road resurfacing project and
found that the critical path length is 40 days and the standard deviation of the critical path is 10
days. Suppose you want to pick a time (in days) within which you will complete the project with
90% confidence level. What should be that time (in days and round to the nearest whole
number.)?
A) 40
B) 13
C) 45
D) 29
E) 53
37) The fact that organizations are flattening is one of the reasons that project management is
important.
⊚ true
⊚ false
38) Breakthrough projects are those that provide fundamental improvements to existing
products.
⊚ true
⊚ false
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39) Derivative projects are those which address incremental changes to products or processes.
⊚ true
⊚ false
40) 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
⊚ false
41) Project management can be defined as planning, directing, and controlling resources to
meet the technical, cost, and time constraints of the project.
⊚ true
⊚ false
42) Upper-level management must decide between pure, functional, and matrix structures as
ways to organize projects.
⊚ true
⊚ false
43) The second step in project management is writing the statement of work.
⊚ true
⊚ false
44) An event unit package is a subdivision of a project.

⊚ true
⊚ false
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45) Complex projects are often subdivided into a series of tasks that are typically configured
to be not longer than several months in duration.
⊚ true
⊚ false
46) A project milestone is a specific event to be reached at a particular point in time.

⊚ true
⊚ false
47) One of the disadvantages of a pure project organizational structure is that the project
manager has full authority over the project.
⊚ true
⊚ false
48) One of the advantages of a functional project organizational structure is that a team
member can work on several projects.
⊚ true
⊚ false
49) A matrix project attempts to blend properties of functional and pure project structures.
⊚ true
⊚ false
50) A matrix project structure is often referred to as a "skunkworks".

⊚ true
⊚ false
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51) A disadvantage of a matrix project organizational structure is that a project manager is
held responsible for successful completion of the project.
⊚ true
⊚ false
52) The Gantt chart is an example of a project control chart.

⊚ true
⊚ false
53) Earned Value Management (EVM) is a technique for measuring project progress in an
objective manner.
⊚ true
⊚ false
54) The valuations in an Earned Value Management (EVM) analysis must be either profits or
revenue.
⊚ true
⊚ false
55) Earned Value Management (EVM) has the capability to combine measurements of scope,
schedule, and cost in a project.
⊚ true
⊚ false
56) The critical path of activities in a project is the sequence of activities that forms the
shortest chain in a project network of activities.
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⊚ true
⊚ false
57) CPM is an abbreviation for critical path method.

⊚ true
⊚ false
58) The critical path in a project is that sequence of activities that consumes the longest
amount of time in a project network of activities.
⊚ true
⊚ false
59) The critical path in a CPM analysis is always the shortest path through the network.
⊚ true
⊚ false
60) A work breakdown structure is used in project management but it is not used when the
critical path method is involved.
⊚ true
⊚ false
61) 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
⊚ false
62) Slack activity time is the difference between the early start and the late finish of a project
activity time.
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⊚ true
⊚ false
63) In a CPM analysis if you subtract the late finish from the early finish the result is the
activity's slack time.
⊚ true
⊚ false
64) In a CPM analysis if you subtract the early start from the late start the result is the
activity's slack time.
⊚ true
⊚ false
65) The critical path in a CPM analysis is found by locating the activities times with zero
slack.
⊚ true
⊚ false
66) Calculating the early start and early finish times for each activity in a CPM analysis does
not provide any useful information.
⊚ true
⊚ false
67) One of the assumptions made using CPM is that project activities can be identified with
clear beginning and ending points.
⊚ true
⊚ false
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68) One of the assumptions made using CPM is that project activity sequence relationships
can be specified and networked.
⊚ true
⊚ false
69) The project indirect costs associated with a project include overhead, facilities, and
resource opportunity costs.
⊚ true
⊚ false
70) The activity direct costs associated with a project might include giving workers overtime
to complete a project in less than the expected time.
⊚ true
⊚ false
71) 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.
⊚ true
⊚ false
72) Using the Time-Cost CPM model, the crash time is the shortest possible time allowed for
each activity in the project.
⊚ true
⊚ false
73) In the Time-Cost CPM model, cost is assumed to be a linear function of time.
⊚ true
⊚ false
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74) 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.
⊚ true
⊚ false
75) The Project Management Institute operates a website with the most up-to-date
information about project management software.
⊚ true
⊚ false
76) Project management software available today combines CPM and other scheduling aids,
like Gantt charting, to aid in tracking progress of project completion.
⊚ true
⊚ false
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Answer Key
1) D
2) C
3) A
4) C
5) A
6) B
7) D
8) E
9) E
10) C
11) C
12) A
13) C
14) E
15) B
16) D
17) C
18) A
19) C
20) D
21) C
22) B
23) A
24) B
25) E
26) B
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27) D
28) C
29) A
30) B
31) D
32) C
33) D
34) A
35) D
36) E
37) TRUE
38) FALSE
39) TRUE
40) TRUE
41) TRUE
42) TRUE
43) FALSE
44) FALSE
45) TRUE
46) TRUE
47) FALSE
48) TRUE
49) TRUE
50) FALSE
51) FALSE
52) TRUE
53) TRUE
54) FALSE
55) TRUE
56) FALSE
Version 1 23
57) TRUE
58) TRUE
59) FALSE
60) FALSE
61) TRUE
62) FALSE
63) FALSE
64) TRUE
65) TRUE
66) FALSE
67) TRUE
68) TRUE
69) TRUE
70) TRUE
71) FALSE
72) TRUE
73) TRUE
74) FALSE
75) TRUE
76) TRUE
Version 1 24
CHAPTER 6
1) A difference between project and continuous flow categories of process flow structures is
which two of the following? (Select all that apply.)
A) The size and bulk of the product.

B) Discrete parts moving from workstation to workstation.
C) Degree of equipment specialization.
D) Being a "Virtual Factory".
E) Profit per unit.
2) Regarding the measures of inventory managing efficiency, identify the most appropriate
answer. (Select all that apply.)
A) Total average value of inventory is equal to the selling price multiplied by finished
goods inventory.
B) Inventory turn is the annual cost of goods sold multiplied by average inventory.
C) Days of supply is the inverse of inventory turns × 365.
D) Inventory turn is the annual cost of goods sold divided by average inventory.
3) In studying positioning of inventory in supply chains, which, if any, of the following is

most appropriate? (Select all that apply.)
A) As order decoupling point moves towards source, inventory investment goes down.
B) As order decoupling point moves towards the source, customer lead time gets longer.
C) As order decoupling point moves towards the source, inventory investment increases.
D) As order decoupling point moves towards the source, customer lead time is
unchanged.
4) In studying product-process matrix describing layout strategies, which of the following is

most appropriate? (Select all that apply.)
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A) As you move from project to manufacturing cell to continuous process, product
volume increases while standardization increases.
B) As you move from project to manufacturing cell to continuous process, product
volume decreases while standardization decreases.
C) As you move from project to manufacturing cell to continuous process, product
volume increases while standardization decreases.
D) As you move from project to manufacturing cell to continuous process, product
volume decreases while standardization increases.
5) Using the assembly-line balancing procedure, which of the following is the required
cycle time if the daily production time is 480 minutes and the required daily output is 50 units?
A) 0.104
B) 50
C) 9.6
D) 480
E) Cannot be determined.
6) Using the assembly-line balancing procedure, which of the following is the required
cycle time if the production time in minutes per day is 1,440 and the required output per day in
units is 2,000?
A) 0.72
B) 1.388
C) 250
D) 500
E) Cannot be determined.
7) Using the assembly-line balancing procedure, which of the following is the theoretical
minimum number of workstations if the task times for the six tasks that make up the job are 4, 6,
7, 2, 6, and 5 minutes, and the cycle time is 10 minutes?
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A) 3
B) 5
C) 6
D) 8
E) None of these
8) Using the assembly-line balancing procedure, which of the following is the theoretical
minimum number of workstations if the task times for the eight tasks that make up the job are 7,
4, 7, 8, 9, 4, 3, and 6 minutes, and the cycle time is 8 minutes?
A) 3
B) 5
C) 6
D) 8
E) None of these
9) You have determined that the actual number of workstations that will be used on an
assembly line is 6, using the assembly-line balancing procedure. The cycle time of the line is 5
minutes and the sum of all tasks required on the line is 25 minutes. Which of the following is the
correct value for the resulting line's efficiency?
A) 0.500
B) 0.833
C) 0.973
D) 0.990
E) None of these
10) You have determined that the actual number of workstations that will be used on an
assembly line is 8, using the assembly-line balancing procedure. The cycle time of the line is 10
minutes and the sum of all tasks required on the line is 60 minutes. Which of the following is the
correct value for the resulting line's efficiency?
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A) 0.500
B) 0.650
C) 0.750
D) 0.850
E) None of these
11) When balancing an assembly line, which of the following is not a way to reduce the
longest task time below the required workstation cycle time?
A) Upgrade the equipment.

B) Assign a roaming helper to support the line.
C) Split the task between two workstations.
D) Speed up the assembly line transfer mechanism.
E) Use a more skilled worker.
12) Which of the following is not a step in developing a manufacturing cell layout?
A) Grouping parts into families that follow a common sequence of steps.

B) Identifying dominant flow patterns of parts families as a basis for location of
processes.
C) Physically grouping machines and processes into cells.
D) Disposing of left-over machinery and outsourcing ungrouped processes.
E) None of the above.
13) Which of the following is not considered a major work flow structure?
A) Workcenter.
B) Project.
C) Assembly line.
D) Fabrication.
E) Continuous Flow.
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14) Which of the following is a basic type of process structure?
A) Process flow diagram.

B) Product matrix.
C) Process matrix.
D) Workcenter.
E) Manual assembly.
15) Which of the following is not a basic type of process structure?
A) Product-process matrix.
B) Workcenter.
C) Manufacturing cell.
D) Assembly line.
E) Continuous process.
16) Which of the following basic types of process structures is one where equipment or work
processes are arranged according to the progressive steps the product is made of?
A) Project.
B) Workcenter.
D) Assembly line.
17) Which of the following basic types of process structures is one where similar equipment
or functions are grouped together?
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A) Project.
B) Workcenter.
D) Assembly line.
18) The placement of which of the following is not determined by production process
organization decisions?
A) Departments.
B) Workgroups.
C) Workstations.
D) Machines.
E) Emergency exits.
19) According to Little's Law, which of the following ratios is used to find throughput rate?
A) Cycle time/Process time.

B) Throughput time/Process velocity.
C) Process velocity/Throughput time.
D) Inventory/Flow time.
E) Value added time/Process velocity.
20) According to Little's Law, which of the following can be used to estimate work-in-
process inventory?
A) Process time/Cycle time.

B) Throughput rate × Flow time.
C) Process velocity/Flow time.
D) Set up time/Throughput rate.
E) Value added time/Process velocity.
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21) A firm fills its customer's orders from finished goods inventory. It is
A) a make-to-order firm.
B) an engineer-to-order firm.
C) a make-to-stock firm.
D) a customer service firm.
E) an assemble to order firm.
22) A firm will work with a customer to design the product, and then make it from purchased
materials, parts, and components. This firm is called
A) a make-to-order firm.
B) an engineer-to-order firm.
C) a make-to-stock firm.
D) a customer service firm.
E) an assemble to order firm.
23) Which of these expressions is Little's Law?
A) Inventory/Flow time = Throughput rate

B) Inventory/Throughput Rate = Flow time
C) Inventory = Throughput rate × Flow time
D) Throughput Rate/Inventory = 1/Flow Time
E) All of the above
24) Process selection refers to the strategic decision of choosing the volume of output to
produce in a manufacturing facility depending upon the way that facility produces.
⊚ true
⊚ false
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25) Process selection refers to the strategic decision of selecting which kind of production
processes to use to produce a product or provide a service.
⊚ true
⊚ false
26) A continuous process indicates production of discrete parts moving from workstation to
workstation at a controlled rate.
⊚ true
⊚ false
27) One difference between an assembly line process flow and a continuous process flow is
that on the assembly line the flow is discrete rather than continuous.
⊚ true
⊚ false
28) One trade-off illustrated by the product-process matrix is between flexibility and cost.
⊚ true
⊚ false
29) The volume requirements for the product is one dimension of the choice of which process
structure to select.
⊚ true
⊚ false
30) The product-process matrix shows the relationship between process structures and
product volume.
Version 1 8
⊚ true
⊚ false
31) The term "assembly line" refers to progressive assembly linked by some material
handling device.
⊚ true
⊚ false
32) Workcenter layouts allocate dissimilar machines into cells to work on products that have
dissimilar processing requirements.
⊚ true
⊚ false
33) A project layout is characterized by a relatively low number of units produced in

comparison with process and product layout formats.
⊚ true
⊚ false
34) A project layout is characterized by a high degree of task ordering.

⊚ true
⊚ false
35) The closer the customer is to the customer order decoupling point the longer it takes the
customer to receive the product.
⊚ true
⊚ false
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36) The closer the customer is to the customer order decoupling point the more quickly the
customer receives the product.
⊚ true
⊚ false
37) An engineer-to-order firm will work with the customer to design the product, and then
make it from purchased materials, parts, and components.
⊚ true
⊚ false
38) A make-to-order firm will work with the customer to design the product, and then make it
from purchased materials, parts, and components.
⊚ true
⊚ false
39) The time needed to respond to a customer's order is called the customer response time.
⊚ true
⊚ false
40) The focus in the make-to-stock environment is on providing finished goods where and
when the customers want them.
⊚ true
⊚ false
41) An example of an assemble-to-order firm is Dell Technologies.

⊚ true
⊚ false
Version 1 10
42) The essential issue in satisfying customers in the make-to-stock environment is to balance
the level of finished inventory against the level of service to the customer.
⊚ true
⊚ false
43) The essential issue in satisfying customers in the make-to-stock environment is to balance
the cost of the finished item against the willingness of the consumer to pay for it.
⊚ true
⊚ false
44) Assembling-to-order means moving the customer order decoupling point from finished
goods to components.
⊚ true
⊚ false
45) A high-level map or diagram of a supply chain process can be useful to understand how
material flows and where inventory is held.
⊚ true
⊚ false
46) Little's law can be thought of as a relationship between units and time.
⊚ true
⊚ false
47) Little's law states that supply chain processes can be regarded as unrelated and thus
treated and analyzed separately.
⊚ true
⊚ false
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48) A process map shows the physical location of the various processes within a supply
chain.
⊚ true
⊚ false
49) Workstation cycle time is the time between successive units coming off the end of the
assembly line.
⊚ true
⊚ false
50) The assembly-line balancing procedure determines the precedence relationships of

manufacturing tasks.
⊚ true
⊚ false
51) In assembly-line balancing the theoretical minimum number of workstations is found by

a ratio of the sum of all task times divided by the cycle time.
⊚ true
⊚ false
52) The efficiency of an assembly-line is found by a ratio of the sum of all task times divided
by the cycle time.
⊚ true
⊚ false
53) For the purposes of assembly-line balancing, the required workstation cycle time is found
by dividing production time per day by the required units of output per day.
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⊚ true
⊚ false
54) In balancing an assembly line, workstation cycle time has to be less than the time
between successive units coming off the end of the line.
⊚ true
⊚ false
55) If the sum of the task times required to produce a product is 45 minutes and the cycle
time for the same product is 10 minutes, the theoretical minimum number of workstations is 5
using the assembly-line balancing procedure.
⊚ true
⊚ false
56) The first step in balancing an assembly line is to specify the precedence relationships
among tasks to be performed on the line.
⊚ true
⊚ false
57) The term "assembly line" refers to progressive assembly linked by some material
handling device.
⊚ true
⊚ false
58) If the sum of the task times required to produce a product is 80 minutes and the cycle
time for the same product is 15 minutes, the theoretical minimum number of workstations is 8
using the assembly-line balancing procedure.
⊚ true
⊚ false
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59) In designing a production layout, a flexible line layout might have the U-shape.
⊚ true
⊚ false
Version 1 14
Answer Key
1) [A, D]
2) [C, D]
3) [A, B]
4) [A, D]
5) C
6) A
7) A
8) C
9) B
10) C
11) D
12) D
13) D
14) D
15) A
16) D
17) B
18) E
19) D
20) B
21) C
22) B
23) E
24) FALSE
25) TRUE
26) FALSE
Version 1 15
27) TRUE
28) TRUE
29) TRUE
30) TRUE
31) TRUE
32) FALSE
33) TRUE
34) TRUE
35) FALSE
36) TRUE
37) TRUE
38) FALSE
39) FALSE
40) TRUE
41) TRUE
42) TRUE
43) FALSE
44) TRUE
45) TRUE
46) TRUE
47) FALSE
48) FALSE
49) TRUE
50) FALSE
51) TRUE
52) FALSE
53) TRUE
54) FALSE
55) TRUE
56) TRUE
Version 1 16
57) TRUE
58) FALSE
59) TRUE
Version 1 17
CHAPTER 7
1) Platform service business model describes an approach where .
1.a) consumers and producers/service creators are brought together for a social cause.
2.b) transaction provider connects the customer and providers and collects the charges.
3.c) an example of a transaction provider would be eBay.
4.d) another model of manufacture is described.
A) Option A
B) Option B
C) Option C
D) Option D
2) Which of the following is a suggestion for managing queues that is mentioned in the
textbook?
A) Put up a serpentine lane to keep people from jumping ahead in line.

B) Use humor to defuse a potentially irritating situation.
C) Segment the customers.
D) Assure customers that the wait is fair and inform them of the queue discipline.
E) Tell people in the queue that each will be served as soon as possible.
3) Which of the following is not a suggestion for managing queues presented in the
textbook?
A) Try to divert your customer's attention when waiting.

B) Segment the customers.
C) Encourage customers to come during a slack period.
D) Train your servers to be friendly.
E) Periodically close the service channel to temporarily disperse the line.
4) Which of the following is a suggestion for managing queues presented in the textbook?
Version 1 1
A) Train your servers to be friendly.
B) Tell customers that the line should encourage them to come during slack periods.
C) Give each customer a number.
D) Periodically close the service channel to temporarily disperse the line.
E) Use humor to defuse a potentially irritating situation.
5) Which of the following are the three major components of a queuing system?
A) The source population, how customers exit the system, and the queuing discipline.
B) The number of servers, the service speed, and the waiting line.
C) The source population, how the customer exits the system, and the servicing system.
D) The source population and the way customers arrive at the system, the serving
systems, and how customers exit the system.
E) The service speed, the queue discipline, and the waiting line.
6) Which of the following is a suggestion for managing queues that is mentioned in the
textbook?
A) Put up a serpentine lane to keep people from jumping ahead in line.

B) Use humor to defuse a potentially irritating situation.
C) Train your servers to be friendly.
D) Assure customers that the wait is fair and inform them of the queue discipline.
E) Tell people in the queue that each will be served as soon as possible.
7) Which of the following is not a suggestion for managing queues presented in the
textbook?
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A) Train your servers to be friendly.
B) Segment the customers.
C) Determine an acceptable waiting time for your customers.
D) Inform your customers of what to expect.
E) Encourage customers to come during slack periods.
8) In essence, a queuing system includes several major components. Which of the following
is not one of them?
A) Source population.
B) Servicing system.
C) How the customer exits the system.
D) The queue discipline.
E) None of these.
9) Which of the following is an example of a finite population in a queuing system?
A) People waiting to place their order at a fast-food restaurant.

B) The departmental faculty in line at the copy machine.
C) People waiting in line at an ATM.
D) Patients seeking help in a hospital emergency room.
E) Taxpayers calling for assistance from the IRS.
10) Which of the following is not a queue discipline discussed in the textbook?
A) First come, first served.

B) Last in, first out.
C) Limited needs.
D) Shortest processing time.
E) Best customer first.
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11) Which of the following queue disciplines is discussed in the textbook?
A) Emergencies first.
B) Garner-Whitten formula.
C) Newest customer first.
D) Patient customers last.
E) None of these.
12) Buying a ticket for a college football game where there are multiple windows to buy the
ticket, which of the following types describes the queuing system line structure?
A) Single channel, single phase.

B) Single channel, multiphase.
C) Multichannel, single phase.
D) Multichannel, multiphase.
E) None of these.
13) Buying food at a large food store with multiple checkout counters, which of the following
types describes the queuing system line structure?

E) None of these.
14) Getting an autograph from a famous person might involve standing in which type of the
queuing line structure?
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E) None of these.
15) In a college registration process, several department heads have to approve an individual
student's semester course load. What is the queuing system line structure?

E) None of these.
16) Standing in line to buy a ticket for a movie where there are multiple windows to buy
tickets is which type of the queuing system line structure?

E) None of these.
17) A roller coaster ride in an amusement park employs which type of the queuing system
line structure?
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E) None of these.
18) Machine breakdown and repair in a twelve-machine factory having one repair mechanic
would represent which type of the queuing system line structure?

E) None of these.
19) Assume the service rate for a queue in a truck-loading operation is 2 trucks per hour.
Using the infinite queuing notion for the models presented in the textbook, which of the
following is the average service time?
A) 2 hours.
B) 1 hour.
C) 0.5 hour.
D) 0.25 hour.
E) None of these.
20) For an infinite queuing situation, if the arrival rate for loading trucks is 5 trucks per hour,
what is the mean time between arrivals?
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A) 5 hours.
B) 2.5 hours.
C) 0.2 hour.
D) 0.1 hour.
E) None of these.
21) A company is concerned about the number of customers that have to wait for service in
their customer service department. Assume the rate at which customers arrive is 12 per hour.
Using the infinite queuing notion for the models presented in the textbook, which of the
following is the mean time between arrivals?
A) 12 minutes.
B) 6 minutes.
C) 2 minutes.
D) 1 minute.
E) None of these.
22) Which of the following is a characteristic that can be used to guide the design of service
systems?
A) Services cannot be inventoried.

B) Services are all similar.
C) Quality work means quality service.
D) Services businesses are inherently entrepreneurial.
E) Even service businesses have internal services.
23) Which of the following refers to the physical presence of the customer in a service
system?
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A) Creation of the service.
B) Customer contact.
C) Intermittent production.
D) Continuous production.
E) None of these.
24) Which of the following is an alternative possible service encounter included in the
service-system design matrix?
A) Mail contact.
B) Warranty.
C) Sales call.
D) Field service.
E) None of these.
25) Which of the following is an alternative possible service encounter included in the
service-system design matrix?
A) Face-to-face distance.
B) Internet.
C) Questionnaire response.
D) Automated teller machine (ATM).
E) Response card encounter.
26) In the service-system design matrix, a face-to-face total customization service encounter
is expected to have which of the following?
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A) Low sales opportunity.
B) Low production efficiency.
C) High production efficiency.
D) Low degree of customer/server contact.
E) None of these.
27) In the service-system design matrix, a mail contact service encounter is expected to have
which of the following?
A) High sales opportunity.

B) High degree of customer/server contact.
D) Low sales opportunity.
E) None of these.
28) In the service-system design matrix, a face-to-face loose specs service encounter is
expected to have which of the following?
A) Low sales opportunity.

B) Low production efficiency.
D) Low degree of customer/server contact.
E) None of these.
29) In the service-system design matrix, an internet and on-site technology service encounter
is expected to have which of the following?
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A) High sales opportunity.
B) High degree of customer/server contact.
C) Low production efficiency.
D) High production efficiency.
E) None of these.
30) There are many applications of poka-yokes in service organizations. is one of the
three-T's used to classify poka-yokes?
A) Task
B) Time
C) Teamwork
D) Trust
E) Talent
31) There are many applications of poka-yokes in service organizations. is one of the
three-T's used to classify poka-yokes?
A) Talent
B) Teamwork
C) Trust
D) Treatment
E) Time
32) Which of the following is considered a high-contact service operation?
A) On-line brokerage house.

B) Internet sales for a department store.
C) Physician practice.
D) Telephone life insurance sales and service.
E) Automobile repair.
Version 1 10
33) The service blueprint makes a distinction between
A) high and low customer contact aspects of the service.

B) those parts of the service performed before payment from those performed after
payment.
C) standardized elements of the service and those distinctive customized aspects of the
service.
D) customers desiring good service and customers unconcerned with service quality.
E) low and high value-added aspects of the service.
34) The "line of visibility" is a feature of
A) a single-channel, single phase queuing system.

B) the service blueprint.
C) an entertainment activity for people waiting in line for a service.
D) a waiting line that allows visibility of the server(s) tending to customers in front of
you.
E) None of these
35) Every service has a service package, which is defined as a bundle of goods and services
provided in some environment. The service package consists of five features. Which of the
following is not one of these features?
A) Supporting facility.
B) Facilitating services.
C) Information.
D) Explicit Services.
E) Implicit Services.
36) According to the text, the main differences separating Amazon from other on line
retailors are all of the following except
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A) website and the gigantic list of product offerings.
B) multi-tiered strategy any one can sell anything.
C) you can return products.
D) you can setup website with links to Amazon and get paid for click throughs.
E) can be your personal shopping assistant.
37) In designing service systems, as you go from mail contact to phone contact to face to face
total customization, which of the following is the most appropriate?
A) Sales opportunity decreases while degree of customer/server contact increases.

B) Sales opportunity decreases while degree of customer/server contact decreases.
C) Sales opportunity increases while degree of customer/server contact decreases.
D) Sales opportunity increases while degree of customer/server contact increases.
38) Assuming a 24-hour operation in a warehouse, and an arrival following Poisson

distribution with mean rate of 36 per day and service (unloading using a single bay) following
exponential distribution with a rate of 48 trucks per day, answer the following question. What is
the expected waiting time in the system (in hours) for a typical truck?
A) 2 hours
B) 1 hour
C) 1.5 hour
D) 0.25 hour
E) 0.5 hour
39) Assuming a 24-hour operation in a warehouse, and an arrival following Poisson

distribution with mean rate of 36 per day and service (unloading using a single bay) following
exponential with a rate of 48 trucks per day, answer the following question. What is the expected
number of trucks in the system?
Version 1 12
A) 2.25
B) 1.5
C) 2
D) 1
E) 3
40) Customers arrive at a single self-serve coffee machine in a busy mall at the rate of 20 per
hour, following Poisson distribution. Each customer takes exactly 90 seconds to get his or her
coffee. What is the expected number of customers in queue at this coffee machine?
A) 0.25
B) 1.5
C) 0.5
D) 2.0
E) 3.0
41) Customers arrive at a common queue at the coffee station with two identical coffee
machines in a busy mall at the rate of 48 per hour, following Poisson distribution. Each customer
mixes his or her specialty coffee taking 2 minutes on an average following an exponential
process. What is the expected number of customers in the system at this coffee station?
A) Infinity
B) 2.844
C) 2.444
D) 4.444
E) 3
42) Effective management of services requires a clear focus on understanding operations, so

much so, that it may even require the exclusion of consideration of marketing or personnel.
⊚ true
⊚ false
Version 1 13
43) Services often take the form of repeated encounters involving face-to-face interactions.
⊚ true
⊚ false
44) The term "encounter" is defined by Webster's Dictionary as "meeting in conflict or battle"
and is used to also designate meetings between consumers and service systems.
⊚ true
⊚ false
45) A service system with a high degree of customer contact is less difficult to control than a
low degree of customer contact service system.
⊚ true
⊚ false
46) Because little or no inventory is carried in a service operation, it is easy to separate the
operations management functions from marketing in services.
⊚ true
⊚ false
47) It is difficult to separate the operations management functions from marketing in

services.
⊚ true
⊚ false
48) The service-system design matrix identifies five alternative forms of service encounters.
⊚ true
⊚ false
Version 1 14
49) The service-system design matrix identifies six forms of service encounters.
⊚ true
⊚ false
50) The "service blueprint" is a classification of services.

⊚ true
⊚ false
51) Poka-yokes are procedures that block the inevitable mistake from becoming a service
defect.
⊚ true
⊚ false
52) Poka-yoke is roughly translated from Japanese as "quality management."

⊚ true
⊚ false
53) Poka-yoke is roughly translated from Japanese as "avoid mistakes."

⊚ true
⊚ false
54) An important aspect of service products is that they cannot be inventoried.

⊚ true
⊚ false
Version 1 15
55) Customer contact refers to creation of the service.
⊚ true
⊚ false
56) The work process involved in providing the service must involve the physical presence of
the customer in the system.
⊚ true
⊚ false
57) The central problem in virtually every waiting line situation is a trade-off decision
balancing the costs of adding services with the costs of waiting.
⊚ true
⊚ false
58) Ideally in waiting line or queuing analysis we want to balance the cost of service with the
cost of waiting.
⊚ true
⊚ false
59) The customer arrivals in a queuing system come almost exclusively from finite
populations.
⊚ true
⊚ false
60) The customer arrivals in a queuing system come almost exclusively from infinite
populations.
⊚ true
⊚ false
Version 1 16
61) A finite population in waiting line management refers to a population that is large enough
in relation to the service system so that the change in population size caused by subtraction or
additions to the population does not significantly affect the system probabilities.
⊚ true
⊚ false
62) An infinite population in waiting line management refers to a population that is large
enough in relation to the service system so that the change in population size caused by
subtraction or additions to the population does not significantly affect the system probabilities.
⊚ true
⊚ false
63) A variable arrival rate is more common in waiting line management than a constant
arrival rate.
⊚ true
⊚ false
64) A constant arrival rate is more common in productive systems than a variable arrival rate.
⊚ true
⊚ false
65) Arrival characteristics in a queuing analysis include the length of the queue.
⊚ true
⊚ false
66) The Poisson probability distribution is used in waiting line management when we are
interested in the number of arrivals to a queue during some fixed time period.
Version 1 17
⊚ true
⊚ false
67) The demand on a hospital's emergency medical services is considered a controllable

arrival pattern.
⊚ true
⊚ false
68) The demand on a hospital's emergency medical services is considered an uncontrollable

arrival pattern.
⊚ true
⊚ false
69) Gas stations, loading docks, and parking lots have infinite potential length of lines for
their queuing systems.
⊚ true
⊚ false
70) Highest-profit customer first is a queue discipline discussed in the textbook.

⊚ true
⊚ false
71) Longest waiting time in line is a queue discipline discussed in the textbook.
⊚ true
⊚ false
72) Best customer last is a queue discipline discussed in the textbook.
Version 1 18
⊚ true
⊚ false
73) A car wash is an example of a single channel, multiphase queuing system.

⊚ true
⊚ false
74) A tellers' window in a bank is an example of a single channel, multiphase queuing

system.
⊚ true
⊚ false
75) The admissions system in a hospital for patients is an example of a single channel, single
phase queuing system.
⊚ true
⊚ false
76) There are different queuing models to fit different queuing situations.
⊚ true
⊚ false
77) In a practical sense, an infinite queue is one that includes every possible member of the
served population.
⊚ true
⊚ false
78) In a waiting line situation, multiple lines occur only when there are multiple servers.
Version 1 19
⊚ true
⊚ false
79) The term "queue discipline" involves the art of controlling surly and unruly customers
who have become irritated by waiting.
⊚ true
⊚ false
80) In a practical sense, a finite population is one that potentially would form a very long line
in relation to the capacity of the serving system.
⊚ true
⊚ false
81) A department of 25 machines is kept running by three operators who respond to

randomly occurring equipment problems. An analyst who wanted to know how much production
was being lost by machines waiting for service could use queuing theory analysis to find out.
⊚ true
⊚ false

randomly occurring equipment problems. When an operator is absent, the amount of production
being lost by machines waiting for service increases. The analyst can use queuing theory analysis
to determine whether to pay overtime to an operator from a different shift or not.
⊚ true
⊚ false

randomly occurring equipment problems. An analyst wanting to know whether to add a fourth
operator or downsize to two operators would be helped by using queuing theory analysis.
Version 1 20
⊚ true
⊚ false
Version 1 21
Answer Key
1) [B, C]
2) C
3) E
4) A
5) D
6) C
7) C
8) D
9) B
10) B
11) A
12) C
13) C
14) A
15) B
16) C
17) A
18) A
19) C
20) C
21) E
22) A
23) B
24) A
25) B
26) B
Version 1 22
27) D
28) B
29) D
30) A
31) D
32) C
33) A
34) B
35) B
36) C
37) D
38) A
39) E
40) A
41) D
42) FALSE
43) TRUE
44) TRUE
45) FALSE
46) FALSE
47) TRUE
48) FALSE
49) TRUE
50) FALSE
51) TRUE
52) FALSE
53) TRUE
54) TRUE
55) FALSE
56) FALSE
Version 1 23
57) TRUE
58) TRUE
59) FALSE
60) FALSE
61) FALSE
62) TRUE
63) TRUE
64) FALSE
65) FALSE
66) TRUE
67) FALSE
68) TRUE
69) FALSE
70) TRUE
71) TRUE
72) FALSE
73) TRUE
74) FALSE
75) FALSE
76) TRUE
77) FALSE
78) FALSE
79) FALSE
80) FALSE
81) TRUE
82) TRUE
83) TRUE
Version 1 24
Version 1 25
CHAPTER 12
1) Which of the following is related to lean production?
A) A philosophy of waste elimination.

B) Lean consumption.
C) Never running out of inventory.
D) The Wahei-Subaru method.
E) Full use of capacity.
2) To develop a lean manufacturing system a firm might blank.
A) Eliminate anything that does not add value for the customer
B) Standardize product configurations
C) Process design with product design
D) Adopt a kaizen philosophy
E) Implement top-down management controls
3) The Toyota Production System identified which of the following types of waste to be
eliminated?
A) Excess quality.
B) Overproduction.
C) Underproduction.
D) Environmental.
E) Over-thinking.
eliminated?
Version 1 1
A) Underproduction.
B) Excess quality.
C) Preventive maintenance.
D) Product defects.
E) Kaizen.
eliminated?
A) Excess quality.
B) Motion.
C) Excess capacity.
D) Underproduction.
E) Excess demand.
6) Lean blank is not listed in the textbook as a component of a lean supply

chain?
A) customers
B) management
C) logistics
D) warehousing
E) procurement
7) In the context of a production process such as a manufacturing plant, what is the

technique used to identify all of the value-adding as well as non-value-adding processes that
materials are subjected to within a plant, from raw material coming into the plant through
delivery to the customer?
Version 1 2
A) Learn manufacturing.
B) Learn supply chain.
C) Kaizen.
D) Value stream mapping.
E) Learn production schedules.
8) Which of the following adresses 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.
9) In designing a lean production facility layout, a designer should blank.
A) locate flexible workstations off line

B) link operations through a push system
C) design for work flow balance
D) balance capacity using job shop analysis
E) always keep operations on a single floor of the factory
10) In a lean production system, we expect to see blank.
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
Version 1 3
11) Lean concepts discussed in the text do not include blank.
A) group technology
B) quality at the source
C) just-in-time production
D) preventive maintenance
E) kaizen burst
12) Which of the following problems is not among those hidden when inventory levels are
excessively high?
A) Inadequate worker motivation.

B) Engineering design redundancies.
C) Paperwork backlogs.
D) Scrap.
E) Productive equipment downtime.
13) 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.
14) Group technology (GT) is credited with blank.
Version 1 4
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
15) 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.
16) 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
17) 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?
Version 1 5
A) 60
B) 80
C) 90
D) 120
E) 150
18) 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
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
Version 1 6
20) When implementing a lean production system, a stabilized schedule is achieved using
blank.
A) level scheduling
B) demand pull
C) demand push
D) reduced lot sizes
E) bottom-round management
21) To implement lean production schedules a firm would blank.
A) have excess capacity

B) force demand
C) hire a consultant
D) bottom-up management
E) implement kanban groups
22) In implementing a lean production system you should work with suppliers to
blank.
A) open facilities near your factory

B) focus workstation capacities
C) backflush
D) provide quality at the source
E) reduce lead times
23) In implementing a lean production system you should work with suppliers to
blank.
Version 1 7
A) calculate lead times
B) do quality circles
C) freeze windows
D) make frequent deliveries
E) achieve bottom-round management
24) To implement a flow process in developing a lean system a firm might

blank.
A) improve capacity utilization

B) build product in anticipation of demand
C) reduce setup/changeover time
D) eliminate some fixed costs
E) implement groupware
25) 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 nonlinearly 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.
26) 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
blank.
Version 1 8
A) frozen window
B) backflush
C) level schedule
D) group Technology
E) kanban
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 percent 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.
You found that the number of kanban cards needed is 47. Your client now tells you that they
miscalculated the demand and the true demand is 300 per hour. All other things remain the same.
What is the most appropriate answer from the choices below?
A) Number of kanban cardsets will stay the same

B) Number of kanban cardsets will decrease.
C) Number of kanban cardsets will be 94
D) Number of kanban cardsets will be 47
E) Number of kanban cardsets will be 23.5 (rounded to 24).
28) In a kanban card calculation problem, other things remaining the same (that is changing
only one variable at a time). Select the most appropriate answer.
A) Number of kanban cards required will increase linearly as demand increases.

B) Number of kanban cards required will decrease linearly as demand increases.
C) Number of kanban cards required will decrease nonlinearly as the container size
increases.
D) Number of kanban cards required will decrease linearly as the container size
increases.
E) Number of kanban cards required will increase linearly as demand increases and
number of kanban cards required will decrease nonlinearly as the container size increases.
Version 1 9
29) Consider the relationship between the number of kanban cars sets needed with safety
stock and the container size. Choose the most appropriate answer.
A) As safety stock increases, the number of kanban card sets needed will decrease.
B) As safety stock decreases, the number of kanban card sets needed will increase.
C) As container size increases, the number of kanban card sets needed will increase.
D) As container size increases, the number of kanban card sets needed will decrease.
E) As container size decreases, the number of kanban card sets needed will decrease.
30) 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.
31) 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) kanban Card Systems.
D) Fully utilizing capacity.
E) Backflushing.
32) 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.
Version 1 10
⊚ true
⊚ false
33) Henry Ford used JIT concepts as he streamlined his moving assembly lines to make
automobiles in the early 1900s.
⊚ true
⊚ false
34) Lean production replaced JIT in the 1990s because JIT did not address the problem of
reducing waste.
⊚ true
⊚ false
35) Lean production makes implementing green strategies in manufacturing processes more
difficult.
⊚ true
⊚ false
36) Respect for people is a key to Toyota's improvement ideas in manufacturing.

⊚ true
⊚ false
37) 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
⊚ false
38) Subcontractor networks are not very important in Japanese manufacturing.
Version 1 11
⊚ true
⊚ false
39) Company unions in Japan exist to foster a cooperative relationship with management.
⊚ true
⊚ false
40) Firms in Japan tend to have short-term relationships with their suppliers and customers.
⊚ true
⊚ false
41) Automation is a key to lean procurement.

⊚ true
⊚ false
42) Applying lean concepts in manufacturing balances increases in cost with quality
improvement.
⊚ true
⊚ false
43) Applying lean concepts to logistics is difficult unless either the manufacturer or the
customer owns the logistics activities.
⊚ true
⊚ false
44) Lean production requires a "push & pull" system of inventory replenishment.
⊚ true
⊚ false
Version 1 12
45) A principle of value stream mapping is to concentrate on speeding up value-added
operations.
⊚ true
⊚ false
46) One of the aims of value stream mapping is to eliminate waste in a process.
⊚ true
⊚ false
47) Value stream mapping is used to visualize product flows through various processing
steps.
⊚ true
⊚ false
48) 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
⊚ false
49) Value stream mapping involves materials, not information.

⊚ true
⊚ false
50) A kaizen burst is a symbol on a value stream map.

⊚ true
⊚ false
Version 1 13
51) A kaizen burst is an overfilled kanban container.
⊚ true
⊚ false
52) Lean production is a management philosophy and a pull system throughout the plant.
⊚ true
⊚ false
53) Group technology is a philosophy wherein similar parts are grouped together and the
processes required to make the parts are arranged as a work cells.
⊚ true
⊚ false
54) Group technology cells help to eliminate movement and queue (wait) time between
operations.
⊚ true
⊚ false
55) Group technology includes the set of psychological tests and training exercises given to
group workers to ensure a high level of teamwork.
⊚ true
⊚ false
56) In the textbook, the expression "quality at the source" means that we need to purchase the
best quality a supplier or vendor can provide.
⊚ true
⊚ false
Version 1 14
57) "Quality at the source" requires factory workers to become their own inspectors.
⊚ true
⊚ false
58) JIT production means that we produce the product before it is required so the customer
does not wait for the product.
⊚ true
⊚ false
59) The goal of JIT production is to drive all inventory queues lower.
⊚ true
⊚ false
60) JIT is typically applied to nonrepetitive manufacturing.

⊚ true
⊚ false
61) JIT manufacturing forces a firm to work in a lower "water level" despite safety hazards.
⊚ true
⊚ false
62) Preventive maintenance is emphasized in lean production to ensure that flows are not
interrupted by downtime or malfunctioning equipment.
⊚ true
⊚ false
Version 1 15
63) Uniform plant loading is where you schedule production with different amounts of the
same product each day of the week to permit variations to meet changing demand requirements.
⊚ true
⊚ false
64) 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
⊚ false
65) A kanban control system uses a signaling device to regulate JIT flows.
⊚ true
⊚ false
66) Kanban means "symbol" or "box" in Japanese.

⊚ true
⊚ false
67) Using the formula in the textbook the only parameters we need to determine the number
of kanban car sets is the average number of units demanded over some time period, the container
size, and the safety stock.
⊚ true
⊚ false
68) "Kanban Squares" is an educational game played in kanban training sessions.

⊚ true
⊚ false
Version 1 16
69) The term "freeze window" refers to the practice of building quality into the process and
not identifying quality by inspection.
⊚ true
⊚ false
70) One of the many lean techniques that have been successfully applied in service firms is
the upgrading of quality.
⊚ true
⊚ false
the upgrading of housekeeping.
⊚ true
⊚ false
leveling facility load.
⊚ true
⊚ false
the eliminating of unnecessary activities.
⊚ true
⊚ false
74) One of the few lean techniques that does not work well in service firms is demand-pull
scheduling.
Version 1 17
⊚ true
⊚ false
Version 1 18
Answer Key
1) A
2) A
3) B
4) D
5) B
6) B
7) D
8) C
9) C
10) A
11) E
12) A
13) C
14) A
15) B
16) D
17) D
18) B
19) C
20) A
21) A
22) E
23) D
24) C
25) C
26) B
Version 1 19
27) C
28) E
29) D
30) D
31) B
32) TRUE
33) TRUE
34) FALSE
35) FALSE
36) TRUE
37) TRUE
38) FALSE
39) TRUE
40) FALSE
41) TRUE
42) FALSE
43) FALSE
44) FALSE
45) FALSE
46) TRUE
47) TRUE
48) TRUE
49) FALSE
50) TRUE
51) FALSE
52) TRUE
53) TRUE
54) TRUE
55) FALSE
56) FALSE
Version 1 20
57) TRUE
58) FALSE
59) FALSE
60) FALSE
61) FALSE
62) TRUE
63) FALSE
64) TRUE
65) TRUE
66) FALSE
67) FALSE
68) FALSE
69) FALSE
70) TRUE
71) TRUE
72) TRUE
73) TRUE
74) FALSE
Version 1 21
CHAPTER 13
1) In the sourcing/purchasing design matrix, there are three variables: contract duration,
transaction costs and specificity (assume levels as short, medium and long for contract duration
and for the rest, low, medium and high). Vendor managed inventory belongs to
blank
A) long contract duration, high transaction costs and low specificity.

B) short contract duration, high transaction costs and low specificity.
C) long contract duration, low transaction costs and low specificity.
D) long contract duration, high transaction costs and high specificity.
E) long contract duration, low transaction costs and high specificity.
2) The effect of the lack of synchronization among supply chain members is referred to
blank.
A) forward buying
B) continuous replenishment
C) bullwhip effect
D) Metcalf's Law
E) being out of step
3) When using the supply chain uncertainty framework to classify supply chains, a supply
chain for functional products with an evolving supply process is called blank.
A) efficient
B) forward looking
C) Agile
D) risk hedging
E) responsive
chain for functional products with a stable supply process is called blank.
Version 1 1
A) efficient
B) forward looking
C) Agile
D) risk hedging
E) responsive
chain for innovative products with an evolving supply process is called blank.
A) efficient
B) forward looking
C) Agile
D) risk hedging
E) responsive
chain for innovative products with a stable supply process is called blank.
A) efficient
B) forward looking
C) Agile
D) risk hedging
E) responsive
7) Typically, which is the most challenging kind of supply chain to manage?
A) Agile supply chain.

B) Efficient supply chain.
C) Risk-hedging supply chain.
D) Erratic supply chain.
E) Responsive supply chain.
Version 1 2
8) Which of the following product categories includes fashionable clothing, personal
computers, and other products that typically have a very brief life cycle?
A) Functional products.
B) Dysfunctional products.
C) Innovative products.
D) Bullwhip products.
E) Value density products.
9) In outsourcing, which of the following internal activities and decision responsibilities

cannot be transferred to outside contractors?
A) Activities involving people.

B) Activities involving facilities.
C) Activities involving equipment.
D) Activities involving shareholders.
E) Activities involving technology.
10) Which of the following is an organizationally-driven reason for outsourcing?
A) Improve effectiveness by focusing on what the firm does best.

B) Turn fixed costs into variable costs.
C) Reduce costs through lowered cost structure and increased flexibility.
D) Improve risk management.
E) Improve credibility and image by associating with superior providers.
11) Which of the following is not an organizationally-driven reason for outsourcing?
Version 1 3
A) Improve effectiveness by focusing on what the firm does best.
B) Improve flexibility to meet changing demand for products and services.
C) Increase product and service value by improving response to customer needs.
D) Improve credibility and image by associating with superior providers.
E) All of these are organizationally-driven reasons for outsourcing.
12) Which of the following is an improvement-driven reason for outsourcing?
A) Shorten cycle time.

B) Improve effectiveness by focusing on what the firm does best.
C) Increase product and service value by improving response to customer needs.
D) Turn fixed costs into variable costs.
E) Reduce costs through a lower cost structure.
13) Which of the following is not an improvement-driven reason for outsourcing?
A) Improve quality and productivity.

B) Enhance effectiveness by focusing on what you do best.
C) Improve risk management.
D) Obtain expertise, skills and technologies not otherwise available.
E) Improve credibility and image by associating with superior providers.
14) Which of the following is not an improvement-driven reason to outsource?
A) Improve risk management.

B) Increase commitment in a noncore area.
C) Shorten cycle time.
D) Improve quality and productivity.
E) Obtain expertise, skills and technologies that are otherwise not available.
Version 1 4
15) When considering outsourcing, what should firms be sure to avoid?
A) Losing control of noncore activities that don't distinguish the firm.

B) Allowing outsourcing to develop into a substitute for innovation.
C) Giving the outsourcing partner opportunities to become a strong competitor.
D) Allowing employees transferred to the outsourcing partner to rejoin the firm.
E) Adverse corporate tax implications of asset transfers to the outsourcing partner.
16) Which of the following is one of the strategic characteristics to consider when deciding
how supplier relationships should be structured on the continuum between vertical integration
(do not outsource) to arm's length relationships (outsource)?
A) Cost.
B) Location.
C) Investment.
D) Coordination.
E) Control.
17) Which of the following the six-step process for green sourcing does not include?
A) Assess the opportunity.

B) Assess the supply base.
C) Confer with environmental groups.
D) Engage sourcing agents.
E) Institutionalize the sourcing strategy.
18) Which of the following the six-step process for green sourcing includes?
Version 1 5
A) Provide a press release to local (and perhaps national) media.
B) Include members of environmental groups in the decision.
C) Notify the state and federal environmental agencies of your plans.
D) Perform an environmental impact study.
E) Develop the sourcing strategy.
19) In the six-step process for green sourcing the initial step is "Assessing the Opportunity".
Which of the following is not among the five most common areas of relevant costs to be taken
into account?
A) Energy.
B) Packaging.
C) Water.
D) Engineering.
E) Recycling.
20) At which stage in the six-step process for green sourcing are metrics against which
vendors will be measured for the contract's duration defined?
A) Assessing the opportunity.

B) Engage internal supply chain sourcing agents.
C) Assess the supply base.
D) Implement the sourcing strategy.
E) Institutionalize the sourcing strategy.
21) Ownership costs are incurred after the initial purchase and are associated with the
ongoing use of the product or material. Which of the following is not an ownership cost listed in
the text?
Version 1 6
A) Financing costs.
B) Energy costs.
C) Taxes.
D) Maintenance and repair costs.
E) Supply network costs.
22) Acquisition costs include blank costs.
A) quality
B) maintenance and repair
C) environmental
D) supply chain
E) customer dissatisfaction
23) Ownership costs include blank.
A) environmental costs
B) warranty costs
C) supply chain costs
D) quality costs
E) taxes
24) Ownership costs incurred after the initial purchase and associated with the ongoing use of
the product or material purchased include blank.
A) energy usage
B) purchase price
C) product liability costs
D) warranty costs
E) customer dissatisfaction costs
Version 1 7
25) Warranty costs are part of blank.
A) acquisition cost
B) total cost of ownership
C) post-ownership costs
D) total cost of ownership and post-ownership costs
E) none of the above
26) First Among Best Solar Incorporated announces that they will take back free of cost, all
of their solar panels that are no longer useful. Till now, the cost of disposal was significant. This
action reduces blank.
A) acquisition cost only

B) total cost of ownership only
C) post-ownership costs only
D) post-ownership costs and total cost of ownership
E) none of the above
27) The inventory turnover ratio used in measuring supply chain efficiency is found by the
following ratio: blank.
A) Cost of goods sold/Average aggregate inventory value

B) Fixed costs/Variable costs
C) Sales costs/Marketing costs
D) Cost of goods sold/Cost to sell goods
E) Operations flow costs/Suppliers flow costs
28) The total value of all items held in inventory for the firm valued at cost is
blank.
Version 1 8
A) cost of goods to be sold
B) average aggregate inventory value
C) weeks of supply
D) inventory turnover
E) none of these
29) If the average aggregate inventory value is $45,000 and the cost of goods sold is $10,000,
which of the following is weeks of supply?
A) 45,000
B) 234
C) 120
D) 23.4
E) 4.5
30) If the average aggregate inventory value is $1,200,000 and the cost of goods sold is
$600,000, which of the following is weeks of supply?
A) 1,040
B) 606
C) 104
D) 60.6
E) 2.0
31) If the average aggregate inventory value is $1,200,000 and the cost of goods sold is
$600,000, which of the following is inventory turnover?
Version 1 9
A) 60
B) 10.4
C) 2
D) 0.5
E) None of these
32) If the average aggregate inventory value is $100,000 and the cost of goods sold is
$450,000, which of the following is inventory turnover?
A) 19.23
B) 4.5
C) 0.8654
D) 0.2222
E) None of these
33) Other things remaining the same, if the average aggregate inventory value goes down,
then blank
A) inventory turnover ratio and weeks of supply will both go down.

B) inventory turnover ratio will go down, but the weeks of supply will stay the same.
C) inventory turnover ratio and weeks of supply will both go up.
D) inventory turnover ratio will go up, but weeks of supply will go down.
E) inventory turnover ratio will stay the same, but weeks of supply will go down.
34) Other things remaining the same, if the cost of goods sold decreases, then
blank
Version 1 10
A) inventory turnover ratio and weeks of supply will both go up.
B) inventory turnover ratio will go down, but the weeks of supply will go up.
C) inventory turnover ratio and weeks of supply will both go down.
D) inventory turnover ratio will go up, but weeks of supply will go down.
E) inventory turnover ratio will stay the same, but weeks of supply will go down.
35) Strategic sourcing is the development and management of supplier relationships to

acquire goods and services in a way that aids in achieving the immediate needs of the business.
⊚ true
⊚ false
36) Retailer behavior when stocking up during promotion periods (where the prices of goods
are reduced) is called backward buying.
⊚ true
⊚ false
37) The phenomenon that magnifies the variability in order quantities for goods as orders
move through the supply chain from the customer to the producer is called the bullwhip effect.
⊚ true
⊚ false
38) Functional products include staples that people buy in a wide range of retail outlets, such
as grocery stores and gas stations.
⊚ true
⊚ false
39) The optimal strategy for functional products is to use an efficient supply chain.
⊚ true
⊚ false
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40) The optimal strategy for functional products is to use a responsive supply chain.
⊚ true
⊚ false
41) The optimal strategy for innovative products is to use an efficient supply chain.
⊚ true
⊚ false
42) The best strategy for innovative products is to use either a responsive or an agile supply
chain.
⊚ true
⊚ false
43) A stable supply process is one where product volumes are high, demand is predictable
and there is a long product life.
⊚ true
⊚ false
44) A stable supply process is one where the manufacturing process and the underlying
technology are mature and the supply base is well established.
⊚ true
⊚ false
45) Firms producing functional products are forced to introduce a steady stream of
innovations in order to survive.
⊚ true
⊚ false
Version 1 12
46) Outsourcing is the act of moving some of a firm's internal activities and decision
responsibility to outside providers.
⊚ true
⊚ false
47) Outsourcing allows a firm to achieve an improved focus on its core competencies.
⊚ true
⊚ false
48) A financially-driven reason for outsourcing is that it can turn fixed costs into variable
costs.
⊚ true
⊚ false
49) A financially-driven reason for outsourcing is that it can shorten cycle time.
⊚ true
⊚ false
50) An organizationally-driven reason for outsourcing is that it can improve effectiveness by

focusing on what the firm does best.
⊚ true
⊚ false
51) An organizationally-driven reason for outsourcing is that it can transform the

organization.
⊚ true
⊚ false
Version 1 13
52) A financially-driven reason for outsourcing is that it can reduce costs through a lower
cost structure.
⊚ true
⊚ false
53) An improvement-driven reason for outsourcing is that it can increase product and service
value, customer satisfaction, and shareholder value.
⊚ true
⊚ false
54) A financially-driven reason for outsourcing is that it can help gain access to new markets,
especially in developing countries.
⊚ true
⊚ false
55) Logistics is a term indicating transportation choices for goods produced internationally
but consumed domestically.
⊚ true
⊚ false
56) Logistics is a term that refers to the management functions that support the complete
cycle of material flow, from the purchase and internal control of production materials; to the
planning and control of work-in-process; to the purchasing, shipping, and distribution of the
finished product.
⊚ true
⊚ false
Version 1 14
57) A firm that controls most of the activities in its supply chain is said to be vertically
integrated.
⊚ true
⊚ false
58) Green sourcing is only about finding new environmentally friendly technologies and
increasing the use of recyclable materials.
⊚ true
⊚ false
59) An important opportunity in green sourcing is waste reduction opportunities.

⊚ true
⊚ false
60) Green sourcing requires incorporating new criteria for evaluating alternatives.
⊚ true
⊚ false
61) The total cost of ownership (TCO) is an estimate of the cost of an item that includes all
the costs related to the procurement and use of an item, but does not include any of the costs
related to disposing of the item after it is no longer useful.
⊚ true
⊚ false
62) The total cost of ownership (TCO) can be categorized into three areas: acquisition costs,
ownership costs, and post-ownership costs.
⊚ true
⊚ false
Version 1 15
63) Overemphasis on purchase price frequently results in failure to address other significant
costs.
⊚ true
⊚ false
64) In conducting a total cost of ownership analysis, it is probably the best to use a team
representing the key functional areas.
⊚ true
⊚ false
65) Two common measures to evaluate supply chain efficiency are the consumer price index
and the beta flow system.
⊚ true
⊚ false
66) Two common measures to evaluate supply chain efficiency are the inventory turnover
and weeks-of-supply ratios.
⊚ true
⊚ false
67) Inventory turn values that are considered good differ by industry and the type of products
being handled.
⊚ true
⊚ false
68) Inventory turnover and weeks of supply are mathematically the inverse of one another.
Version 1 16
⊚ true
⊚ false
Version 1 17
Answer Key
1) E
2) C
3) D
4) A
5) C
6) E
7) A
8) C
9) D
10) A
11) D
12) A
13) B
14) B
15) C
16) D
17) C
18) E
19) D
20) E
21) C
22) A
23) C
24) A
25) D
26) D
Version 1 18
27) A
28) B
29) B
30) C
31) D
32) B
33) D
34) B
35) TRUE
36) FALSE
37) TRUE
38) TRUE
39) FALSE
40) FALSE
41) FALSE
42) TRUE
43) FALSE
44) TRUE
45) FALSE
46) TRUE
47) TRUE
48) TRUE
49) FALSE
50) TRUE
51) FALSE
52) TRUE
53) FALSE
54) TRUE
55) FALSE
56) TRUE
Version 1 19
57) TRUE
58) FALSE
59) TRUE
60) TRUE
61) FALSE
62) TRUE
63) TRUE
64) TRUE
65) FALSE
66) TRUE
67) TRUE
68) TRUE
Version 1 20
CHAPTER 14
1) As per the discussion on FedEx, the vision of the firm and the driver for comprehensive
technology strategy is blank
A) delivery of the package is important and technology is not relevant.

B) information about a package is as important as the delivery itself but technology is
incidental.
C) delivery of the package is important though information about a package is incidental.
D) comprehensive technology is the only important thing.
E) information about the package is as important as the delivery of the package and that
drives comprehensive technology strategy.
2) Which of the following is not a coordinating activity related to information systems

involved in logistics planning?
A) Allocating resources.
B) Labor management.
C) Managing inventory levels.
D) Scheduling.
E) Order tracking.
3) 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.
4) Very few products are moved without at least part of their journey being by which mode
of transportation?
Version 1 1
A) Highway.
B) Rail.
C) Water.
D) Pipeline.
E) Air.
5) In the logistics-systems design matrix, volume, cost and speed of delivery are three
variables (assume three levels: low, moderate or high) used to describe attributes of
transportation modes. Rail is associated with blank
A) moderate volume, moderate speed and high cost.

B) moderate volume, high speed and high cost.
C) high volume, moderate speed and low cost.
D) low volume, high cost and low speed.
E) high volume, high speed and high cost.
6) 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.

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A) Suppliers.
B) Free trade zones.
C) Political risk.
D) Gross national product.
E) Tariffs and customs duties.

A) Government barriers.
B) Trading blocs.
C) Environmental regulation.
D) Immigration rules.
E) Local labor costs.
9) Which of the following is a criterion that influences manufacturing plant or warehouse

facility location decisions?
A) Proximity to customers.
B) Corporate policy.
C) Competitor's locations.
D) Competitive advantage.
E) Host community politics.
10) An important issue in facility location analysis is business climate. An unfavorable

business climate could be indicated by blank.
Version 1 3
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
F) none of the answers are correct
11) 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 costs.
D) Construction costs.
E) Regional costs.
cost. 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) Taxes.
cost. Which of the following are hidden costs that should be included in the analysis?
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A) Costs of of the loss of customer responsiveness.
B) Supplier costs.
C) Taxes.
E) Product life cycle costs.
14) 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) Costs of movement of preproduction material between locations.
C) Taxes.
E) Bribery costs.
15) Which of the following is not an infrastructure criterion 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.
16) How many free trade zones are there in the United States?
A) Less than 50.

B) Less than 100.
C) About 290.
D) More than 412.
E) About 310.
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17) An example of a trading bloc is blank.
A) Pacific Alliance
B) Central American Free Trade Agreement countries
C) ISO-9000 companies
D) American Production and Inventory Control Society
E) Wal-Mart and its suppliers
18) According to the text, an important decision for multinational companies is the nation in
which to locate the home base for each business. Which of the following business activities does
not happen at the business's home base?
A) Core process technology is created.

B) A critical mass of production takes place.
C) The largest profits are recorded.
D) Strategy is created.
E) Core products are created.
19) Which of the following is not among the factors related to infrastructure in making
facility location decisions?
A) Satisfactory hotel accommodations.

B) Adequate air transportation.
C) Energy requirements.
D) Telecommunications requirements.
E) Willingness of local government to invest in infrastructure upgrades.
20) Which of the following is a plant location methodology that is good for locating a single
facility within a set of existing facilities based in distances and volumes of goods shipped?
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A) Factor-rating systems.
B) Centroid method.
C) Decision trees.
D) Linear programming.
E) Regression analysis.
21) 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.
22) The centroid method for plant location uses blank.
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
23) 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?
Version 1 7
A) 100
B) 114
C) 130
D) 150
E) X coordinate cannot be computed from the data given
24) 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) 208
B) 227
C) 243
D) 389
E) X coordinate cannot be computed from the data given
25) 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
26) Which of the following is not mentioned in the text as a technique for identifying
potential sites for plants or other types of facilities?
Version 1 8
A) The centroid method.
B) Factor-rating systems.
C) Linear programming.
D) The transportation method of decision analysis.
E) Regression analysis.
27) Suppose that using the centroid method you found the best location for a communications
tower. The location happens to be in the middle of a pond. Then, you should locate the tower
blank
A) at that location using water proof concrete and precast poles.

B) at the closest point outside the pond.
C) using some other method.
D) after considering qualitative factors such as geography, roads and utilities to help find
the exact location.
28) Using the transportation method for solving the optimal shipping a product from factories
to warehouses, as per text, you should use blank
A) “≤” for constraints regarding factory capacity and “=” for constraints regarding
demand at warehouses.
B) “≥” for constraints regarding factory capacity and “≤” for constraints regarding
C) “=” for constraints regarding factory capacity and “≥” for constraints regarding
D) “≥” for constraints regarding factory capacity and “=” for constraints regarding
Version 1 9
29) A third-party logistics company is a firm that manages all or part of another company's
product delivery operations.
⊚ true
⊚ false
30) Logistics is the process of coordinating and moving material and other resources from
one location to another.
⊚ true
⊚ false
31) DHL and United Parcel Service are transportation companies that are prohibited from
functioning as a third-party logistics company the way Federal Express does.
⊚ true
⊚ false
32) Cross-docking is a practice used in the international shipping industry that facilitates port
utilization.
⊚ true
⊚ false
33) Cross-docking is an approach used in consolidation warehouses, where large shipments

are broken down into small shipments for local delivery in an area.
⊚ true
⊚ false
34) Hub-and-spoke systems combine the idea of consolidation and that of cross-docking.
⊚ true
⊚ false
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35) In a hub-and-spoke system each warehouse in the system acts as a spoke.
⊚ true
⊚ false
36) 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
⊚ false
37) Facility location analysis considers the competitive imperative to be close to customers as
to timeliness of deliveries.
⊚ true
⊚ false
38) Facility location analysis considers the competitive imperative of lowest total cost.
⊚ true
⊚ false
39) 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
⊚ false
40) 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.
Version 1 11
⊚ true
⊚ false
41) Facility location analysis considers the competitive imperative of locating near the
appropriate labor pool to take advantage of high technical skills.
⊚ true
⊚ false
42) An example of a positive business climate that might influence a facility location
decision is increasing governmental costs and increasing property taxes.
⊚ true
⊚ false
43) A favorable business climate in facility location decision making might include
government legislation of tax abatements.
⊚ true
⊚ false
44) A favorable business climate in facility location decision making might include local
government intervention to facilitate businesses locating in an area via subsidies.
⊚ true
⊚ false
45) A favorable business climate in facility location decision making might include local
government providing basic skill training for prospective members of the workforce.
⊚ true
⊚ false
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46) In facility location decision making the educational and skill levels of the labor pool must
match the company's needs.
⊚ true
⊚ false
47) 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.
⊚ true
⊚ false
48) Because the world is becoming more highly interconnected, the proximity of an
important supplier's plants is not crucial in supporting lean production methods.
⊚ true
⊚ false
49) Issues of product mix and capacity are strongly interconnected to the facility location
decision.
⊚ true
⊚ false
50) A free trade zone operates under different rules and laws than a foreign trade zone.
⊚ true
⊚ false
51) 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
⊚ false
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52) The objective of facility location analysis is to select the site with the lowest total cost.
⊚ true
⊚ false
53) Governmental barriers to enter and locate in many countries are increasing through
restrictive protectionist legislation.
⊚ true
⊚ false
54) Quality of life in a host community is not a major factor in making the facility location
decision.
⊚ true
⊚ false
55) In facility location decision making, the factor-rating system is one of the least used
general location techniques.
⊚ true
⊚ false
56) In facility location decision making, the factor-rating system is based on linear
programming.
⊚ true
⊚ false
57) 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.
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⊚ true
⊚ false
58) Facility location decisions are made using analytical techniques that are able to weigh a
large number of different variables equally.
⊚ true
⊚ false
59) Services typically have multiple site locations to maintain close contact with customers.
⊚ true
⊚ false
Version 1 15
Answer Key
1) E
2) B
3) D
4) A
5) C
6) B
7) D
8) D
9) A
10) F
11) A
12) B
13) A
14) B
15) D
16) C
17) A
18) C
19) A
20) B
21) D
22) A
23) B
24) C
25) B
26) D
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27) D
28) A
29) TRUE
30) TRUE
31) FALSE
32) FALSE
33) TRUE
34) TRUE
35) FALSE
36) TRUE
37) TRUE
38) TRUE
39) TRUE
40) TRUE
41) TRUE
42) FALSE
43) TRUE
44) TRUE
45) TRUE
46) TRUE
47) FALSE
48) FALSE
49) TRUE
50) FALSE
51) TRUE
52) TRUE
53) FALSE
54) FALSE
55) FALSE
56) FALSE
Version 1 17
57) TRUE
58) FALSE
59) TRUE
Version 1 18

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CHAPTER 1

A) OSCM is essential for understanding organizational behavior.

A) No goods, some goods, even mix, some service, no service.

3) Which of the following are defined as core goods?

4) Current issues in OSCM do not include blank.

A) Department store manager.

A) Service jobs are unskilled.

A) Dividend payout ratio.

12) When considering the concept of value, how is quality defined?

A) By the price of the product.

B. Inventory turnover is an efficiency measure.

C. Inventory turnover is unaffected by changes in annual sales.

B. Cash conversion cycle goes down if payable period goes up.

C. Cash conversion cycle goes up if average inventory goes up.

19) A worker can be efficient without being effective.

20) A process can be effective without being efficient.

28) Supply networks cannot be constructed for every product or service.

31) "Supply Chain" includes only inbound freight and inventory.

45) Services are intangible processes that cannot be weighed or measured.

47) Services are homogeneous.

49) Automobiles and appliances are classified as "pure goods."

53) A bank branch manager position is not an OSCM job.

55) Just-in-time (JIT) production was a major breakthrough in manufacturing philosophy

62) Sustainability is the ability to maintain profits in a system.

63) Raising senior management awareness of OSCM as a competitive weapon is not an

Test name: Chap 01_6e

2) Which of the following major competitive dimension forms a company's strategic

A) Operations capability analysis.

6) Which of the following is an activity-system map?

A) A network guide to route airlines.

7) Which of the following is a partial measure of productivity?

B. Output / (Labor + Capital + Energy)

C. Output / All resources used

8) Which of the following is a multifactor measure of productivity?

B. Output / (Labor + Capital + Energy)

C. Output / All resources used

9) Which of the following is a total measure of productivity?

B. Output / (Labor + Capital + Energy)

Output: Sales $300,000 $330,000

Energy: $ 10,000 $ 9,000

Capital Employed: $250,000 $262,000

Other: $ 2,000 $ 6,000

Output: Sales $300,000 $330,000

Capital Employed: $250,000 $262,000

Other: $ 2,000 $ 6,000

Output: Sales $300,000 $330,000

Energy: $ 10,000 $ 9,000

Capital Employed: $250,000 $262,000

Other: $ 2,000 $ 6,000

Output: Sales $300,000 $330,000

Energy: $ 10,000 $ 9,000

Capital Employed: $250,000 $262,000

Other: $ 2,000 $ 6,000

19) What is meant by the term "operations effectiveness?"

A) Products produced in sufficient volume to meet demand.

B. Delivery speed, delivery reliability, order qualifiers

C. Cost or price, delivery speed, delivery reliability, new product design

D. Order qualifier is a screening criterion while order winner is a differentiating criterion.

E. Order winners may have been order qualifiers before.

B. increase the multifactor productivity only

C. increase both labor and multifactor productivity

D. decrease capital productivity

E. have no effect on productivity.

A) double the material productivity