Operations Management Chapter 1

1. Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization’s goods or services.
FALSE Operation managers are not responsible for promoting goods/services.
2. Often, the collective success or failure of companies’ operations functions will impact the ability of a nation to compete with other nations.
TRUE A nation is often only as competitive as its companies.
3. Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used.
FALSE Most systems involve a blend of goods and services.
4. Operations, marketing, and finance function independently of each other in most organizations.
FALSE Operations, marketing and finance are naturally dependent upon one another
5. The greater the degree of customer involvement, the more challenging the design and management of operations.
TRUE Greater customer involvement leads to more complexity in the design and management of operations.
6. Goods producing organizations are not involved in service activities.
FALSE Most systems involve a blend of goods and services.
7. Service operations require additional inventory because of the unpredictability of consumer demand.
FALSE Service operations cannot use inventory as a hedge against unpredictable demand.
8. The value of outputs is measured by the prices customers are willing to pay for goods or services.
TRUE Customers’ willingness to pay for goods or services sets the value of these outputs.
9. The use of models will guarantee the best possible decisions.
FALSE Models are useful, but their use does not guarantee the best decisions.
10. People who work in the field of operations should have skills that include both knowledge and people skills.
TRUE Operations management requires a blend of knowledge and people skills.
11. Assembly lines achieved productivity but at the expense of standard of living.
FALSE Productivity and standard of living go hand in hand.
12. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities.
FALSE The operations manager plays a role in these decisions but is not primarily responsible for them.
13. The word “technology” is used only to refer to “information technology”.
FALSE Technology also refers to the technology involved in resource transformations.
14. ‘Value added’ by definition is always a positive number since ‘added’ implies increases.
FALSE Some transformations result in the output being worth less than the inputs.
15. Service often requires greater labor content, whereas manufacturing is more capital intensive.
TRUE Service operations tend to be more labor-intensive than manufacturing.
16. Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials.
FALSE Materials cost must be considered in services as well.
17. Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs.
FALSE Special-purpose technology typically reduces costs through standardization.
18. One concern in the design of production systems is the degree of standardization.
TRUE How standardized outputs will be is a critical consideration in the system design question.
19. Most people encounter operations only in profit-making organizations.
FALSE Operations are also relevant to not-for-profit organizations such as the Red Cross.
0. Service involves a much higher degree of customer contact than manufacturing.
TRUE Customer contact tends to be much higher in services.
21. A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts.
TRUE Optimizing the performance of individual subsystems does not guarantee optimal performance from the overall system.
22. The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management.
TRUE Pareto phenomena can be observed in a wide variety of organization situations.
23. Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision-making.
Ethics issues are touching on all areas of management, including operations.
24. The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework.
Quantitative techniques have limitations that must be considered.
25. Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions.
Just as other techniques do, quantitative techniques have limitations.
26. Many operations management decisions can be described as tradeoffs.
Managing tradeoffs is the essence of operations management.
27. A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency.
Subsystem efficiency doesn’t necessarily translate into overall efficiency.
28. Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts.
After the Industrial Revolution, more standardized approaches became common.
29. Elton Mayo’s “Hawthorne Experiment” was the focal point of the Human Relations Movement, which emphasized the importance of the human element in job design.
The Hawthorne Experiments were the beginning of the Human Relations Movement.
30. Among Ford’s many contributions was the introduction of mass production, using the concept of interchangeable parts and division of labor.
Ford made mass production a practical success.
31. Operations management and marketing are the two functional areas that exist to support activities in other functions such as accounting, finance, IT and human resources.
Operations management and marketing are supported by these functions.
32. Lean production systems incorporate the advantages of both mass production and craft production.
Lean production blends the best of both worlds.
33. As an abstraction of reality, a model is a simplified version of a real phenomenon.
Models are valuable abstractions and simplifications of real, complex phenomena.
34. Lean production systems use a highly skilled work force and flexible equipment.
Lean depends on a skilled workforce.
35. The lean production philosophy has been slow to be adopted in service industries.
Lean concepts apply very well in service industries.
36. Operations Management activities will be less important in the future because many firms are becoming service-oriented operations rather than goods producing operations.
Operations management is just as important for service firms.
37. A modern firm has two supply chain considerations – external links with suppliers and customers, and an internal network of flows to and between the operations function itself.
Supply chain considerations are at play both in and beyond the modern firm.
38. Operations management involves continuous decision-making; hopefully most decisions made will be:
C. informed Informed decisions incorporate all relevant issues.
39. A ‘product package’ consists of:
C. a combination of goods and services Most firms are not pure service or manufacturing firms; they produce combinations of goods and services.
40. Business organizations consist of three major functions which, ideally:
A. support one another Finance, Marketing and Operations are these major functions.
41. Which of the following is not a type of operations?
E. all the above involve operations
All of these involve taking inputs and transforming them.
42. Technology choices seldom affect:
C. union activity. Union activity can affect a firm’s technology choices, but not the other way around.
43. Measurements taken at various points in the transformation process for control purposes are called:
D. feedback Feedback is used to monitor and improve processes.
44. Budgeting, analysis of investment proposals, and provision of funds are activities associated with the _______ function.
D. finance These are the primary tasks for the finance function.
45. Which one of the following would not generally be classified under the heading of transformation?
C. staffing Staffing doesn’t involve transforming resources so much as it involves acquiring them.
46. Manufacturing work sent to other countries is called:
B. outsourced Outsourcing is increasingly a part of operations management.
47. Product design and process selection are examples of _______ decisions.
C. system design These major decisions affect decisions made at lower levels.
48. The responsibilities of the operations manager are:
B. planning, organizing, staffing, directing, and controlling The scope of operations management ranges across the organization.
49. Knowledge skills usually don’t include:
C. communication skills Communication skills generally are considered to be people skills.
50. Which of the following is not true about systems approach?
C. A systems approach concentrates on efficiency within subsystems. Subsystem efficiency doesn’t necessarily translate into overall system efficiency.
51. What is credited with gains in industrial productivity, increased standards of living and affordable products?
D. assembly lines Mass production has played a prominent role in increasing standards of living.
52. Production systems with customized outputs typically have relatively:
E. skilled workers
Skilled workers are necessary to accommodate the variation inherent in customized outputs.
53. Which is not a significant difference between manufacturing and service operations?
A. cost per unit Manufacturing operations aren’t necessarily more or less efficient than service operations.
54. Which of the following is not a characteristic of service operations?
D. easy measurement of productivity The productivity of service operations is often hard to measure.
55. Which of the following is a recent trend in business?
C. supply chain management Supply chain management involves a broader systemic view of operations.
56. Farming is an example of:
C. non-manufactured goods Farm operations are not manufacturing operations.
57. Dealing with the fact that certain aspects of any management situation are more important than others is called:
C. recognition of priorities Solutions tend to be targeted toward higher priority aspects of a situation.
58. The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the:
B. Pareto phenomenon Pareto phenomena direct our attention to the difference between the “important few” and the “trivial many.”
59. The process of comparing outputs to previously established standards to determine if corrective action is needed is called:
C. controlling Controls are used to maintain performance.
60. Which of the following does not relate to system design?
C. inventory management Inventory management is a system operation decision area.
61. Taking a systems viewpoint with regard to operations in today’s environment increasingly leads decision-makers to consider ______________ in response to the ___________.
C. sustainability; threat of global warming Sustainability is a relatively recent operations management consideration.
62. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is an example of __________________:
D. Revenue management Revenue management is used to ensure that as much perishable capacity as possible is sold.
63. Which of the following is not an ongoing trend in manufacturing?
D. mass production for greater economies of scale Manufacturers are moving away from mass production for economies of scale.
64. Which of the following is not a benefit of using models in decision making?
D. All of the above are benefits. Models are useful tools for making decisions without confronting the actual situation with all of its complexity.
65. Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management.
A. outsourcing; supply chain Supply chain management takes a more systemic view of the firm, its operations, and its suppliers.
66. Operations and sales are the two ________ functions in businesses.
E. line
Others are support functions.
67. Marketing depends on operations for information regarding ___________.
B. lead time Marketing uses lead time information to make promises to customers.
68. Two widely used metrics of variation are the __________ and the _________.
The mean and standard deviation summarize important facets regarding the variation in a process.
. mean; standard deviation
69. Which of the following statements about variation is FALSE?
D. Any variation makes a production process less productive. The choice to offer customers greater variety might increase variation but increase productivity even more.
70. Which of the following is essential to consider with respect to managing a process to meet demand?
A. strategy B. demand forecasts C. capacity D. random variability E. all of the above
All of these play a role in determining whether a process can meet demand.