EXAMINATION 1, Version A



EXAMINATION 1, Version B

Use a Scantron Form No. 886-E to record your choice of the best answer to each of the following questions. You have the full period to answer the questions.

The following questions are worth three (3) points each.

1. At a factory, the transformation process is a (an) change of raw materials and components into products.

a) locational

b) imperceptible

c) hypothetical

d) irreversible

e) physical

2. Operations management is responsible for orchestrating all the resources needed to produce the final product. This includes all of the following except ______________________________________.

a) obtaining customer feedback

b) arranging schedules

c) managing inventory

d) controlling quality

e) designing work methods

3. A key feature of scientific management is that workers are motivated only by __________________.

a) love

b) power

c) challenging work

d) money

e) fame

4. Which of the following competitive priorities typically requires the use of more general-purpose equipment?

a) technology

b) cost

c) quality

d) flexibility

e) time

5. Studying the practices of companies considered “best in class” and comparing the performance of our company against their performance is

a) competition

b) copying

c) frustration

d) benchmarking

e) notching

6. In break-even analysis, in order to make a profit the company must

a) sell above the break-even point

b) sell below the break-even point

c) sell at a loss

d) sell at the break-even point

e) sell on consignment

7. Which product and service strategy is used to produce standard components that can be combined to customer specifications?

a) assemble-to-deliver

b) make-to-stock

c) assemble-to-order

d) make-to-order

e) make-to-package

8. Which activity appears to be most frequently outsourced by large companies?

a) Purchasing

b) Marketing

c) Finance

d) Accounting

e) Manufacturing

9. According to several studies, what are the three most important criteria for selecting suppliers?

a) Price, quality, fast delivery

b) Quality, fast delivery, on-time delivery

c) Price, flexibility, on-time delivery

d) Quality, flexibility, fast delivery

e) Price, quality, on-time delivery

10. The discussion in the textbook implies that information sharing has shifted power in the supply chain the most to which group?

a) Suppliers

b) Manufacturers

c) Distributors

d) Retailers

e) Individual consumers

11. The definition of quality that involves the product functioning as expected without failure is

a) Performance

b) Conformance

c) Reliability

d) Standardization

e) Endurance

12. Warranty claims, customer complaints, and costs of litigation are examples of costs.

a) Internal failure

b) External failure

c) Appraisal

d) Prevention

e) Replacement

13. The Baldrige Award is intended to

a) Demonstrate that American companies are better than their foreign competitors

b) Certify suppliers

c) Reward and stimulate quality initiatives

d) Focus national attention on manufacturing

e) Add structure to TQM

14. What technique answers the question of whether the process is functioning properly or not?

a) Fishbone diagramming

b) Acceptance sampling

c) Statistical process control

d) Scatter plotting

e) Experimental design

15.Six-sigma quality implies how many average defects per million?

a) 3.4

b) 6

c) 2600

d) 3(

e) 6(

16. What measures the difference between the largest and smallest observations in a set of data?

a) Range

b) Coefficient of variation

c) Coefficient of kurtosis

d) Coefficient of skewness

e) Standard deviation

17. At a factory, the transformation process is the physical change of raw materials and components into products.

a) True

b) False

18. Companies that compete based on cost generally also allow a lot of product customization.

a) True

b) False

19. Companies that compete based on flexibility often cannot compete based on cost.

a) True

b) False

20. Productivity = input/output.

a) True

b) False

21. The make-to-stock product and service strategy has the shortest delivery lead time among the possible strategies, but the customer has no involvement in product design.

a) True

b) False

22. Manufacturers typically represent the beginning of a supply chain.

a) True

b) False

23. Quality at the source involves inspecting goods after they are produced.

a) True

b) False

24. Acceptance sampling occurs after the product has been produced.

a) True

b) False

The following problems are worth ten (10) points each.

1. A firm produces 1500 units per day using four workers on a five-hour shift. On average, 12% of the units produced are defective and must be scrapped. What is the labor productivity (of all the workers on the shift) for non-defective units?

[pic]

2. Birdie Par owns a company that makes golf gloves. She is thinking about introducing a new glove, which would require an additional fixed cost of $20,000 per year. The variable costs for the new glove have been estimated to be $5 per glove.

a) If she sells the new glove for $15, how many must she sell to break even?

[pic]

b) If she sells 3,000 gloves at the $15 price, what will the contribution to profit be?

Profit = R – (FC + (VC * Q)) = (3000 * $15) – ($20,000 + ($5 * 3000)) = $45,000 - $35,000 = $10,000

3. Simuelson Industries can produce its own motors for a $60,000 fixed monthly cost and a $50 variable cost per unit. Alternatively, Simuelson Industries can purchase the motors from an outside supplier for $50,000 per month and $58 per unit.

a) What is the indifference point?

[pic]

b) What option should be chosen if monthly demand is 1200 units?

[pic]

[pic]

Thus, it would be a little less expensive to outsource.

OPM101 - Formulas

Spring 2009

Examination 1

Chapter 2:

[pic]; [pic]

P2 - later productivity measure, P1 – earlier productivity measure

Chapter 3:

[pic]

TC – total cost, FC – fixed cost, VC – variable cost/unit

Q – number of units R – revenue, SP – selling price/unit, QBE – break even quantity

Chapter 4:

Cost to buy: [pic]

Cost to make: [pic]

Indifference point: [pic]

TC – total cost, FC – fixed cost, VC – variable cost/unit, Q – number of units,

QIND – indifference point

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