Exam
Name___________________________________

TRUE/FALSE.  Write 'T' if the statement is true and 'F' if the statement is false. 

1) 

Services are physical objects, something we can touch, feel, or see. 

1) 

_______ 

2) 

Service companies are in the business of converting raw materials to a form that is of far more value and use to the consumer than the original raw materials. 

2) 

_______ 

3) 

Regulation of business by the various levels of government is extensive. 

3) 

_______ 

4) 

General economic conditions seldom influence the demand for a company's products or services and the availability of inputs. 

4) 

_______ 

5) 

Since competition is international and aggressive, successful companies provide quality that not only meets customers' high expectations but exceeds them. 

5) 

_______ 

6) 

Order winners and qualifiers for any product or market combinations are static. 

6) 

_______ 

7) 

Assembly-to-order means that the customer's specifications require unique engineering design or significant customization. 

7) 

_______ 

8) 

In recent years attention has moved away from the concept of supply chain management (SCM). 

8) 

_______ 

9) 

Just-in-time (JIT) concepts were originally developed by Motorola and other American companies in the 1970s.  

9) 

_______ 

10) 

More and more companies are subcontracting some of their work to suppliers, keeping only their most important core competencies as internal activities. 

10) 

______ 

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question. 

11) 

A ________ function is needed to transform our resources into useful goods. 

11) 

______ 

A) 

resource material 

B) 

production	 

C) 

extraction 

D) 

service			 

12) 

Operations management works in a complex environment affected by 

12) 

______ 

A) 

the economy 

B) 

government regulations 

C) 

competition	 

D) 

all of the above 

13) 

For the products or services they buy, customers expect 

13) 

______ 

A) 

no after-sale service 

B) 

a fair price 

C) 

no pre-sale service 

D) 

lower quality 

14) 

Generally a supplier must meet set minimum requirements to be considered a viable competitor in the marketplace.  Customer requirements may be based on price, quality, delivery, and so forth and are called ________. 

14) 

______ 

A) 

order price 

B) 

order qualifiers  

C) 

order flexibility 

D) 

order winners 

15) 

Since it is virtually impossible to be the best in every dimension of competition, firms should in general strive to provide a ________ level of acceptance for each of the order qualifiers but ________ try to be the best in the market for the order winner(s). 

15) 

______ 

A) 

maximum, should 

B) 

minimal, should 

C) 

minimal, should not 

D) 

maximum, should not 

16) 

________ means that the manufacturer does not start to make the product until a customer's order is received. 

16) 

______ 

A) 

Make-to-order	 

B) 

Make-to-stock 

C) 

Assembly-to-order 

D) 

Engineer-to-order 

17) 

________ means that the product is made from standard components that the manufacturer can inventory and assemble according to a customer order. 

17) 

______ 

A) 

Engineer-to-order 

B) 

Make-to-stock 

C) 

Assemble-to-order 

D) 

Make-to-order 

18) 

________ means that the supplier manufacturers the goods and sells from finished goods inventory. 

18) 

______ 

A) 

Assembly-to-order 

B) 

Make-to-stock 

C) 

Engineer-to-order 

D) 

Make-to-order 

19) 

________ usually flow from supplier to customers and design. 

19) 

______ 

A) 

Demand information 

B) 

Product	 

C) 

Services 

D) 

Product or services 

20) 

Demand information usually flows from 

20) 

______ 

A) 

customer to supplier 

B) 

product to supplier 

C) 

supplier to customer 

D) 

customer to products 

SHORT ANSWER.  Write the word or phrase that best completes each statement or answers the question. 

21) 

Identify and briefly describe the primary activities carried out in manufacturing planning and control. 

21)  

_____________ 

22) 

Identify the basic inputs to the manufacturing planning and control system. 

22)  

_____________ 

23) 

Discuss the activities involved in physical supply and distribution. 

23)  

_____________ 

24) 

Why is materials management seen as a "balancing act"? 

24)  

_____________ 

25) 

What factors or major challenges are currently shaping production control's demand environment? 

25)  

_____________ 

26) 

Fill in the missing data in the profit and loss statement below.

	Dollars	Percent of Sales
Revenue	$1,000,000	100%	
Cost of Goods Sold
	Direct Material	$500,000	______	
	Direct Labor	________	20%
	Factory Overhead	$200,000	20%
Total Cost of Goods Sold	$900,000	90%
Gross Profit	$100,000	_____ 

26)  

_____________ 

27) 

Using the data below, if direct materials can be reduced by 10% and direct labor by 5%, the improvement in profit would be

	Dollars	Percent of Sales
Revenue	$1,000,000	100%	
Cost of Goods Sold
	Direct Material	$500,000	50%	
	Direct Labor	$200,000	20%
	Factory Overhead	$200,000	20%
Total Cost of Goods Sold	$900,000	90%
Gross Profit	$100,000	10%

27)  

_____________ 

28) 

Using the data below, to achieve a $60,000 increase in revenue, how much would sales have to increase?

	Dollars	Percent of Sales
Revenue	$1,000,000	100%	
Cost of Goods Sold
	Direct Material	$500,000	50%	
	Direct Labor	$200,000	20%
	Factory Overhead	$200,000	20%
Total Cost of Goods Sold	$900,000	90%
Gross Profit	$100,000	10% 

28)  

_____________ 

29) 

If the cost of manufacturing which includes direct material and direct labor is 70% of sales and profit is 10% of sales, what would be the improvement in profit, if through your better planning and control, the cost of manufacturing was reduced from 70% of sales to 50% of sales? 

29)  

_____________ 

30) 

Consider the following situation  If the cost of manufacturing which includes direct material and direct labor is 70% of sales and profit is 10% of sales, what would be the improvement in profit, if through your better planning and control, the cost of manufacturing was reduced from 70% of sales to 50% of sales? How much would sales have to increase to provide the same increase in profits? 

30)  

_____________ 

 

1) 

FALSE 

2) 

FALSE 

3) 

TRUE 

4) 

FALSE 

5) 

TRUE 

6) 

FALSE 

7) 

FALSE 

8) 

FALSE 

9) 

FALSE 

10) 

TRUE 

11) 

B 

12) 

D 

13) 

B 

14) 

D 

15) 

B 

16) 

A 

17) 

C 

18) 

B 

19) 

D 

20) 

A 

21) 

Manufacturing planning and control are responsible for the planning and control of the flow of materials through the manufacturing process.  The primary activities are  production planning (to be able to meet the demands of the market place through forecasting, master planning, material requirements planning, and capacity planning), implementation and control (to put into action and achieve the production plans), and inventory management (to provide materials or supplies to the production process).  These three activities work together. 

22) 

There are five basic inputs to the manufacturing planning and control system.  (1) The product description shows how the product will appear at some stage of production. (2) Process specifications describe the steps necessary to make the end product.  (3) The time needed to perform operations is needed and usually expressed in standard time, which is the time taken by an average operator, working at a normal pace, to perform the task. (4) available facilities. And, (5) Quantities required which comes from forecasts, customer orders, orders to replace finished-goods inventory, and the material requirements plan. 

23) 

Physical supply and distribution includes all the activities involved in moving goods, from the supplier to the beginning of the production process, and from the end of the production process to the consumer.  The activities involved are transportation, distribution inventory, warehousing, packaging, materials handling, and order entry. 

24) 

The objective is to be able to deliver what customers want, when and where they want it, and do so at a minimum cost.  To achieve this objective, materials management must make trade-offs between the level fo customer service and the cost of providing that service.  As a rule, costs rise as the service level increases, and materials management must find that combination of inputs to maximize service and minimize costs. 

25) 

The key factors are several.  First, customers are never satisfied.  Also supply chains are large and must be continually managed.  Product life cycles are getting shorter and shorter.  Production control requires a vast amount of data that must be managed.  There is an emphasis on profit margins that are being continually squeezed.  Finally, there are an increasing number of alternatives. 

26) 

Direct Labor is $200,000; Direct Material represents 50% of Sales, and Gross Profit represents 10% of Sales. 

27) 

	Dollars	Percent of Sales
Revenue	$1,000,000	100%	
Cost of Goods Sold
	Direct Material	$450,000	45%	
	Direct Labor	$190,000	19%
	Factory Overhead	$200,000	20%
Total Cost of Goods Sold	$840,000	84%
Gross Profit	$160,000	16% 

28) 

	Dollars	Percent of Sales
Revenue	$1,200,000	100%	
Cost of Goods Sold
	Direct Material	$600,000	50%	
	Direct Labor	$240,000	20%
	Factory Overhead	$200,000	17%
Total Cost of Goods Sold	$1,040,000	87%
Gross Profit	$160,000	13% 

29) 

Profit would increase or improve by 200%.   

30) 

Profit would increase or improve by 200%; Sales would have to increase 20%.