File: ch01, Chapter 1: Introduction to Operations Management

Multiple Choice

1. Every business is managed through what three major functions?
a) accounting, finance, and marketing
b) engineering, finance, and operations management
c) accounting, purchasing, and human resources
d) accounting, engineering, and marketing
e) finance, marketing, and operations management

Ans: e
Response: See page 2
Level: easy

2. Which business function is responsible for managing cash flow, current assets, and capital investments?
a) accounting
b) finance
c) marketing
d) operations management
e) purchasing

Ans: b
Response: See page 2
Level: easy

3. Which business function is responsible for sales, generating customer demand, and understanding customer wants and needs?
a) finance
b) human resources
c) marketing
d) operations management
e) purchasing

Ans: c
Response: See page 2
Level: easy

4. Which business function is responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services?  
a) engineering
b) finance
c) human resources
d) marketing
e) operations management

Ans: e
Response: See page 3
Level: easy

5. Which of the following is not true for business process reengineering?
a) It can increase efficiency.
b) It cannot be used to improve quality.
c) It can reduce costs.
d) It involves asking why things are done in a certain way.
e) It involves redesigning processes.

Ans: b
Response: See pages 15-16
Level: easy

6. At the GAP, which function plans and coordinates all the resources needed to design, produce, and deliver the merchandise to its various retail locations?
a) engineering
b) human resources
c) marketing
d) operations management
e) purchasing

Ans: d
Response: See page 3
Level: easy

7. Which one of the following would not generally be considered to be a transformation?
a) a haircut
b) a train ride
c) manufacturing a radio
d) waiting to see the doctor
e) a surgery

Ans: d
Response: See page 3
Level: moderate

8. 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

Ans: e
Response: See page 3
Level: moderate

9. Which of the following is not an input?
a) services
b) managers
c) buildings
d) technology
e) information

Ans: a
Response: See page 3
Level: moderate

10. 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

Ans: a
Response: See page 4
Level: hard

11. Which second-tier computer company utilized a drastic change in its operations function to become an industry leader in the late 1990s?
a) Apple
b) Compaq
c) Dell
d) IBM
e) Kozmo

Ans: c
Response: See page 4
Level: easy

12. Which initially successful web-based home delivery company had to shut down in 2001 due to inadequate management of its operations?
a) Contact.com
b) Time Saver.com
c) Kozmo.com
d) Kramer.com
e) Neptune.com

Ans: c
Response: See page 4
Level: moderate

13. In order to be successful with Web-based on-line shopping, companies must do all except which of the following?
a) manage distribution centers and warehouses
b) operate fleets of trucks
c) maintain adequate inventories of products
d) promise same-day delivery
e) schedule deliveries

Ans: d
Response: See pages 4-5
Level: hard

14. What outsourcing functions does UPS provide for clients?
a) accounting and inventories
b) inventories and deliveries
c) accounting and deliveries
d) accounting and maintenance
e) deliveries and maintenance

Ans: b
Response: See pages 4-5
Level: hard

15. An example of an operation that does not add value is ____________________________.
a) removing iron ore from the ground and shipping it to a steel mill
b) filling the underground gasoline tanks at a service station
c) making a wedding cake
d) moving components to a warehouse for storage until the factory needs them
e) moving luggage from a cab to the airport ticket counter

Ans: d
Response: See page 5
Level: hard

16. Which famous economist once suggested that, “The production problem has been solved.”?
a) John Nash
b) Irving Fisher
c) John Kenneth Galbraith
d) Adam Smith
e) John Maynard Keynes

Ans: c
Response: See page 11
Level: hard

17. What was the primary reason why American firms lost market dominance in many industries in the 1970s and 1980s?
a) OPEC oil embargoes 
b) the Vietnam war had drained the economy of resources
c) after Richard Nixon was President, foreign consumers began to mistrust American firms
d) they had become lax with a lack of competition in the 1950s and 1960s
e) foreign government subsidies for business

Ans: d
Response: See page 11
Level: moderate

18. In what area does General Motors earn its highest return on capital?
a) selling cars
b) selling logo merchandise
c) financing
d) selling racing engines
e) post-sales parts and service

Ans: e
Response: See pages 5-6
Level: hard

19. Which of the following is an example of a “back room” operation for an airline company?
a) serving food and drinks to passengers
b) collecting tickets and checking passengers in at the gate
c) loading luggage onto the airplane
d) demonstrating use of the seat belt and other safety features of the airplane
e) assisting passengers in getting off of the plane

Ans: c
Response: See pages 5-6
Level: moderate

20. What are companies that have low customer contact and are capital intensive, yet provide a service, called?
a) pseudo-manufacturing organizations
b) quasi-manufacturing organizations
c) hierarchical manufacturing organizations
d) service factories
e) servifacturing organizations

Ans: b
Response: See pages 6-7
Level: moderate
21. What percentage of total non-farm jobs in the U.S. economy come from service-producing industries?
a) 20%
b) 50%
c) 60%
d) 80%
e) 95%

Ans: d
Response: See page 7
Level: moderate

22. What are long-term decisions that set the direction for the entire organization called?
a) tactical
b) operational
c) directional
d) distant
e) strategic

Ans: e
Response: See page 9
Level: easy

23. Which of the following is not true with respect to strategic and tactical decisions?
a) tactical decisions focus on more specific day-to-day decisions
b) tactical decisions determine the direction for strategic decisions
c) tactical decisions provide feedback to strategic decisions
d) tactical decisions are made more frequently and routinely
e) tactical decisions must be aligned with strategic decisions

Ans: b
Response: See pages 7-9
Level: moderate

24. Which of the following is not primarily performed by the operation management function?
a) job design and work measurement
b) advertising strategy
c) location analysis
d) quality management
e) facility layout

Ans: b
Response: See page 8
Level: moderate

25. When did operations management emerge as a formal field of study?
a) during the late 1950s and early 1960s
b) during the late 1970s and early 1980s
c) during World War II
d) during the nineteenth century
e) during the early 1900s

Ans: a
Response: See page 12
Level: moderate

26. Who invented the steam engine?
a) James Watt
b) Adam Smith
c) Eli Whitney
d) Henry Ford
e) Frederick Taylor

Ans: a
Response: See page 13
Level: hard

27. What concept involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker?
a) division of labor
b) interchangeable parts
c) scientific management
d) the Hawthorne effect
e) operations research

Ans: a
Response: See page 13
Level: easy

28. Who wrote The Wealth of Nations in 1776, describing division of labor?
a) James Watt
b) Adam Smith
c) Eli Whitney
d) Henry Ford
e) Frederick Taylor

Ans: b
Response: See page 13
Level: hard

29. The concept of interchangeable parts was introduced by ___________________.
a) Adam Smith
b) Frederick Taylor
c) Eli Whitney
d) Henry Ford
e) W. Edwards Deming

Ans: c
Response: See page 13
Level: hard

30. Who created “scientific management?”
a) James Watt
b) Adam Smith
c) Eli Whitney
d) Frederick W. Taylor
e) Henry Ford

Ans: d
Response: See page 13
Level: moderate

31. What was Frederick W. Taylor’s background?
a) physics
b) human resources management
c) operations research
d) psychology
e) engineering

Ans: e
Response: See page 13
Level: hard

32. A key feature of scientific management is that workers are motivated only by __________________.
a) love
b) power
c) challenging work
d) money
e) fame

Ans: d
Response: See page 14
Level: moderate

33. A key feature of scientific management is that workers are limited only by __________________.
a) machinery
b) co-workers
c) their job description
d) their tools
e) their physical ability

Ans: e
Response: See pages 13-14
Level: moderate

34. The creator of scientific management believed that ______________________________________.
a) worker productivity is governed by scientific laws
b) the worker should have a lot of control over his or her job
c) efficiency is overrated
d) worker pay should primarily be based on seniority
e) mathematical models are the basis for management of production

Ans: a
Response: See pages 13-14
Level: moderate

35. Which of the following operations management concepts did not evolve from scientific management?
a) moving assembly lines
b) interchangeable parts
c) stopwatch time studies
d) piece rate incentives
e) setting time standards for task performance

Ans: b
Response: See pages 13-14
Level: moderate

36. Who popularized the moving assembly line?
a) James Watt
b) Adam Smith
c) Eli Whitney
d) Frederick W. Taylor
e) Henry Ford

Ans: e
Response: See page 14
Level: moderate

37. Under scientific management, information from what is used to set time standards for task performance?
a) stopwatch time studies
b) observance of similar tasks
c) computer simulation
d) negotiations with unions
e) arbitration

Ans: a
Response: See page 14
Level: moderate

38. What movement started with the publication of the results of the Hawthorne studies?
a) scientific management
b) human relations
c) management science
d) marketing research
e) operations management

Ans: b
Response: See page 14
Level: moderate

39. What is the Hawthorne effect?
a) workers responding to the attention they are given
b) stopwatch time studies leading to time standards
c) the use of quantitative methods for solving management problems
d) the use of interchangeable parts
e) more lighting increases productivity

Ans: a
Response: See page 14
Level: moderate

40. Increasing the level of responsibility of a job by adding planning and coordination tasks is ___________.
a) job enlargement
b) job rotation
c) job involvement
d) job enrichment
e) job backward integration

Ans: d
Response: See page 14
Level: moderate

41. The first military use of management science was solving complex problems of logistics control, weapons system design, and deployment of missiles during _____________________.
a) World War I
b) World War II
c) The Korean War
d) The Vietnam War
e) Operation Desert Storm

Ans: b
Response: See page 14
Level: hard

42. What term describes the approach of giving workers a larger portion of the total task to do?

a) job enlargement
b) job rotation
c) job involvement
d) job enrichment
e) job backward integration

Ans: a
Response: See page 14
Level: moderate

43. When were the Hawthorne Studies conducted?
a) 1770s
b) 1830s
c) 1930s
d) 1960s
e) 1980s

Ans: c
Response: See page 14
Level: moderate

44. In what company were the Hawthorne Studies conducted?
a) Westinghouse
b) General Electric
c) Hawthorne Incorporated
d) General Motors
e) Western Electric

Ans: e
Response: See page 14
Level: hard

45. When was the first mathematical model for inventory management developed?
a) 1770
b) 1865
c) 1900
d) 1913
e) 1930

Ans: d
Response: See page 14
Level: hard

46. Where was the just-in-time philosophy developed?
a) Germany
b) United States
c) Canada
d) Japan
e) Italy

Ans: d
Response: See page 15
Level: moderate

47. When was the just-in-time philosophy developed?
a) 1980s
b) 1930s
c) 1800s
d) 1700s
e) 1990s

Ans: a
Response: See page 15
Level: hard

48. What is a philosophy that aggressively seeks to improve product quality by eliminating causes of product defects and making quality an all-encompassing organizational philosophy?
a) CQI
b) TQM
c) SPC
d) JIT
e) BPR

Ans: b
Response: See page 15
Level: moderate

49. Which of the following is considered a “quality guru?”
a) Elton Mayo
b) W. Edwards Deming
c) Alex Gamble
d) F.W. Harris
e) Frederick W. Taylor 

Ans: b
Response: See page 15
Level: hard

50. Many companies require their suppliers to meet what standards as a condition for obtaining contracts?
a) RFO 6000
b) PUR 8000
c) ISO 9000
d) MACH 5000
e) SUP 2000

Ans: c
Response: See page 15
Level: hard

51. One of the two most important features of time-based competition involves ________________________.
a) advertising on the Internet
b) stopwatch time studies
c) setting time standards for task performance
d) instantaneous access to inventory information
e) developing new products and services faster than the competition

Ans: e
Response: See page 16
Level: moderate

52. ISO 14000 standards provide guidelines for what?
a) business ethics
b) environmentally responsible actions
c) supplier certification
d) quality control
e) web site development

Ans: b
Response: See page 17
Level: moderate

53. NAFTA and the EU are _________________________.
a) certification groups
b) regional trade agreements
c) quality control methods
d) logistics providers
e) U.S. government agencies

Ans: b
Response: See page 17
Level: moderate

54. What type of commerce makes up the highest percentage of electronic transactions?
a) B2C
b) C2C
c) B4B
d) B2B
e) B4C

Ans: d
Response: See page 17
Level: moderate

55. The Internet developed from a government network called ARPANET, which was created in 1969 by _____.
a) Japanese scientists 
b) the EPA
c) the U.S. Defense Department
d) NSF
e) ISO

Ans: c
Response: See page 17
Level: hard

56. General Electric’s Trading Process Network primarily handles transactions between _________________.
a) individual customers
b) companies and individual customers
c) companies and their shipping firms
d) companies and their distributors
e) companies and their suppliers

Ans: e
Response: See page 17
Level: moderate

57. What is a concept that takes a total system approach to creating efficient operations?
a) lean systems
b) enterprise resource planning
c) customer relationship management
d) management science
e) management information systems

Ans: a
Response: See pages 17-18
Level: easy

58. What are software solutions that allow the firm to collect customer-specific data?
a) MRP
b) CRM
c) ERP
d) JIT
e) ISO

Ans: b
Response: See page 18
Level: moderate

59. Entry-level positions for operations management graduates include all of the following except _________.
a) quality specialist
b) inventory analyst
c) plant manager
d) production analyst
e) production supervisor

Ans: c
Response: See page 18
Level: moderate

60. Operations management personnel perform a variety of functions, including all of the following except ___________________.
a) analyzing production problems
b) analyzing potential mergers
c) developing forecasts
d) developing employee schedules
e) monitoring inventory

Ans: b
Response: See page 18
Level: moderate

61. Which of the following concepts is linked the least with Henry Ford?
a) scientific management
b) mass production
c) mass customization
d) technology
e) interchangeable parts

Ans: c
Response: See pages 14 and 16
Level: hard

62. Which of the following historical figures would probably have the most different management style from the others?
a) Elton Mayo
b) Henry Ford
c) Eli Whitney
d) Frederick W. Taylor
e) Adam Smith

Ans: a
Response: See pages 12-14
Level: hard

True/False

1. Operations management is the business function that plans, coordinates, and controls the resources needed to produce a company’s products and services.

Ans: True
Response: See page 2
Level: easy

2. Marketing is the central core function of every company.

Ans: False
Response: See page 3
Level: easy

3. Operations management is the central core function of every company.

Ans: True
Response: See page 3
Level: easy

4. An example of a transformation is waiting to see the doctor.

Ans: False
Response: See page 3
Level: moderate

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

Ans: True
Response: See page 3
Level: moderate

6. An example of an operation that does not add value is making a wedding cake.

Ans: False
Response: See page 5
Level: moderate

7. An example of a “back room” operation for an airline company is loading luggage onto the airplane.

Ans: True
Response: See pages 5-6
Level: moderate

8. Companies that have low customer contact and are capital intensive, yet provide a service, are called service factories.

Ans: False
Response: See pages 6-7
Level: moderate

9. The Industrial Revolution started in the 1770s with the development of a number of inventions that relied on machine power instead of human power.

Ans: True
Response: See pages 12-13
Level: moderate

10. Division of labor involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker.

Ans: True
Response: See page 13
Level: moderate

11. A key feature of scientific management is that workers are limited only by their tools.

Ans: False
Response: See page 13
Level: moderate

12. The creator of scientific management believed that worker productivity was governed by scientific laws.

Ans: True
Response: See page 13
Level: moderate

13. Worker participation in decision making is a key feature of scientific management.

Ans: False
Response: See page 13
Level: moderate

14. “Job enrichment” is an approach in which workers are given a larger portion of the total task to do.

Ans: False
Response: See page 14
Level: moderate

15. The first mathematical model for inventory management was developed by Elton Mayo.

Ans: False
Response: See page 14
Level: hard

16. Operations research started with the publication of the results of the Hawthorne studies.

Ans: False
Response: See page 14
Level: moderate

17. The Hawthorne effect is that workers are motivated by the attention they are given.

Ans: True
Response: See page 14
Level: moderate

18. Increasing the level of responsibility of a job by adding planning and coordination tasks is called job enrichment.

Ans: True
Response: See page 14
Level: moderate

19. Management science focuses on developing quantitative techniques for solving operations problems.

Ans: True
Response: See pages 14-15
Level: moderate

20. The advent of the computer age paved the way for the development of MRP for inventory control and scheduling.

Ans: True
Response: See page 15
Level: moderate

21. The objective of supply chain management is to have every member of the chain compete against each other to enhance competitive abilities.

Ans: False
Response: See page 16
Level: moderate

22. The need to offer a greater variety of product choices to customers of a traditionally standardized product is the challenge of flexibility.

Ans: True
Response: See page 16
Level: moderate

23. One of the most important trends in companies today is competition based on time.

Ans: True
Response: See page 16
Level: moderate

24. The highest percentage of transactions on the internet occur between businesses and their customers (B2C).
Ans: False
Response: See page 17
Level: moderate

25. Today many corporate CEOs have come through the ranks of operations.

Ans: True
Response: See page 18
Level: easy

Essay

1. Define operations management.

Ans: 	The business function responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services.
Response: See page 2
Level: easy

2. What must companies focus on in order to survive in today’s business environment?

Ans: quality, time-based competition, efficiency, international perspectives, and customer relationships
Response: See page 2
Level: moderate

3. What are the three major functions through which every business is managed?

Ans: finance, marketing, and operations management
Response: See page 2
Level: easy

4. What is the “role” of operations management?

Ans: To transform organizational inputs into outputs
Response: See page 3
Level: easy

5. List at least seven different possible inputs to a transformation process.

Ans: workers, managers, buildings, equipment, materials, technology, and information
Response: See page 3
Level: moderate

6. What must companies do in order to be successful with Web-based on-line shopping?

Ans: 	Manage distribution centers and warehouses, operate fleets of trucks, forecast what customers want and maintain adequate inventories of products, and schedule deliveries while keeping costs low and customers happy.
Response: See pages 4-5
Level: moderate
7. In what ways do service organizations differ from manufacturing organizations?

Ans:	Manufacturing organizations produce a physical, tangible product that can be stored in inventory before it is needed, while service organizations produce an intangible product that cannot be produced ahead of time; and for manufacturing organizations most customers have no direct contact with the operation, while for service organizations customers are typically present during creation of the service.  Also, service organizations tend to have a shorter response time and are more labor intensive.  
Response: See pages 5-6
Level: moderate

8. List some typical operations management decisions that are made, along with their associated operations management term.

Ans: 	What are the unique features of the business that will make it competitive? (Operations strategy)
	What are the unique features of the product? (Product design)
	What are the unique features of the process that give the product its unique characteristics? (Process
		selection)
	How do we manage our sources of supply? (Supply chain management)
	How will managers ensure the quality of the product, measure quality, and identify quality problems? 
		(Quality management) 
	What is the expected demand for the product? (Forecasting)
	Where will the facility be located? (Location analysis)
	How large should the facility be? (Capacity planning)
	How should the facility be laid out? (Facility layout)
	What jobs will be needed in the facility, who should do what task, and how will their performance be 
		measured? (Job design and work measurement)
	How will the inventory of raw materials be monitored? When will orders be placed? (Inventory mgt.)
	Who will work on what schedule? (Scheduling)
Response: See page 8
Level: hard

9. Why are operations management decisions typically more complex for large companies than for small companies?

Ans: 	Because of the size and scope of large companies: they typically produce a greater variety of products, have multiple location sites, and often use both domestic and international suppliers.
Response: See page 9
Level: hard

10. What operations management approaches came out of the scientific management movement?

Ans: 	moving assembly lines, stopwatch time studies, piece rate incentives, and setting time standards for task performance
Response: See pages 12-13
Level: hard

11. What are the two key features of scientific management?

Ans:	First, it is assumed that workers are motivated only by money and are limited only by their physical ability.  Second, management should perform “planning” separately from the workers who perform the “doing.” 
Response: See page 13
Level: moderate
12. What were the major impacts on operations management that resulted from the widespread use of computers in the 1970s?

Ans: 	using quantitative models on a larger scale; development of material requirements planning; and data processing was made easier, with advances in forecasting, scheduling, and inventory management

Response: See page 15
Level: hard

13. What is the basic approach for business process reengineering and what are its major impacts?

Ans: 	It involves asking why things are done in a certain way, questioning assumptions, and then redesigning the processes.  It can increase efficiency, improve quality, and reduce costs.
Response: See page 16
Level: moderate

14. How have information technology tools helped with supply chain management?

Ans: 	They enable collaborative planning and scheduling.  They allow synchronized supply chain execution and design collaboration, and they allow companies to respond better and faster to changing market needs.
Response: See page 16
Level: hard

15. What are environmental issues faced by business?

Ans: air pollution, water pollution, global warming, and waste disposal
Response: See page 17
Level: moderate