File: ch01, Chapter 1: Operations Management

True/False

1.	Operations management is concerned only with the day-to-day operations of the firm’s productive system. 

Ans: False
Difficulty: Easy
Feedback: Introduction

2.	A warehouse or transportation operation is an example of a physical transformation process. 

Ans: False
Difficulty: Easy
Feedback: The Operations Function

3.	A retail operation is an example of an exchange transformation process.

Ans: True
Difficulty: Easy
Feedback:  The Operations Function

4.	Operations Management designs, operates, and improves productive systems. 

Ans: True
Difficulty: Easy
Feedback: The Operations Function

5.	Operations managers need an integrated view of business organizations.

Ans: True
Difficulty: Easy
Feedback: Evolution of Operations

6.	The systematic analysis of work methods is known as scientific management.

Ans: True
Difficulty: Easy
Feedback: Evolution of Operations

7.	The concept of interchangeable parts was introduced by Frederick W. Taylor.

Ans: False
Difficulty: Moderate
Feedback: Evolution of Operations

8.	Scientific management is concerned with the systematic analysis of work methods. 

Ans: True
Difficulty: Easy
Feedback: Evolution of Operations

9.	Mass production refers to high-volume production of a standardized product for a mass market.

Ans: True 
Difficulty: Easy
Feedback: Strategy

10.	Emphasizing the strategic role of operations help renew the competitiveness of U.S. companies. 

Ans: True 
Difficulty: Easy
Feedback: Globalization

11.	The adaptation of mass production to emphasize flexibility, rather than efficiency, and quality, rather than quantity is known as craft production. 

Ans: False 
Difficulty: Moderate
Feedback: Globalization

12.	The tools and techniques of operations management do not apply to the service sector. 

Ans: False 
Difficulty: Easy
Feedback: The Operations Function

13.	The set of activities that create and deliver products to the customer is known as the value chain.

 Ans: True 
Difficulty: Moderate
Feedback: The operations function

14.	Assuring high quality is a potential problem posed by globalization. 

Ans: True
Difficulty: Easy
Feedback: Globalization

15.	The four primary functional areas pf a firm are marketing, finance, operations, and human resources. 

Ans: True 
Difficulty: Easy
Feedback: he Operations Function

16.	The process of producing high-volume, standardized products for a large market is known as craft production. 

Ans: False  
Difficulty: Moderate
Feedback: Globalization

17.	An advantage of mass production is its ability to adapt quickly to changes in demand. 

Ans: False 
Difficulty: Moderate
Feedback: Globalization

18.	The European Union requires that strict quality and environmental standards be met before companies can do business with member countries. 

Ans: True 
Difficulty: Moderate
Feedback: Globalization

19.	Globalization had led India to become the world’s factory while enabling China to excel in services. 

Ans: False 
Difficulty: Moderate
Feedback: Globalization

20.	The issue of supply chain logistics is one risk posed by globalization. 

Ans: True 
Difficulty: Easy
Feedback: Globalization

21.	Productivity increases enable a nation to raise its standard of living. 

Ans: True
Difficulty: Easy
Feedback: Globalization

22.	A nation’s productivity is unrelated to its standard of living. 

Ans: False 
Difficulty: Easy
Feedback: Globalization

23.	Globalization has affected both manufacturing and service operations. 

Ans: True  
Difficulty: Easy
Feedback: Globalization

24.	Courses in operations management are relevant only to those who desire to be operations managers. 

Ans: False 
Difficulty: Easy
Feedback: The operations function

25.	Operations is the function or system that transforms inputs into outputs of greater value. 

 Ans: True 
Difficulty: Moderate
Feedback: the Operations function

26.	A supply chain is a series of activities from supplier to customer that add value to a product or service 

Ans: False.
Difficulty: Moderate
Feedback: The Operations function

27.	The concept of division of labor was proposed by Adam Smith. 

Ans: True 
Difficulty: Moderate
Feedback: The evolution of operations

28.	Maintaining the quality of products and services is easier when production or delivery is closer to home. 

Ans: True
Difficulty: Moderate

29.	U.S. companies became globally competitive again by emphasizing quality and the strategic importance of operations. 

Ans: True
Difficulty: Moderate

30.	Operations management is less applicable to services than it is to manufacturing.  

Ans: False 
Difficulty: Easy

31.	Many companies now find it necessary to have some global presence to remain competitive. 

Ans: True
Difficulty: Easy

32.	Productivity is the most common measure of competitiveness. 

Ans: True
Difficulty: Easy

33.	Single factor productivity measures compare output to individual inputs.

Ans: True
Difficulty: Moderate

34.	Productivity increases when firms become more efficient 

Ans: True
Difficulty: Easy

35.	Because productivity is a relative measure government reports typically measure productivity in percentage changes. 

Ans: True
Difficulty: Moderate

36.	Operating a production process or delivering a service often involves utilizing items or processes that are outsourced. 

Ans: True
Difficulty: Moderate

37.	Making certain that jobs meet the requirements of the production and service process in the most efficient and effective manner possible is the responsibility of supply chain managers. 

Ans: False
Difficulty: Moderate

38.	Human resources management involves using different methods and techniques to provide accurate estimates of demand, which are then used in production decisions.

Ans: False
Difficulty: Moderate

39.	Quality underlies all operational decisions.
Ans: True
Difficulty: Easy

40.	  Two-thirds of today’s businesses operate globally 

Ans: True

41.	 China is reshaping the way  firms compete globally 

Ans: True

Multiple Choice 

42.	Operations management is concerned with
a.	the design of the firm’s productive systems.
b.	the operation of the firm’s productive systems.
c.	the improvement of the firm’s productive systems.
d.	all of the above.

Ans: d
Difficulty: Easy
Feedback:

43.	The transformation process associated with health care is best described as
a.	locational
b.	exchange
c.	physiological
d.	informational

Ans: c
Difficulty: Easy
Feedback:

44.	Which of the following is not one of the four primary functional areas of a firm?
a.	human resources
b.	legal
c.	marketing
d.	operations

Ans: B
Difficulty: Easy
Feedback: Productivity and competitiveness

45.	The systematic analysis of work methods known as scientific management is attributed to 
a.	Frederick W. Taylor
b.	Eli Whitney
c.	Henry Ford
d.	Adam Smith

Ans: a
Difficulty: Moderate
Feedback: Productivity and competitiveness

46.	The production system that prizes flexibility over efficiency and quality over quantity is known as
a.	mass production
b.	craft production
c.	lean production
d.	electronic commerce

Ans: c
Difficulty: Moderate
Feedback: Productivity and competitiveness

47.	Dividing a job into a series of small tasks each performed by a different worker is known as
a.	craft production
b.	scientific management
c.	division of labor
d.	interchangeable parts

Ans: c.
Difficulty: Moderate
Feedback: Productivity and competitiveness

48.	The introduction of interchangeable parts into the production process was first proposed by
a.	Eli Whitney
b.	Adam Smith
c.	Lillian Gilbreth
d.	Henry Gantt

Ans: a
Difficulty: Moderate
Feedback: Evolution of Operations

49.	Linear programming, simulation, and waiting line theory are most closely associated with which era in the historical development of operations management?
a.	human relations
b.	operations research
c.	globalization
d.	Internet revolution

Ans: b
Difficulty: Moderate
Feedback: Productivity and competitiveness

50.	Each of the following represents an impact of E-Business on operations management except
a.	better and faster decision-making
b.	expanded supply chains
c.	restricted access to suppliers
d.	information technology synergy

Ans: c
Difficulty: Moderate
Feedback: Productivity and competitiveness

51.	The ratio of a firm’s monthly output to the number of labor hours used in the same month would be a measure of
a.	labor productivity
b.	capital productivity
c.	machine productivity
d.	multifactor productivity

Ans: a
Difficulty: Moderate
Feedback: Strategy

52.	The degree of competitiveness in an industry can affect
a.	product innovation
b.	technological investment
c.	operating strategy
d.	all of the above

Ans: d
Difficulty: Easy
Feedback: Strategy

53.	Which of the following is not an event or concept associated with the quality revolution in operations management that occurred during the 1970s, 1980s, and 1990s?
a.	TQM (total quality management)
b.	PERT/CPM
c.	Business process reengineering
d.	JIT

Ans: b
Difficulty: Moderate
Feedback: Evolution of operations

54.	Japanese firms used the concept of ___________ to convert from mass production to lean production.
a.	division of labor
b.	scientific management
c.	just-in-time
d.	interchangeable parts

Ans: c
Difficulty: Moderate
Feedback: Productivity and competitiveness

55.	Mass production is well suited to all of the following except
a.	producing large volumes of goods quickly
b.	adapting quickly to changes in market demand
c.	producing standardized products for a large market
d.	all of the above

Ans: b
Difficulty: Easy
Feedback: Productivity and competitiveness

56.	All of the following are characteristics of today’s consumer market except
a.	longer product life cycles
b.	shorter product life cycles
c.	more customized products
d.	product proliferation

Ans: a.
Difficulty: Moderate
Feedback: Strategy

57.	All of the following are responsibilities of operations managers except
a.	acquiring financial resources
b.	managing inventories
c.	planning production
d.	scheduling production

Ans: a
Difficulty: Easy
Feedback: Productivity and competitiveness

58.	The work of W. Edwards Deming is most closely associated with
a.	MRP
b.	TQM
c.	supply chain management
d.	time and motion studies

Ans: b
Difficulty: Easy
Feedback: Evolution of operations

59.	All of the following are transformation processes except:
a.	physiological
b.	locational
c.	exchange
d.	inherent

Ans: d
Difficulty: Easy
Feedback: Introduction

60.	Linear programming, waiting line, simulation, and PERT/CPM are all parts of which era of operations management?
a)	Quality Research
b)	Operations Research
c)	Internet Revolution
d)	Globalization

Ans: b
Difficulty: Moderate
Feedback:  Historical Events in OM

61.	Based on experience, knowledge, and know-how: Hard-to-copy strategies, core competencies represent:
a)	sustainable competitive advantages
b)	unique selling propositions
c)	non-compete clauses
d)	none of the above

Ans: a
Difficulty Hard
Feedback: Core Competencies

62.	A firm who is adept at recognizing global windows of opportunity, acting on those very quickly, with tight linkages can be said to be competing on:
a)	flexibility
b)	speed
c)	quality 
d)	cost

Ans: b
Difficulty: Hard
Sectioned: Competing on Speed

Short Answer

63.	Briefly describe how operations can be viewed as a transformation process.

Operations is often defined as a transformation process.  Inputs such as raw materials, labor, equipment, and capital are transformed into outputs (goods and services). Customer feedback is used to adjust the transformation process. An objective of the operations manager is to ensure that the transformation process operates efficiently and the outputs of the process have greater value than the sum of the inputs.  In this way the transformation process creates value, making it possible to view the transformation process as a value chain extending from supplier to customer. 

64.	Briefly describe the four primary functional areas of a firm.  How is operations related to them?

The four primary functional areas of a firm are marketing, finance, operations, and human resources.  For most firms, operations is the technical core or “hub” of the organization, interacting with the other functional areas and suppliers to produce goods and services for customers.  For example, marketing provides sales forecasts to operations and operations provides marketing with product availability information, lead time estimates and delivery schedules.  Operations provides finance with inventory and production data, capital budgeting and equipment requests, and technology plans.  Finance provides the capital resources for financing inventory and securing more capital equipment.  Operations relies on human resources to meet its personnel needs—hiring, training, and evaluating workers.  

65.	What is electronic commerce?

Trade that occurs over the Internet (or any other computer network) is called electronic commerce, e-commerce, or e-business. Electronic commerce can take the form of trade between businesses (B2B), between consumers, or between business and consumers (B2C). B2B trade typically involves companies and their suppliers while B2C trade can take the form of online retailing.  Companies that integrate both B2B and B2C are said to have a fully integrated value chain.

66. What is productivity and how is it measured?
Productivity is the ratio of output to input.  Output can be expressed in units or dollars. Single factor productivity compares output to individual inputs, such as labor hours, investment in equipment, or material usage. Multifactor productivity relates output to a combination of inputs, such as labor + capital.  Total factor productivity compares the quantity of goods and services produced with all the inputs used to produce them.  

67. What can lead to increases in productivity?
Productivity increases when firms become more efficient, expand, achieve breakthroughs that enable output increases to occur with reduced inputs, downsize while maintaining output with fewer inputs, and retrench with output and inputs decreasing but inputs decreasing at a faster rate than output. 

68.	Briefly describe the field of operations and supply chain management  are relevant to all business majors
Relate the functions of operations and supply chain management to marketing (selling and advertising), management, accounting, information technology, finance, and economics, as well as global aspects thereof.