Notes for CA5104 Operations Management

Chapter 1 : Introduction to Operations Management

What is operations?
-part of business organization that’s responsible for producing goods or services

Operations Management
-management of systems/processes that create goods and/or provide services

Supply Chain
-sequence of activities and organizations involved in producing and delivering a
good/service.
Supplier > Manufacturer > Distributor > Retailer > Customer

The Transformation Process (Conversion Process)

Feedback – measurements taken at various points in the transformation process

Control – comparison of feedback against previously established standards to determine if
corrective action is needed

Value-added elements
–make the difference between the cost of inputs and the value of outputs
-the higher the value added the greater the effectiveness of the operation

Product packages
-combination of goods and services, makes the company more competitive (Spa)

Goods-service continuum
-products are typically neither purely service (surgery, teaching) or purely goods based
(automobile assembly)
Manufacturing vs Service

1 Customer contact – service involves higher customer contact

2 Uniformity of input – service operations are subject to greater variability of inputs, presents a
specific problem to be diagnosed before it can be remedied
3 Labor content of jobs – higher in service
4 Measurement of productivity - more difficult in service due to variation in demand intensity
5 Quality assurance – more challenging in services where production & consumption occur at the
same time (restaurant)
6 Amount of inventory – manufacturing have more inventory on hand
7 Wages – less wage variation in manufacturing
8 Ability to patent design – product designs are easier to patent compared to services that makes
it easier for other competitors to copy

Why Study Operations Management?

-every aspect of business is affected by operations
-jobs closely related to operations: Financial, Marketing, Accounting, and Information services
-for better understanding as to why companies succeed or fail

Overlap of Business Functions

Finance & Operations
-Budgeting
-Economic analysis of investment proposals
-Provision of funds

Marketing & Operations

-Demand data
-Product and service design
-Competitor analysis
-Lead time data

Process Management
|_> one or more actions that transform inputs into outputs

Three Categories of Business Processes:

Upper-management process
-govern the operation of the entire organization
Operational processes
-core processes that make up the value stream
Supporting processes
-support the core process

Operations & Supply Chains Sales & Marketing

Supply > Demand Wasteful Costly
Supply < Demand Opportunity Loss Customer Dissatisfaction
Supply = Demand Ideal
Process Variation

Four Sources of Variation:

Variety of goods/services being offered
-The greater the variety of goods/services offered, the greater the production/service
requirement.
Structural variation in demand
-generally predictable and important for capacity planning.
Random variation
-Natural variation that is present in all processes, cannot be influenced by managers.
Assignable variation
-has identifiable sources. Can be reduced or eliminated by analysis or corrective action.

Variation can be disruptive to operations and supply chain process, may result to delays and
shortages or have additional costs.

Role of Operations Manager

-primary function is to guide the system by decision making.
>system design decisions
>system operation decisions

Operation Function
-consists of all activities directly related to producing goods or providing services

System Design Decisions

>capacity, facility location and layout, product and service planning
-strategic decisions that usually require long-term commitment of resources.
-determine parameters of system operation.

System Operation Decisions

>management of personnel, inventory management, scheduling, quality assurance
-operations managers spends more time on system operation decision than any area

Module 3 : Product & Service Design

-essence of an organization is the goods (products) and services it offers
-should be closely tied to an organization’s strategy
Properly Designed Product and service is very important

What does Product & Service Design Do?

-translate customer wants and needs into product and service requirement (mktg,op)
-refine existing products and services ex.Enhanced sound for laptops, updating online pay
-develop new products and services (mktg, op)
-formulate quality goals (mktg, op)
 -formulate cost targets (acctg, mktg, op)
-construct and test prototypes – sample/model as a basis for standard (mktg, op, engi)
-Document specifications –stating precise requirement
-translate product and service specifications into process specifications (engi, op)
>control the material features and properties, performance, and reliability of process output
-Involve inter-functional collaboration

Manufacturability
-capability of an organization to produce an item at an acceptable profit
Serviceability
-capability of an organization to provide a service at an acceptable cost/profit

Reasons to Design or Re-design

driving forces are market opportunities or threats:
>Economic ; integrating cost analysis into early product design to determine final cost
-low demand
-need to reduce the cost
>Social and demographic (e.g. aging baby boomers, population shifts)
-the product production depends on the population
>Political, liability or legal (e.g. safety issues, new regulations, gov’t changes)
-Design products that are free of hazards (eco-friendly)
>Competitive (e.g. new products & services, new advertising)
-use of cash registers vs adopting a system in supermarkets
-web page for ads vs use of flyers/brochures
>Cost or availability (e.g. raw materials, labor, energy)
>Technological (e.g. in product components, processes)
-advancement of technology can directly and indirectly affect product s&d
-new tech should be adopted in design to remain efficient and competitive

Ideas Generation (main sources of design)

>Supply-Chain Based
Ideas can come from anywhere in the supply chain:
Customers } Suppliers } Distributors } Employees } Maintenance & repair personnel

>Competitor Based
•Reversed engineering – dismantling and inspecting a competitor’s product to discover product
improvements.

>Research Based
Research and development
-organized efforts to increase scientific knowledge or product innovation
Basic research –has the objective of advancing the state of knowledge about the subject
Applied research –has the objective of achieving commercial applications
Development –converts the result of applied research into useful commercial application
Legal Considerations
Automobile pollution
Safety issues: airbags, seatbelts, energy-absorbing bumpers

Uniform Commercial Code

-under ucc, products must carry an implication of merchantability and fitness, it should
be useable for its intended purpose

Ethical Considerations
Designers are often under pressure to:
Speed up the design process and cut costs

These pressures force trade-off decisions

•What if product has bugs?
-release the product and risk damage to your reputation
-work out bugs and forego revenue

Other Factors to be considered in the design of products & services:

>Human Factors
-safety & liability are two critical issues
-adding new features that contributes to ease of use
>Cultural Factors
-designers operating globally must account for any cultural differences related to
the product design or service

Sustainability
-using resources in ways that do not harm ecological systems that support human
existence

Goal of LCA
-choose products and services that have the least environmental impact
LCA procedures are part of the ISO 14000 environmental management procedures

Key aspects of designing for sustainability

The 3-Rs (reduction, reusing, recycling)
-considered as the three aspects of potential cost savings & reducing environmental impact
 >Reduce : Cost and Materials
-examination of the function of parts and materials in an effort to reduce cost or
improve product’s performance

>Reuse : Remanufacturing
-refurbishing used products by replacing worn-out or defective components
Design for disassembly (DFD)
– designing a product to that used products can be easily taken apart

>Recycle
-recovering materials for future use
Design for recycling (DFR)
–product design that takes into account the ability to disassemble a used product to
recover recyclable parts

 Question 1
0 out of 2 points
It means recovering materials for future use. This applies not only to manufactured parts but
also to materials used during production, such as lubricants and solvents.

Selected Answer:  
Reuse

Answers: Reuse

Reduce

 
Recycle

All of the above

 Question 2
2 out of 2 points
Which of the following department in a business company focuses all its activities and energies
in enhancing knowledge about product innovation or service development.

Selected Answer:  
RDD (Research and Development Dept.)

Answers: AD (Administration Department)

HRD (Human Resource Dept.)

MD (Manufacturing Department)

 
 RDD (Research and Development Dept.)

 Question 3
2 out of 2 points
Which of the following is a guideline for successful service?

Selected Answer:  
All of the above

Answers: Define quality for both tangibles and intangibles

Focus on the operation from the customer's perspective

Establish procedures to handle both predictable and unpredictable events

 
All of the above

 Question 4
2 out of 2 points
A systematic approach to managing the service of changes a product through, from its
conception to its end-of-life is called:

Selected Answer:  
Product Life Cycle Management

Answers: Value analysis

 
Product Life Cycle Management

Standardization

Life Stages

 Question 5
2 out of 2 points
Which of the following is NOT a determinant of effective capacity?

Selected Answer:  
actual output

Answers: facilities

product mix

 
actual output

human factors
 Question 6
2 out of 2 points
Which of the following is NOT a criterion for developing capacity alternatives?

Selected Answer:  
design structured, rigid systems

Answers:  
design structured, rigid systems

take a big-picture approach to capacity changes

prepare to deal with capacity in "chunks"

identify the optimal operating level

 Question 7
2 out of 2 points
Which of the following statements is CORRECT?

Selected  
Answer:
Capacity planning requires an analysis of needs: what kind, how much, and
when.

Answers: Having excess capacity tends to keep operating costs low.

In cost-volume analysis, costs that vary directly with volume of output are
referred to as fixed costs because they are a fixed percentage of output levels

According to the reading on restaurant sourcing practices, only fast-food

restaurants are able to bring in outsourced foods.

 
Capacity planning requires an analysis of needs: what kind, how much, and
when.

 Question 8
2 out of 2 points
It is the stage of a product or service life cycle that producers must think of the new uses of an
existing product or service to remain profitable or stop with the product or service.

Selected Answer:  
Decline phase

Answers: Introduction

Growth phase

Maturity phase
  
Decline phase

 Question 9
2 out of 2 points
Everything else being equal, a firm considering outsourcing would find all of the following
desirable EXCEPT:

Selected Answer:  
proprietary information will be disclosed to the supplier.

Answers: total costs will be lower for outsources goods or services.

its supplier has more expertise in whatever is being outsourced.

it can maintain tight control over knowledge.

 
proprietary information will be disclosed to the supplier.

 Question 10
2 out of 2 points
It is a design so that used products can be easily taken apart and a support to green reputation
and sustainability.

Selected Answer:  
Design for Disassembly (DFD)

Answers: Design for Assembly (DFA)

 
Design for Disassembly (DFD)

Design for Manufacturing (DFM)

Design for Recycling (DFR)

 Question 11
2 out of 2 points
Unbalanced systems are evidenced by:

Selected Answer:  
bottleneck operations

Answers: top-heavy operations

labor unrest

 
 bottleneck operations

increasing capacities

 Question 12
2 out of 2 points
Seasonal variations are often easier to deal with in capacity planning than random variations
because seasonal variations tend to be:

Selected Answer:  
predictable

Answers: larger

 
predictable

controllable

less frequent

 Question 13
2 out of 2 points
It is the capability of the business organization to produce an item at an acceptable cost and
profit.

Selected Answer:  
Manufacturability

Answers: Component Commonality

Liability

 
Manufacturability

Serviceability

 Question 14
2 out of 2 points
It is the process of dismantling and inspecting competitor's product to discover product
improvements.

Selected Answer:  
Reverse engineering

Answers: Concurrent engineering

Re-manufacturing
 Research based technology

 
Reverse engineering

 Question 15
0 out of 2 points
When customers avail of services and they feel that the service received is worth the money
they paid. This illustrates:

Selected Answer:  
Being cost-effective

Answers: Being user-friendly

Being easy to sustain

Being cost-effective

 
Having value that is obvious to the customer

 Question 16
2 out of 2 points
Short-term considerations in determining capacity requirements include:

Selected Answer:  
seasonal demand variations

Answers: demand trend

cyclical demand variations.

 
seasonal demand variations

new product development plans.

 Question 17
2 out of 2 points
It is the extent to which a product, service or process lacks variety and producing high volume
of products which are readily available to customers.

Selected Answer:  
Standardization

Answers: Customization

Deployment
 function

Differentiation

 
Standardization

 Question 18
2 out of 2 points
Utilization is defined as the ratio of:

Selected Answer:  
actual output to design capacity

Answers: actual output to effective capacity

 
actual output to design capacity

design capacity to effective capacity

effective capacity to actual output

 Question 19
2 out of 2 points
What does Product and Service Design do or what is its importance?

Selected Answer:  
All of the above

Answers: Develop new products and services.

Document specifications.

Translate customer wants and needs into product and service

requirements.

 
All of the above

 Question 20
2 out of 2 points
Which of the following is NOT a criterion for developing capacity alternatives?

Selected Answer:  
design structured, rigid systems

Answers:  
design structured, rigid systems
 take a big-picture approach to capacity changes

prepare to deal with capacity in "chunks"

attempt to smooth out capacity requirements

 Question 21
2 out of 2 points
Efficiency is defined as the ratio of:

Selected Answer:  
actual output to effective capacity

Answers:  
actual output to effective capacity

actual output to design capacity

effective capacity to actual output

design capacity to actual output

 Question 22
2 out of 2 points
In the early design of a product, it should involve the material specialist for technical feasibility,
manufacturing personnel, customer and supplier views to avoid serious problems in
production. This describes:

Selected Answer:  
Concurrent Engineering

Answers: CAD

Component Commonality

 
Concurrent Engineering

Serviceability

 Question 23
3 out of 3 points
Given the following information, what would utilization be if Effective capacity is 20 units per
day, Design capacity is 60 units per day and Actual output is 15 units per day?

Selected Answer:  
25%

Answers:  
 25%

33%

50%

75%

 Question 24
2 out of 2 points
It refers to refurbishing used products by replacing worn-out components.

Selected Answer:  
Remanufacturing

Answers: Recycling

 
Remanufacturing

Reducing

Replacing

 Question 25
2 out of 2 points
Producers design and redesign strategically and stay ahead of market trends. This relates to
what reason or driving force?

Selected Answer:  
Competitive

Answers:  
Competitive

Cost or availability

Economic

Social and demographic

 Question 26
2 out of 2 points
One of the quality emphasized by the Kano model that explains why customers prefer to buy
house paints that can last for a longer period of time versus paints that easily fade.

Selected Answer:  
Performance

Answers: Basic
 Complex

Excitement

 
Performance

 Question 27
2 out of 2 points
The impact that a significant change in capacity will have on a key vendor is a:

Selected Answer:  
supply chain factor

Answers:  
supply chain factor

process limiting factor

internal factor

operational process factor

 Question 28
0 out of 2 points
If an accounting firm offers more varied services then which of the following is TRUE?

Selected Answer:  
The service is highly standardized

Answers: The service is highly standardized

 
The service has high degree of customer contact

The service has low degree of customer contact

The fewer service requirements

 Question 29
0 out of 2 points
Which of the following is a key question in capacity planning?

Selected Answer:  
Where do we need the capacity?

Answers: Should we make the product in-house or outsource it?

Where do we need the capacity?

  
When do we need the capacity?

Who will pay for the capacity change?

 Question 30
3 out of 3 points
C&M Machining is developing plans for a dedicated production line and needs to determine
how many drill presses will be needed. Engineering estimates are that one drill press will be
able to process 120 parts per hour. Daily demand is 2,400 parts. C&M operates one 8 hour shift
per day. How many drill presses are needed to meet the capacity requirements?

Selected Answer:  
3 drills

Answers: 2 drills

 
3 drills

4 drills

5 drills

 Question 31
2 out of 2 points
The following are reasons why companies recycle EXCEPT,

Selected Answer:  
Redesign

Answers: Cost savings

Environmental concerns

Environmental regulations

 
Redesign

 Question 32
2 out of 2 points
Capacity in excess of expected demand that is intended to offset uncertainty is a:

Selected Answer:  
capacity cushion

Answers: margin protect

 line balance

 
capacity cushion

timing bubble

 Question 33
2 out of 2 points
Which of the following is NOT true for a service?

Selected Answer:  
It is tangible and can involve inventory

Answers: It is intangible but its effect can be felt by customers

It is created and delivered simultaneously

 
It is tangible and can involve inventory

It is labor-intensive

 Question 34
2 out of 2 points
This is also known as life cycle analysis which deal with the assessment of the environmental
impact of a product or service throughout its useful life.

Selected Answer:  
Cradle-to-Grave Assessment

Answers:  
Cradle-to-Grave Assessment

End-of-life-programs

ISO 14000

Product & Service Life Stages

 Question 35
2 out of 2 points
Maximum capacity commonly refers to the upper limit on:

Selected Answer:  
the rate of output

Answers: efficiency

finances
 the rate of demand

 
the rate of output

 Question 36
0 out of 2 points
An architect can generate a 3D design of a building & other simulations through this tool in
designing.

Selected Answer:  
CAD

Answers: CAD

Component Commonality

 
Concurrent Engineering

Serviceability

 Question 37
2 out of 2 points
If the output rate is increased but the average unit costs also increase, we are experiencing:

Selected Answer:  
diseconomies of scale

Answers: market share erosion

economies of scale

 
diseconomies of scale

value-added accounting

 Question 38
0 out of 2 points
Aside from legal consideration, designers must also take into account the following:

Selected Answer:  
Ethical consideration

Answers: Ethical consideration

Environmental consideration

Human consideration
  
All of the above

 Question 39
2 out of 2 points
Which of the following would tend to reduce effective capacity?

Selected Answer:  
greater variety in the product line

Answers: suppliers that provide more reliable delivery performance

employees that are fully trained

improved production quality

 
greater variety in the product line

 Question 40
2 out of 2 points
The utilization of online payment services that ensure simple instructions, convenient and easy
to manipulate in order to complete transactions demonstrates this characteristic of a service
system.

Selected Answer:  
Being user-friendly

Answers:  
Being user-friendly

Being easy to sustain

Having effective linkages between back- and front-of-the-house

operations

Having value that is obvious to the customer

 Question 41
2 out of 2 points
Which of the following would NOT be a potential upside in a decision to outsource?

Selected Answer:  
disclosure of proprietary information to supplier

Answers: increased total production capacity

potential to lower fixed costs

 supplier may have greater expertise to do the outsourced work

 
disclosure of proprietary information to supplier

 Question 42
3 out of 3 points
The owner of a greenhouse and nursery is considering whether to spend P60,000 to acquire the
licensing rights to grow a new variety of rosebush, which she could then sell for P60 each. Per-
unit variable cost would be P30. What would the profit be if she were to produce and sell 5,000
rosebushes?

Selected Answer:  
P90,000

Answers:  
P90,000

150,000

100,000

300,000

 Question 43
3 out of 3 points
Find efficiency if Effective capacity is equal to 90 units per day, Design capacity is 100 units per
day and utilization is equal to 63%.

Selected Answer:  
70%

Answers: 10%

35%

 
70%

90%

 Question 44
2 out of 2 points
Reliability involves products functioning based on its intended purpose and not easily affected
by environmental factors such as heat, temperature etc. This suggests a:

Selected Answer:  
Robust Design
 Answers: Degree of newness

Delayed Differentiation

Modular Design

 
Robust Design

 Question 45
2 out of 2 points
Applicants at a multinational fast-food chain must go through several recruitment steps. The
managers have observed that it is typically the case that the waiting line at the interview station
is the longest. This would seem to suggest that the interview station is the ___________ in the
recruitment process.

Selected Answer:  
bottleneck

Answers: capacity cushion

first station

 
bottleneck

diseconomy of scale

 Question 46
2 out of 2 points
The task to construct prototypes is the responsibility of the following EXCEPT:

Selected Answer:  
Accounting

Answers:  
Accounting

Engineering

Marketing

Operations

 Question 47
2 out of 2 points
Food products must be designed based on local tastes & preferences. This incorporates what
consideration or factor?
 Selected Answer:  
Cultural

Answers:  
Cultural

Ethical

Legal

Sustainability

 Question 48
2 out of 2 points
Which of the following is NOT a reason why capacity decisions are so important?

Selected Answer:  
Capacity chunks can be added or deleted quickly and
inexpensively

Answers: Capacity affects operating costs

Capacity is a major determinant of initial costs

Capacity is a long-term commitment of resources

 
Capacity chunks can be added or deleted quickly and
inexpensively

 Question 1
2.32 out of 2.32 points
The primary difference between seasonality and cycles is:

Selected Answer:  
the duration of the repeating patterns

Answers:  
the duration of the repeating patterns

the magnitude of the variation

the ability to attribute the pattern to a

cause

the direction of the movement

there are only 4 seasons but 30 cycles

 Question 2
 2.32 out of 2.32 points
Given an actual demand of 105, a forecasted value of 97, and an alpha of .4, the simple
exponential smoothing forecast for the next period would be:

Selected Answer:  
100.2

Answers: 80.8

93.8

 
100.2

101.8

108.2

 Question 3
0 out of 2.32 points
Henry Ford is noted for his contributions to:

Selected Answer:  
scientific management

Answers: standardization of parts

statistical quality control

 
assembly line operations

scientific management

time and motion studies

 Question 4
0 out of 2.32 points
The first step in forecasting is:

Selected Answer:  
determine what data is available

Answers: determine what data is available

 
decide what to forecast

evaluate and analyze appropriate data

 select and test the forecast model

establish the forecast accuracy requirements

 Question 5
2.32 out of 2.32 points
Which of the following does NOT relate to system design?

Selected Answer:  
inventory management

Answers: altering the system capacity

location of facilities

 
inventory management

selection and acquisition of equipment

physical arrangement of departments

 Question 6
2.32 out of 2.32 points
Dealing with the fact that certain aspects of any management situation are more important
than others is called:

Selected Answer:  
recognition of
priorities

Answers: analysis of tradeoffs

sensitivity analysis

 
recognition of
priorities

analysis of variance

decision table

 Question 7
2.32 out of 2.32 points
Which of the following statements is TRUE?

Selected  
Answer:
Almost all services and almost all goods are a mixture of a service and a
tangible product.
 Answers:  
Almost all services and almost all goods are a mixture of a service and a
tangible product.

A pure good has no tangible product component.

A pure service has only a tangible product component.

There is no such thing as a pure good.

None of the above is a true statement.

 Question 8
2.32 out of 2.32 points
The dean of a school of business is forecasting total student enrollment for this year's summer
session classes based on the following historical data: 4 years ago = 2,200; 3 years ago = 2,400;
2 years ago = 2,800 and 1 year ago = 3000. What is this year's forecast using a three-year simple
moving average?

Selected Answer:  
2,733

Answers:  
2,733

2,667

2,600

2,500

2,333

 Question 9
2.32 out of 2.32 points
Which of the following services is least likely to be unique, i.e., customized to a particular
individual's needs?

Selected Answer:  
elementary education

Answers: dental care

hairdressing

legal services

 
elementary education
 computer consulting

 Question 10
2.32 out of 2.32 points
Which of the following is NOT a typical attribute of goods?

Selected Answer:  
aspects of quality difficult to measure

Answers: output can be inventoried

often easy to automate

 
aspects of quality difficult to measure

output can be resold

production and consumption are separate

 Question 11
0 out of 2.32 points
Demand for a certain product is forecast to be 800 units per month, averaged over all 12
months of the year. The product follows a seasonal pattern, for which the January monthly
index is 1.25. What is the seasonally-adjusted sales forecast for January?

Selected Answer:  
640 units

Answers: 640 units

798.75 unit

800 units

 
1000 units

1,200 units

 Question 12
2.32 out of 2.32 points
Which of the following features would NOT generally be considered common to all forecasts?

Selected  
Answer:
Historical data is available on which to base the forecast.

Answers: Assumption of a stable underlying causal system

Actual results will differ somewhat from predicted values.

  
Historical data is available on which to base the forecast.

Forecasts for groups of items tend to be more accurate than forecasts for
individual items.

Accuracy decreases as the time horizon increases.

 Question 13
0 out of 2.32 points
Given forecast errors of 5, 2, -4 and 3, what is the tracking signal?

Selected Answer:  
1.33

Answers:  
1.71

1.33

1.5

0.75

 Question 14
2.32 out of 2.32 points
Gradual, long-term movement in time series data is called:

Selected Answer:  
trend

Answers: seasonal variation

cycles

irregular variation

 
trend

random variation

 Question 15
2.32 out of 2.32 points
Suppose that Rachel's company uses exponential smoothing to make forecasts. Further,
suppose that last period's demand forecast was for 20,000 units, and last period's actual
demand was 21,000 units. Rachel's company uses a smoothing constant (α) equal to 40%. What
should be the forecast for this period?
 Selected Answer:  
20,400

Answers: 20,000

21,000

20,600

 
20,400

19,600

 Question 16
0 out of 2.32 points
The dean of a school of business is forecasting total student enrollment for this year's summer
session classes based on the following historical data: 4 years ago = 2,000; 3 years ago = 2,200;
2 years ago = 2,800 and 1 year ago = 3000. What is this year's forecast using a three-year
weighted moving average with weights of 0.6, 0.3, and 0.1?

Selected Answer:  
2,460

Answers:  
2,860

3,600

3,240

2,640

2,460

 Question 17
0 out of 2.32 points
Measurements taken at various points in the transformation process for control purposes are
called:

Selected Answer:  
plans

Answers: plans

directions

controls

 
 feedback

budgets

 Question 18
2.32 out of 2.32 points
Averaging techniques are useful for:

Selected Answer:  
smoothing out fluctuations in time series

Answers: distinguishing between random and non-random

variations

 
smoothing out fluctuations in time series

eliminating historical data

providing accuracy in forecasts

average people

 Question 19
2.32 out of 2.32 points
Which of the following statements is INCORRECT?

Selected  
Answer:
The naive approach to forecasting requires a linear trend line.

Answers: The shorter the forecast period, the more accurately the forecasts tend to
track what actually happens.

Forecasts based on an average tend to exhibit less variability than the original
data.

 
The naive approach to forecasting requires a linear trend line.

The naive forecast can serve as a quick and easy standard of comparison
against which to judge the cost and accuracy of other techniques.

In order to update a moving average forecast, the values of each data point in
the average must be known.

 Question 20
2.32 out of 2.32 points
Suppose that you are using the naïve forecasting method with trend to forecast sales. Sales
have been increasing by 10% per week. Two weeks ago, sales amounted to $100. What should
your forecast be for this week?
 Selected Answer:  
$121

Answers: $100

$10

$110

 
$121

$120

 Question 21
2.32 out of 2.32 points
Which of the following is NOT a benefit of using models in decision making?

Selected  
Answer:
They force the decision maker to take into account qualitative issues such as
personalities and emotions.

Answers: They provide a standardized format for analyzing a problem.

They serve as a consistent tool for evaluation.

They are easy to use and less expensive than dealing with the actual
situation.

 
They force the decision maker to take into account qualitative issues such as
personalities and emotions.

They offer insights into fundamental issues at play in a decision-making

setting.

 Question 22
2.32 out of 2.32 points
The "Father of Scientific Management" is:

Selected Answer:  
Frederick W. Taylor

Answers: Henry Ford

 
Frederick W. Taylor

W. Edwards Deming
 Frank Gilbreth

just a figure of speech, not a reference to a

person

 Question 23
0 out of 2.32 points
Given forecast errors of 4, 8, and -3, what is the mean absolute deviation?

Selected Answer:  
4

Answers: 4

 
5

12

 Question 24
2.32 out of 2.32 points
A firm has the following order history over the last 6 months from January to June: 120, 95, 100,
75, 100 and 50. What would be the 4-month simple moving average forecast for July?

Selected Answer:  
81.25

Answers: 97.5

325

90

 
81.25

50

 Question 25
2.32 out of 2.32 points
In order to increase the responsiveness of a forecast made using the moving average
technique, the number of data points in the average should be:

Selected Answer:  
decreased
 Answers:  
decreased

increased

multiplied by a larger alpha

multiplied by a smaller alpha

eliminated if the MAD is greater than the

MSE

 Question 26
2.32 out of 2.32 points
Some companies attempt to maximize the revenue they receive from fixed operating capacity
by influencing demands through price manipulation. This is an example of:

Selected Answer:  
revenue management

Answers: illegal price discrimination

collusion

volume analysis

 
revenue management

outsourcing

 Question 27
2.32 out of 2.32 points
Which of the following refers to service and production processes that use resources in ways
that do NOT harm ecological systems?

Selected Answer:  
sustainability

Answers:  
sustainability

supportability

marketability

perishability

transportability

 Question 28
 2.32 out of 2.32 points
A seasonal index for a monthly series is about to be calculated on the basis of three years'
accumulation of data. The three previous July values were 110, 150, and 160. The average
overall months is 190. The approximate seasonal index for July is

Selected Answer:  
0.737

Answers: 0.487

0.684

 
0.737

1.462

2.053

 Question 29
2.32 out of 2.32 points
Simple exponential smoothing is being used to forecast demand. The previous forecast of 66
turned out to be four units less than actual demand. The next forecast is 66.6, implying a
smoothing constant, alpha, equal to:

Selected Answer:  
.15

Answers: .01

.10

 
.15

.20

.60

 Question 30
2.32 out of 2.32 points
Forecasting is NOT a function which contributes to:

Selected Answer:  
deciding how bonuses should be allocated

Answers: deciding which business market to pursue

deciding which product to produce

  
deciding how bonuses should be allocated

deciding how much inventory to carry

deciding how many people to hire

 Question 31
2.32 out of 2.32 points
Which of the following will more likely locate near their customers?

Selected Answer:  
a medical clinic

Answers: an automobile manufacturer

an aluminum manufacturer

an insurance company headquarters

 
a medical clinic

All of the above will tend to locate near their customers.

 Question 32
0 out of 2.32 points
Which of the following are the primary functions of all organizations?

Selected Answer:  
operations, marketing, and human resources

Answers: operations, marketing, and human resources

marketing, human resources, and finance/accounting

sales, quality control, and operations

 
marketing, operations, and finance/accounting

research and development, finance/accounting, and purchasing

 Question 33
2.32 out of 2.32 points
Suppose sales of Go Dong Hae Co. from Days 1-5 are as follows: 24, 31, 27,29, and 25 while
forecasts for Days 1-5 are 25, 30, 26, 31, and 22 respectively. What is the mean squared error of
the forecast?

Selected Answer:  
 4

Answers: 81

16

 
4

 Question 34
0 out of 2.32 points
An operations task performed at Starbucks is:

Selected Answer:  
all of the above

Answers: borrowing funds to build a new restaurant

advertising changes in the restaurant

menu

calculating restaurant profit and loss

 
preparing employee schedules

all of the above

 Question 35
0 out of 2.32 points
Which of the following statements is TRUE?

Selected  
Answer:
A major difference between forecast accuracy measures MAD and MSE is that
MAD is influenced much more by large forecast errors than by small errors.

Answers: The naive forecast is limited in its application to series that reflect no trend or
seasonality.

A moving average forecast tends to be more responsive to changes in the data

series when more data points are included in the average.

Because of random variations, forecasts are never 100% accurate.

A major difference between forecast accuracy measures MAD and MSE is that
MAD is influenced much more by large forecast errors than by small errors.
  
Long range forecasts expressed in sales dollars are more meaningful to top
managers than to managers at the operations level.

 Question 36
0 out of 2.32 points
The dean of a school of business is forecasting total student enrollment for this year's summer
session classes based on the following historical data: 4 years ago = 2,000; 3 years ago = 2,600;
2 years ago = 2,800 and 1 year ago = 3,200. What is this year's forecast using the naïve method?

Selected Answer:  
3,200

Answers: 2,800

3,000

3,200

3,400

 
3,600

 Question 37
2.32 out of 2.32 points
Which of the following would be an advantage of using a sales force composite to develop a
demand forecast?

Selected  
Answer:
The sales staff is often aware of customers' future plans.

Answers: The sales staff is least affected by changing customer needs.

The sales force can easily distinguish between customer desires and
probable actions.

 
The sales staff is often aware of customers' future plans.

Salespeople are least likely to be influenced by recent events.

 Question 38
0 out of 2.32 points
Which of the following statements is INCORRECT?

Selected  
Answer:
In order to compute seasonal relatives, the trend of past data must be
computed or known which means that for brand new products this approach
 can't be used.

Answers: In order to compute seasonal relatives, the trend of past data must be
computed or known which means that for brand new products this approach
can't be used.

Removing the seasonal component from a data series (de-seasonalizing) can

be accomplished by dividing each data point by its appropriate seasonal
relative.

The sample standard deviation of forecast error, is equal to the square root of
MSE.

 
MAD is equal to the square root of MSE which is why we calculate the easier
MSE and then calculate the more difficult Mean Absolute Deviation.

A tracking signal focuses on the ratio of cumulative forecast error to the

corresponding value of MAD.

 Question 39
0 out of 2.32 points
Among the ethical and social challenges facing operations managers are

Selected Answer:  
all of the above

Answers: honoring financial commitments

 
maintaining a clean environment

developing low-cost products

providing an efficient workplace

all of the above

 Question 40
2.32 out of 2.32 points
Budgeting, paying the bills, and collection of funds are activities associated with the

Selected Answer:  
finance/accounting function

Answers: management function

control function

 
 finance/accounting function

production/operations function

staffing function

 Question 41
2.32 out of 2.32 points
Suppose a four-period weighted average is being used to forecast demand. Weights for the
periods are as follows: wt-4 = 0.1, wt-3 = 0.2, wt-2 = 0.3 and wt-1 = 0.4. Demand observed in the
previous four periods was as follows: At-4 = 410, At-3 = 390, At-2 = 400, At-1 = 420. What will be
the demand forecast for period t?

Selected Answer:  
407

Answers: 402

399

397

 
407

393

 Question 42
2.32 out of 2.32 points
Which of the following is an example of globalization of operations strategy?

Selected Answer:  
A Chinese manufacturer, Haier, now operates plants in the United States.

Answers: Boeing's Dreamliner has engines with higher fuel/payload efficiency.

Ford's new auto models have dent-resistant panels.

 
A Chinese manufacturer, Haier, now operates plants in the United States.

Hard Rock Café provides an "experience differentiation" at its restaurants.

All of the above are examples.

 Question 43
2.32 out of 2.32 points
Detecting non-randomness in errors can be done using:

Selected Answer:  
 Control Charts

Answers: MSE

MAPE

 
Control Charts

Correlation Coefficients

MAD