Production Management First Exam, Nov 9 2009

You name:
For the following two parts of the exam, fill your answers in the following tables:
• Insert your answer of the T/F part here:
# 1 2 3 4 5 6 7 8 9 10 11 12 13
Answer
# 14 15 16 17 18 19 20 21 22 23 24 25
Answer

• Mark your answers by (X) for the multiple choice questions here:
# A B C D # A B C D
1 11
2 12
3 13
4 14
5 15
6 16
7 17
8 18
9 19
10 20

Part 1: Mark the following statements by True (T) or False (F): (10 points).

1) Operations management refers to the direction and control of inputs that transform processes into
products and services. T
2) The three main line functions of any business include Operations, Finance and Marketing. T
3) A process involves transforming inputs into outputs. T
4) Inputs to a process can include human resources. T
5) At the level of the firm, service providers offer just services and manufacturers offer just products. F
6) The break-even quantity is the volume at which the total revenue equals total cost. T

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7) The variable cost is the portion of total cost that remains constant regardless of changes in levels of
production. F
8) Decision theory is a general approach to decision making when the outcomes associated with
alternatives are often in doubt. T
9) The square nodes in a decision tree represent the alternatives in a sequential decision situation. F
10) Petroleum refineries typically use continuous flow processes. T

11) In a service process, output can be inventoried. F

12) Manufacturing processes tend to be capital intensive, while service processes tend to be more labor
intensive. T
13) Quality is more easily measured in a service process than in a manufacturing process. F
14) Manufacturing processes usually have long response times compared to service processes. T
15) Contact with the customer is usually higher in a manufacturing process than in a service process.
F
16) A supply chain is the cumulative work of a firm's processes. T
17) Flexibility is a possible competitive priority. T
18) Job processes generally have higher volumes than batch processes. F
19) Assemble-to-order strategy produces a wide variety of products from relatively few assemblies
and components after orders are received. T
20) Consistent quality is not important to today's consumers. F
21) Productivity is measured as input divided by output. F
22) Resource flexibility determines whether resources are organized around products or processes. F
23) Physical presence does not occur in a manufacturing service process. F
24) Back office work is typically routine, with many steps having considerable divergence. F
25) A job process has a relatively high level of customization. T

Part2: Circle the most suitable choice that best completes the statements or answers: (20 points)
1) Manufacturing processes usually have:
A) high levels of customer contact. B) output that cannot be inventoried.
C) low levels of capital intensity. D) physical, durable output.

2) The framework for carrying out all of an organization's functions is:

A) the corporate strategy. B) the market analysis.
C) the competitive priority. D) the organizational design.

3) An ethnic restaurant, in serving a lovely, four-hour, seven-course dinner for two for $250, is
giving particular emphasis to which dimension of competitive priorities?
A) Delivery speed B) Top quality
C) Consistent quality D) Price

4) Using an airline example for competitive priorities, the process capability of handling service
needs of all market segments and promotional programs would be best described by:
A) delivery speed. B) variety.
C) consistent quality. D) top quality.

5) A company's ability to reconfigure processes to meet diverse types of customer needs would
be best described by:

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A) top quality. B) variety.
C) delivery speed. D) customization.

6) A company's ability to quickly introduce a new service or product would be best described
as:
A) development speed. B) variety.
C) volume flexibility. D) consistent quality.

7) In an assembly operation at a furniture factory, six employees assembled an average of 450

custom cabinet drawers per 5-day week. What is the labor productivity of this operation?
A) 75 chairs per worker per day B) 90 chairs per worker per day
C) 15 chairs per worker per day D) 20 chairs per worker per day

8) The details of weekly output and input for a fabrication process are as follows: output is 400
units, with a standard selling price of $100 per unit. For the week, total labor costs are: 10
workers at 40 hours for the week, paid $15 per hour. Total material costs for the 400 units are
$5,000. Weekly overhead is charged at the rate of 1.5 times the labor costs. What is the
multifactor productivity for the week?
A) 0.02 B) 1.50
C) 2.00 D) 0.75

9) The break-even quantity for a certain kitchen appliance is 6000 units. The selling price is $10
per unit, and the variable cost is $4 per unit. What must be the fixed cost to break even at 6000
units?
A) Between $40,001 and $45,000 B) Above $45,000
C) Between $35,000 and $40,000 D) Less than $35,000

10) Service processes usually have:

A) low levels of customer contact. B) output that can be inventoried.
C) physical, durable output. D) low levels of capital intensity.

11) Budgeting, recruiting, and scheduling are examples of these types of processes.
A) Support process B) Development
C) System D) Core process

12) A company must decide if it will make or buy an item it needs. The company can make the
item for $10 per unit, but must invest $15,000 in tooling to do so. An outside firm has quoted a
total price of $12 per unit to supply the quantity required (assume their fixed costs are included
in the quoted price). What is the break-even quantity in this situation?
A) 7,000 units B) 6,500 units
C) 7,500 units D) 7,250 units

13) When using decision tree analysis:

A) probabilities for all branches leaving a chance B) round nodes represent decision points.
node must sum to 1.0.
C) the sum of the expected payoffs must always D) there must be more square nodes than round
equal zero. nodes.

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Consider the following project activities and answer the next 5 questions:
Activity Predecessor Time(weeks)
A -- 8
B A 6
C -- 4
D C 9
E A 11
F B 3
G D,E,F 1

14) Using the above table, what is the earliest completion time for this project?
A) 20 weeks B) 19 weeks
C) 18 weeks D) 21 weeks

15) Using the above table, what is the largest amount of slack that any activity in the project
has?
A) Two weeks B) Six weeks
C) Four weeks D) Zero weeks

16) Using the above table, what is the minimum number of activities that would have to be
delayed to cause an increase in the project's earliest completion date?
A) One activity B) Two activities
C) Four or more activities D) Three activities

17) Using the above table, what is the early start time for activity D?
A) Week 9 B) Week 0
C) Week 4 D) Week 7

18) Using the above table, what is the latest finish time for activity C?
A) Week 4 B) Week 10
C) Week 6 D) Week 8

19) A process that is primarily back office is:

A) A taxi driver. B) The hostess at a restaurant.
C) The payroll clerk that calculates your D) Loan officer at a bank.
paycheck.

20) A new product is being considered that will require $45,000 in fixed costs per year. Variable
costs per unit are estimated to be $12.72. The firm wants to break even if 8000 units are
produced and sold per year. What should be the price?
A) Less than $16.00 B) Between $18.00 and $18.99
C) Between $16.00 and $16.99 D) Between $17.00 and $17.99