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Chapter 1: Production and Operation Management

Self Assessment Questions


1. A strategy which aims to produce a perfect product which will suit everybody is called:
a) Marketing orientation.
b) Production orientation.
c) Product orientation.
d) Perfection orientation.
2. A strategy which aims to produce the maximum amount of goods at the lowest possible price
is called:
a) Production orientation.
b) Selling orientation.
c) Societal marketing.
d) Cost orientation.
3. Someone who has responsibility for marketing decisions concerning a group of products is:
a) A marketing manager
b) A brand manager.
c) A sales manager.
d) A product manager.
4. Which of the following is true?
a) Value is always lower than price.
b) Value is what consumers are prepared to pay.
c) Cost is always lower than price.
d) Price is always lower than value.
5. The marketing concept should be central to business strategy because:
a) Business strategy is aimed at customers.
b) Companies have a moral responsibility to care for their customers.
c) Marketing enables firms to persuade their customers to buy things they do not really
need.
d) Customers will only spend money with firms that look after their needs.
6. Demand is created when:
a) A need is identified.
b) A significant group of people want to buy something.
c) People who can afford something want to buy it.
d) Marketers persuade people to want something.
7. Production orientation is about creating the ideal product.
a) True
b) False
8. Marketing is the process of managing exchange.
a) True
b) False

9. Sales orientation is the view that customers will not ordinarily buy enough of the firm's
products unless there is an aggressive sales campaign.
a) True
b) False
10. The marketing mix consists of product, price, place, promotion, people, process and payment.
a) True
b) False
11. Customer centrality means providing everything the customer needs and wants.
a) True
b) False
12. A brand manager is responsible for all the decisions relating to a specific brand.
a) True
b) False
13. Publics are organisations or individuals that have actual or potential influence on the
company's sales.
a) True
b) False
14. A need is essential: a want is a luxury.
a) True
b) False
15. Relationship marketing focuses on the lifetime value of the customer.
a) True
b) False
16. Societal marketing is about the needs of society as a whole.
a) True
b) False
17. The paradigm that leads to more complex products at ever-increasing prices is _______.
a) Product orientation
b) Production orientation
c) Marketing orientation
d) Sales orientation
18. Someone who is responsible for finding out what individual customers need, and explaining
how the firm's products meet those needs, is a _________.
a) Brand manager
b) Salesperson
c) Sales manager
d) Market research manager
19. Someone who controls media purchases and deals with advertising agencies is ___________.
a) An advertising manager
b) A brand manager

c) A public relations manager


d) A sales manager
20. A specific satisfier for a need is called a _____.
a) Product
b) Demand
c) Want
d) Market
Answers for Self Assessment Questions
1. (c)
2. (a)
3. (d)
6. (c)
7. (b)
8. (a)
11. (b)
12. (a)
13. (b)
16. (a)
17. (a)
18. (b)

4.(b)
9. (a)
14. (b)
19. (a)

5. (d)
10. (b)
15. (a)
20. (c)

Chapter 2: Production System


Self Assessment Questions
1. Which of the following provides the best definition of information?
a) Computer hardware
b) Data processed for a purpose
c) Computer software
d) Transaction Data
2. What are the four stages of Simons model of decision making?
a)
b)
c)
d)

Intelligence, design, choice, implementation


Intelligence, design, computation, implementation
Information, design, choice, implementation
Intelligence, data, choice, implementation

3. Which of the following best describes strategic planning?


a) Time horizon: Long-term
Level of detail: Summarised
Source: Mainly internal
b) Level of detail: Summarised
Source: Mainly external
Degree of certainty: Certain
c) Time horizon: Long-term
Level of detail: Summarised
Degree of certainty: Uncertain
d) Time horizon: Long-term
Level of detail: Highly detailed
Source: Mainly external
4. Which of the following best describes the decision making required in dealing with customer
enquiries?
a)
b)
c)
d)

Unstructured, strategic
Unstructured, operational
Structured, strategic
Structured, operational

5. One way to decouple the production system and the sales system is:
a) To introduce a feedback loop
b) To treat the systems as black boxes
c) To decrease sales
d) To introduce an inventory
6. Which of the following decision is least likely to be supported by a management information
system?
a) Company reorganisation
b) Analysis of performance

c) Allocating budgets
d) Dealing with customer enquiries
7. Which of the following best describes formal information?
a)
b)
c)
d)

Produced by standard procedures. Passed by word of mouth


Produced by standard procedures. Objective
Objective. Passed by word of mouth
Subjective. Based on estimates

8. Psychologists use the term ______ to describe the way that individuals absorb information.
a)
b)
c)
d)

Cognitive style
Intelligence Quotient
Human Computer Interaction
Data Processing

9. Structured decisions are also called ______ decisions.


a) Strategic
b) Programmable
c) Read-intensive
d) Non-programmable
10. Inputs come from and outputs are transferred to the ______ of a system.
a)
b)
c)
d)

Environment
Sub-system
Comparator
Effector

11. Two systems are described as ______ if a change in the outputs of one causes a substantial
change in the state of the other.
a)
b)
c)
d)

Highly decoupled
Highly coupled
Black boxes
Sub-systems

12. The decision making carried out by the most senior management is called Operational
Planning and Control.
a) True
b) False
13. The decision making carried out by middle management is called Strategic Planning.
a) True
b) False
14. The decision making carried out by the most junior levels of management is called
Operational Planning and Control.

a) True
b) False
15. Decisions which are governed by clear rules are known as unstructured decisions.
a) True
b) False
16. Information produced for a business has an associated cost.
a) True
b) False
17. It is not possible to measure the benefits of information in monetary terms.
a) True
b) False
18. A system that has little or no links to its environment is called a closed system.
a) True
b) False
19. If all sub-systems are optimised then the total system must be optimised.
a) True
b) False
20. In a business continuity plan which of the following notification directories is the MOST
important?
a) Equipment and supply vendors
b) Insurance company agents
c) Contract personnel services
d) A prioritized contact list
Answers for Self Assessment Questions
1. (b)
2. (a)
3. (c)
6. (a)
7. (b)
8. (a)
11. (b)
12. (b)
13. (b)
16. (a)
17. (a)
18. (a)

4.(b)
9. (b)
14. (a)
19. (b)

5. (d)
10. (a)
15. (b)
20. (d)

Chapter 3: Capacity Planning


Self Assessment Questions
1. Long-term capacity planning deals with which of the following factors?
a) Overtime budgets
b) Workforce size
c) Inventories
d) Investment in new facilities
2. Input measures of capacity are preferred when there is/are:
a) Service processes.
b) High-volume processes.
c) Flexible flow processes.
d) Low customization.
3. A measure of the reserve capacity a process has to handle in unexpected increases in demand
is the:
a) Capacity utilization rate.
b) Capacity cushion.
c) Capacity bottleneck.
d) Capacity constraint limit.
4. In general, a less capital-intensive industry such as a hotel chain would do well with a
utilization rate of:
a) Approximately 18%.
b) 30-40%.
c) 60-70%.
d) 100%.
5. An expansionist capacity strategy is NOT indicated when:
a) A preemptive marketing strategy is used.
b) Expansion will lead to economies of scale.
c) Expansion is made in large increments.
d) Capacity expansion is consistently ahead of demand.
6. Chang and Chang observe that the competition is increasing the size of its warehouses. They
have decided to do the same. They are following a ____________ strategy.
a) Theory of Constraints
b) Follow the leader
c) Expansionist
d) Wait-and-see
7. When evaluating alternative capacity decisions, qualitative concerns exclude:
a) Cash flow.
b) Uncertainties about demand.
c) Competitive reaction.
d) Technology change.
8. Efficiency is given by

a)
b)
c)
d)

Actual output divided by design capacity.


Capacity divided by utilization.
Effective capacity divided by actual output.
Actual output divided by effective capacity.

9. The maximum output of a system in a given period is called the


a) Efficiency.
b) Effective capacity.
c) Design capacity.
d) Break-even point.
10. Costs that continue even if no units are produced are called
a) Variable costs.
b) Mixed costs.
c) Marginal costs.
d) Fixed costs.
11. A facility with a design capacity of 1,000 units, an actual average of 800 units, and effective
capacity of 850 units has a utilization of _______ .
a) 85%
b) 80%
c) 125%
d) 94%
12. A facility with a design capacity of 1,000 units, an actual average of 800 units, and effective
capacity of 850 units has an efficiency of _________ .
a) 80%
b) 50%
c) 85%
d) 94%
13. The multiple product case of determining breakeven in dollars
a) Weights the variable cost of each product.
b) Weights the selling price of each product.
c) Weights the fixed cost attributable to each product.
d) Weights the contribution of each product.
14. When demand exceeds capacity, a firm should
a) Lower prices.
b) Add workers.
c) Temporarily lay-off workers.
d) Advertise.
15. Which of the following actions would be best if a firm faced highly seasonal demand for a
perishable product?
a) Hire and fire employees as demand fluctuates.
b) Build up inventory when demand is low.
c) Add warehouse and production building space to accommodate the highest period of
demand.
d) Offer a product with a complementary demand pattern.

16. The most aggressive and risky approach to capacity planning is


a) Capacity lags with incremental expansion.
b) Leading demand with one-step expansion.
c) Leading demand with incremental expansion.
d) Attempts to have an average capacity that straddles demand with incremental
expansion.
17. The basic break-even model
a) Demonstrates that the break-even point increases as output volume increases.
b) Demonstrates that fixed costs remain constant as output volume increases.
c) Demonstrates that total revenue is fixed as output volume increases.
d) Demonstrates that per unit variable costs vary as output volume increases.
18. The first steps of capacity planning and control do not include:
a) Identifying the alternative capacity plans?
b) Measuring aggregate demand and capacity?
c) Studying the effect of queueing theory
d) Choosing the most appropriate capacity plan?
19. Yield management is not especially useful where:
a) The service/product can be stored
b) Capacity is relatively fixed
c) The service cannot be sold in advance
d) The market can be fairly clearly segmented
20. Which of the following is not a measure of utilisation?
a) Uptime in a factory
b) Number of hours available for production
c) Room occupancy level in hotels
d) Load factor for aircraft
Answers for Self Assessment Questions
1. (d)
2. (c)
3. (b)
6. (b)
7. (a)
8. (d)
11. (b)
12. (d)
13. (d)
16. (b)
17. (b)
18. (c)

4.(c)
9. (c)
14. (b)
19. (a)

5. (b)
10. (d)
15. (d)
20. (b)

Chapter 4: Facility Planning


Self Assessment Questions
1. MRP stands for:
a) Master Resources Production
b) Management Reaction Planning
c) Materials Requirements Planning
d) Manufacturing Resource Planning
2. MPS stands for:
a) Master Planning System
b) Master Production Schedule
c) Material Production Schedule
d) Material Planning System
3. Closed Loop MRP means:
a) Actual inventory is counted regularly and adjustment made to the inventory records
b) Capacity and resource planning is included in the MRP logic
c) Unused materials are returned to stores and recorded back into the system
d) Actual sales are netted off the forecasts in the MPS
4. Optimized production technology (OPT) is a computer-based technique and tool which helps
to schedule production systems. Which of the following are not principles of OPT?
a) Capacity is king
b) Balance flow is what is required
c) Process batch should be variable
d) Bottlenecks govern throughput
5. Enterprise Resource Planning (ERP) has been criticised on a number of grounds. Which of the
following is not a common criticism of ERP?
a) It doesnt allow decisions and databases from all parts of the organisation to be
integrated
b) Implementation is expensive
c) The effect it has on businesses is disappointing
d) It can have a disruptive effect on the organisations operations
6. In MRP (Materials Requirements Planning) the Bill of Materials is:
a) The required output from a process over time
b) A list of required safety stock items
c) The sum of stock-on-hand and work-in-progress
d) The product structure showing where common parts are used
7. The outputs of a MRP II system are:
a) Sales order priorities / Bills of Materials / Material Requirement Plans
b) Material Requirement Plans / scheduled purchase orders / capacity requirement plans
c) Stock quantities / Bills of Materials / Master Production Schedule
d) Capacity requirement plans / stock quantities / stock locations
8. Three inputs for every MRP system are:

a)
b)
c)
d)

Sales forecast, delivery costs, capacity plan


Average replenishment time, re-order point, economic order quantity
Stock on hand, Master Production Schedule, Bill of Materials
Bill of Materials, sales forecast, sales history

9. Identify the best definition of planning.


a) The core activity of planners and planning departments.
b) Setting an organisation's objectives and the means of reaching them.
c) Devising ways of achieving the objectives of an organisation.
d) An integrated process in which plans are formulated, carried out and controlled.
10. Three levels of planning. What are they?
a) Top, middle and bottom
b) Headquarters, divisional and local
c) Operational, intermediate and strategic
d) None of these
11. What is the planning horizon?
a) The time ahead for which there is no information.
b) The time period within which uncertainty is very low.
c) The maximum time for which managers can make plans.
d) The time between making a plan and putting it into effect.
12. We identified several internal benefits of objectives, goals and a sense of mission. Which is
not included?
a) Basis of plans and decisions
b) Unity of direction
c) Basis to resolve disputes
d) None of the above.
13. What is measurementship?
a) Trying to agree low objectives so as to look good later
b) Discussing "the numbers" at every opportunity
c) Surveying by naval architects.
d) Collecting too much performance data
14. What three problems commonly hindering successful planning did we identify?
a) An oversized planning department; poor co-operation between managers and planners;
managers with little time to gather information.
b) Procedures unsuited to change; negative organisational culture; poor interpersonal
relationships.
c) Lack of planning expertise; little top management support; misuse of planning
specialists.
d) Conflict among objectives; impossibility of measuring outcomes; confusion between
means and ends.
15. What is the more formal term for what is known as 'Plan B'?
a) A contingency plan
b) A circumstantial plan

c) A catastrophe plan
d) A convergence plan
16. Good crisis management involves immediately decentralising control to a number of welltrained teams. They concentrate on speedy resolution of the crisis.
a) True
b) False
17. Demand for a given item is said to be dependent if
a) the item has several children
b) there is a deep bill of materials
c) the finished products are mostly services (rather than goods)
d) there is a clearly identifiable parent
18. Dependent demand and independent demand items differ in that
a) For any product, all components are dependent-demand items
b) The need for independent-demand items is forecasted
c) The need for dependent-demand items is calculated
d) All of the above are true
19. A master production schedule specifies
a) The financial resources required for production
b) What component is to be made, and when
c) What product is to be made, and when
d) The labor hours required for production
20. A master production schedule contains information about
a) Quantities and required delivery dates of all sub-assemblies
b) Quantities and required delivery dates of final products
c) Inventory on hand for each sub-assembly
d) Inventory on hand for each final product
Answers for Self Assessment Questions
1. (c)
2. (b)
3. (b)
6. (d)
7. (b)
8. (c)
11. (d)
12. (c)
13. (a)
16. (b)
17. (d)
18. (d)

4.(a)
9. (b)
14. (c)
19. (c)

5. (a)
10. (c)
15. (a)
20. (b)

Chapter 5: Material Management


Self Assessment Questions
1. Business cycle, price trends, National Economy are .
a) Micro Factors
b) Macro Factors
c) Controllable Factors
d) All of these
2. .also called part lists or building lists is the document generated at the
design stage.
a) MRP (Material Requirement Planning)
b) BOM (Bill of Materials)
c) MPS (Master Production Schedule)
d) None of these
3. is the scientific technique for planning the ordering and usage of
materials at various levels of production and for monitoring the stocks during these transaction.
a) MPS
b) MRP
c) BOM
d) None of these
4. is the time that elapses between issuing replenishment order and
receiving the material in stores.
a) Replenishment time
b) Lead time
c) Idle time
d) All of these
5. is the task of buying goods of right quality, in the right quantities, at the right
time and at the right price.
a) Supplying
b) Purchasing
c) Scrutinizing
d) None of these
6. Which is not a part of 5Rs of buying?
a) Right Quality
b) Right Quantity
c) Right Source
d) None of the above
7. Purchasing responsibilities can be divided into Buying, Clerical and ..division.
a) Packing
b) Traffic
c) Record
d) Follow up
8. The first activity of Purchasing cycle is
a) Communicating requirement to the purchase

b) Source Selection and development


c) Recognizing the need for procurement
d) Inspection of goods
9. Buying according to the requirements is called
a) Seasonal Buying
b) Hand to mouth buying
c) Scheduled Buying
d) Tender Buying
10. Procuring an item in staggering deliveries according to the delivery schedule finished to the
supplier by the buyer.
a) Seasonal Buying
b) Hand to mouth buying
c) Scheduled Buying
d) Tender Buying
e) Speculative Buying
11. Buying of the annual requirements of an item during its season.
a) Seasonal Buying
b) Hand to mouth buying
c) Scheduled Buying
d) Tender Buying
12. Raw Materials and WIP can be classified undera)
b)
c)
d)

Indirect Material
Direct Material
Finished Material
Standard Parts

13. ..are the basic materials which have not undergone any conversion since their
receipt from suppliers.
a) WIP
b) Raw Material
c) Finished Parts
d) Work Made Parts
14. __________ is concerned with the maximization of a firm's earnings after taxes.
a) Shareholder wealth maximization
b) Profit maximization
c) Stakeholder maximization
d) EPS maximization
15. What is the most appropriate goal of the firm?
a) Shareholder wealth maximization.
b) Profit maximization.
c) Stakeholder maximization.
d) EPS maximization.

16. Which of the following statements is correct regarding profit maximization as the primary
goal of the firm?
a) Profit maximization considers the firm's risk level.
b) Profit maximization will not lead to increasing short-term profits at the expense of
lowering expected future profits.
c) Profit maximization does consider the impact on individual shareholder's EPS.
d) Profit maximization is concerned more with maximizing net income than the stock price.
17. __________ is concerned with the branch of economics relating the behavior of principals and
their agents.
a) Financial management
b) Profit maximization
c) Agency theory
d) Social responsibility
18. Which of the following statements is not correct regarding earnings per share (EPS)
maximization as the primary goal of the firm?
a) EPS maximization ignores the firm's risk level.
b) EPS maximization does not specify the timing or duration of expected EPS.
c) EPS maximization naturally requires all earnings to be retained.
d) EPS maximization is concerned with maximizing net income.
19. __________ is concerned with the maximization of a firm's stock price.
a) Shareholder wealth maximization
b) Profit maximization
c) Stakeholder welfare maximization
d) EPS maximization
20. Corporate governance success includes three key groups. Which of the following represents
these three groups?
a) Suppliers, managers, and customers.
b) Board of Directors, executive officers, and common shareholders.
c) Suppliers, employees, and customers.
d) Common shareholders, managers, and employees.
Answers for Self Assessment Questions
1. (b)
2. (b)
3. (b)
6. (d)
7. (b)
8. (c)
11. (a)
12. (b)
13. (b)
16. (d)
17. (c)
18. (d)

4.(b)
9. (b)
14. (b)
19. (a)

5. (b)
10. (c)
15. (a)
20. (b)

Chapter 6: Material Requirement Planning (MRP)


Self Assessment Questions
1. _________ establishes the overall production, workforce, and inventory levels.
a) Production activity control
b) Distribution requirements planning
c) Master production schedule
d) Sale and operations planning
2. _________ determines when specific products will be produced, when specific customer orders
will be fulfilled, and what capabilities remain available to satisfy unexpected demand.
a) Sale and operations planning
b) Material requirements planning
c) Distribution requirements planning
d) Master production schedule
3. ____________ calculates the timing and quantities of material orders needed to support the
master schedule.
a) Sale and operations planning
b) Distribution requirements planning
c) Material requirements planning
d) Master production schedule
4. ___________ is a time phased approach to managing the physical distribution environment
with dependent demand logic.
a) Master production schedule
b) Distribution requirements planning
c) Sale and operations planning
d) Material requirements planning
5. The master production schedule requires all of the following input except
a) Projected inventory levels
b) Production quantities
c) Forecasted demand
d) All of the above are inputs into MSP.
6. ________ can be seen as the amount of new inventory created by production.
a) Scheduled receipts
b) Gross requirements
c) Planning horizon
d) Available to promise
7. __________ is the amount of materials necessary to support production of the required output
in the next higher level in the bill of materials.
a) Planning horizon
b) Available to promise
c) Net requirements
d) Gross requirements

8. __________ is the amount of new orders necessary to support production of the required
output in the next higher level in the bill of materials.
a) Scheduled receipts
b) Available to promise
c) Projected ending inventory
d) Planning horizon
9. The master production schedule is the schedule of production for what level product/material?
a) Level 0
b) Level 1
c) Level 2
d) Level 3
10. In a distribution requirements planning environment, forecasted demand at the plant level is
equal to ______ in the distribution center level.
a) Scheduled receipts
b) Planned receipts
c) Planned orders
d) None of the above
11. The list of quantities of components, ingredients, and materials required to produce a
product is the
a) Bill-of-materials.
b) Engineering change notice.
c) Purchase order.
d) Master schedule.
12. ____________ allows a segment of the master schedule to be designated as "not to be
rescheduled."
a) Pegging
b) Regenerative MRP
c) Time fence
d) System nervousness
13. A lot-sizing technique that generates exactly what was required to meet the plan is
a) The Wagner-Whitin algorithm.
b) Economic order quantity.
c) Lot-for-lot.
d) Part period balancing.
14. Breaking up the order and running part of it ahead of schedule is known as
a) Operations splitting.
b) Lot splitting.
c) Pegging.
d) Overlapping.
15. The difference between a gross material requirements plan (gross MRP) and a net material
requirements plan (net MRP) is

a) The net MRP includes consideration of the inventory on hand, whereas the gross MRP
does not.
b) The gross MRP doesn't take taxes into account, whereas the net MRP includes the tax
considerations.
c) The gross MRP may not be computerized, but the net MRP must be computerized.
d) The gross MRP includes consideration of the inventory on hand, whereas the net MRP
does not.
16. A phantom bill-of-materials is a bill-of-materials developed for
a) A subassembly that exists only temporarily.
b) A final product for which production is to be discontinued.
c) The purpose of grouping subassemblies when we wish to issue "kits" for later use.
d) A module that is a major component of a final product.
17. Which of the following lot-sizing techniques is likely to prove the most complex to use?
a) Part period balancing (PPB)
b) The Wagner-Whitin algorithm
c) Economic order quantity (EOQ)
d) Lot-for-lot
18. When a bill-of-materials is used in order to assign an artificial parent to a bill-of-materials, it
is usually called a
a) Phantom bill-of-materials.
b) Planning bill-of-materials.
c) Modular bill-of-materials.
d) Pick list.
19. The operations manager has several tools available to deal with MRP system nervousness.
Those tools are
a) Pseudo bills and kits.
b) Time fences and pegging.
c) Buckets with back flush.
d) Net and gross requirements.
20. An MRP system that provides feedback to the capacity plan, master production schedule, and
production plans is called
a) System nervousness.
b) Closed-loop mrp.
c) Lot-sizing.
d) Load report.
Answers for Self Assessment Questions
1. (d)
2. (d)
3. (c)
6. (d)
7. (d)
8. (a)
11. (a)
12. (c)
13. (c)
16. (a)
17. (b)
18. (b)

4.(b)
9. (a)
14. (b)
19. (b)

5. (d)
10. (c)
15. (a)
20. (b)

Chapter 7: Work Measurement


Self Assessment Questions
1. Managers can use work standards in which of the following ways?
a) Scheduling
b) Motivating workers
c) Capacity planning
d) All of the above
2. Formal methods of work measurement exclude which of the following?
a) Time study method
b) Work sampling method
c) Predetermined data approach
d) Systems approach
3. Which of the following are reasons why an allowance should be added to determine the
standard time?
a) Unavoidable delay
b) Rest period
c) Fatigue
d) All of the above
4. Assume that a normal cycle time for a set of transactions is 35 seconds and an allowance rate
for fatigue is 15%. Determine the hourly transaction-processing rate based on the standard time
in seconds for each lottery transaction.
a) 90
b) 103
c) 716
d) None of the above
5. The work measurement method that is most often used for setting time standards for a job is:
a) The work sampling method
b) The predetermined data approach
c) The elemental standard data approach
d) The time study method
6. The work measurement method that eliminates the need for time studies is:
a) The predetermined data approach
b) The work sampling method
c) The elemental standard data approach
d) The time study method
7. Disadvantages of the predetermined data approach include:
a) The reduction of the sources of error inherent in time studies
b) The ability to set standards for new jobs before production begins
c) The reduction of the need for performance ratings
d) The need to break work into micromotions

8. The work measurement method that is not usually used for setting standards for repetitive,
well-defined jobs is:
a) The elemental standard data approach
b) The predetermined data approach
c) The time study method
d) The work sampling method
9. Which of the following is not a trend in job design?
a) Quality control
b) Cross training
c) Jobs for life
d) Team approaches
10. Which of the following is not a trend in job design?
a) Temporary Workers
b) 9 to 5 scheduling
c) Alternative workplaces (telecommuting, shared offices, etc)
d) Automation of manual work
11. Which is not an advantage of specialization?
a) Upstream and downstream quality control
b) Rapid training
c) Ease of recruiting
d) No education required
12. Which is not a disadvantage of specialization?
a) Boredom
b) Little opportunity to progress
c) Low cost to replace a worker
d) Limited flexibility to change the process
13. Job enrichment includes all of the following except:
a) Horizontal enrichment
b) Vertical enrichment
c) Diagonal enrichment
d) Both A and B
14. Looking at socio-technical systems, which job design principle is not important?
a) Skill variety
b) Feedback
c) Task autonomy
d) None of the above (all are important)
15. Work measurement sets time standards that are necessary for all of the following reasons
except:
a) To schedule work and allocate capacity
b) To scare employees
c) To provide an objective basis for motivation
d) To bid for new contracts

16. Work measurement techniques include all of the following except:


a) On the job training
b) Time study
c) Work sampling
d) Predetermined motion-time data systems
17. The 5 steps of making a work sample study include all of the following except:
a) Estimate the proportion of time of the activity of interest
b) State the desired accuracy in the study results
c) Determine the specific times observations are to be made
d) Change the specific time observations to make them convenient
18. Work sampling offers all the following advantages over time study except:
a) No timing device required
b) Less employee influence
c) The sample time can be easily changed
d) A complete breakdown of all the elements of a job
19. Which of the following is not a major personnel selection method?
a) Graphology
b) References
c) Biodata
d) Focus groups
20. Work-sample test
a) Often use in-tray or in-basket exercises for selecting shop floor workers
b) Normally make use of many different complementary predictors
c) Require candidates to conduct a sample of the work required for the job
d) Do not necessarily have any obvious link with the job in question
Answers for Self Assessment Questions
1. (a)
2. (d)
3. (d)
6. (a)
7. (d)
8. (d)
11. (a)
12. (c)
13. (c)
16. (a)
17. (d)
18. (d)

4.(a)
9. (c)
14. (d)
19. (d)

5. (d)
10. (b)
15. (b)
20. (c)

Chapter 8: Inventory Management and Control


Self Assessment Questions
1. One use of inventory is
a) To ensure that item cost is maximized.
b) To tightly link production and distribution processes.
c) To provide a hedge against inflation.
d) To tightly link a firm's production with its customers' demand.
2. ABC analysis divides an organization's on-hand inventory into three classes based upon
a) Annual demand.
b) The number of units on hand.
c) Unit price.
d) Annual dollar volume.
3. Cycle counting
a) Provides a measure of inventory turnover.
b) Assumes that all inventory records must be verified with the same frequency.
c) Cannot be done in an independent demand situation.
d) Is a process by which inventory records are verified.
4. The difference(s) between the basic EOQ model and the production order quantity model is
(are) that
a) The production order quantity model does not require the assumption of known,
constant demand.
b) There are no holding costs in the production order quantity model.
c) The production order quantity model does not require the assumption of instantaneous
delivery.
d) The eoq model does not require the assumption of known, constant lead time.
5. Extra units that are held in inventory to reduce stockouts are called
a) Just-in-time inventory.
b) Reorder point.
c) Demand variance.
d) Safety stock.
6. Inventory record accuracy would be decreased by
a) Abc analysis.
b) Increasing stockroom accessibility.
c) Cycle counting.
d) reorder points.
7. The two most important inventory-based questions answered by the typical inventory model
are
a) When to place an order and what is the cost of the order.
b) When to place an order and how many of an item to order.
c) How many of an item to order and with whom the order should be placed.
d) How many of an item to order and what is the cost of this order.

8. The appropriate level of safety stock is typically determined by


a) Minimizing expected stockout cost.
b) Taking the square root of the economic order quantity.
c) Choosing the level of safety stock that assures a given service level.
d) Carrying sufficient safety stock so as to eliminate all stockouts.
9. Which of the following is NOT a type of inventory?
a) MRP
b) Finished goods
c) Raw material
d) Work-in-process
10. In the probabilistic model, increasing the service level will
a) Cannot be determined.
b) Have no impact on the cost of the inventory policy.
c) Increase the cost of the inventory policy.
d) Reduce the cost of the inventory policy.
11. A system that triggers ordering on a uniform time basis is called a
a) Fixed-quantity system.
b) Reorder point system.
c) Fixed-period system.
d) EOQ.
12. Policies based on ABC analysis might include investing
a) More in inventory security for C items.
b) More in supplier development for A items.
c) The most time and effort verifying the accuracy of records for B items.
d) Extra care in forecasting for C items.
13. A system that keeps track of each withdrawal or addition to inventory continuously is
a) A perpetual inventory system.
b) A continuous inventory system.
c) A fixed period system.
d) A fixed quantity system.
14. Inventory carried for the purpose of providing flexibility to each decision-making unit to
manage its operations independently is known as
a) Safety inventory
b) Cycle inventory
c) Seasonal inventory
d) Decoupling inventory
15. Cycle inventory helps in
a) Taking care of any special event that does not occur on a regular basis
b) Taking care of uncertainty in demand and supply of products/components
c) Finding out the amount of stock required during a finite period in order to move the
materials from one location to another
d) Taking advantage of economies of scale and reducing cost within the supply chain

16. The inventory which is dependent on alternative modes of transportation is known as


a) Safety inventory
b) Pipeline inventory
c) Decoupling inventory
d) Seasonal inventory
17. The best strategy of minimizing the amount of safety inventory to be kept in a store without
hurting the level of customer service is
a) Minimizing the uncertainty inherent in supply
b) Minimizing the cycle service level
c) Reducing the supply lead time
d) Minimizing the uncertainty inherent in demand
18. Higher demand uncertainty provides higher savings by pooling which of the following
inventory?
a) Seasonal inventory
b) Pipeline inventory
c) Safety inventory
d) Decoupling inventory
19. Higher number of stock points required for risk pooling results in higher savings in terms of
a) Decoupling inventory
b) Pipeline inventory
c) Cycle inventory
d) Safety inventory
20. Centralized system will provide benefits for the items which
a) Are fast-moving
b) Are slow moving and have high demand variability
c) Have low demand variability
d) Have high demand variability
Answers for Self Assessment Questions
1. (a)
2. (d)
3. (d)
6. (b)
7. (b)
8. (c)
11. (c)
12. (b)
13. (a)
16. (b)
17. (a)
18. (c)

4.(c)
9. (a)
14. (d)
19. (c)

5. (d)
10. (c)
15. (d)
20. (b)

Chapter 9: Quality Assurance and Control


Self Assessment Questions
1. TQM refers to _____.
a) Total quantity management
b) Total quality management
c) Total quality marketing
d) Total quotient management
e) Total quantity marketing
2. The 20-80 rule states _____.
a) The top 80 percent of customers generate 20 percent of the company's profits
b) The bottom 80 percent of customers generate 80 percent of the company's profits while
the bottom 20 percent of customers generate 20 percent of the profits
c) The top 20 percent of customers generate 80 percent of the company's profits
d) The bottom 20 percent of customers generate 80 percent of the company's profits
3. _____ is a company's ability to perform in one or more ways that competitors cannot or will
not match.
a) Customer advantage
b) Customer relationship advantage
c) Customer lifetime value
d) Competitive advantage
4. Customer churn refers to ____.
a) Customer defection
b) Customer mix
c) Customer anxiety
d) Customer loyalty
5. _____ is when a company works continuously with its large customers to help improve their
performance.
a) Basic marketing
b) Reactive marketing
c) Proactive marketing
d) Partnership marketing
6. Frequency programs (FP's) are designed to provide rewards to _____.
a) Customers who need to be encouraged to buy more frequently
b) Customers who buy frequently and in substantial amounts
c) Customers who buy frequently but in small amounts
d) Customers who buy infrequently in large amounts
7. A _____ is an organized collection of comprehensive information about individual customers
or prospects.
a) Marketing database
b) Customer database
c) Customer mailing list
d) Business database

8. Through _____ marketing statisticians can extract useful information about individuals,
trends, and segments from the mass of data.
a) CRM
b) Prospecting
c) Datamining
d) Calculus
9. Companies can build interest and enthusiasm by using databases to remember customer
preferences. This strategy helps to _____.
a) Deepen customer loyalty
b) Reactivate dormant customers
c) Avoid serious customer mistakes
d) Identify prospects
10. One problem that can deter a firm from effectively using CRM is _____.
a) Having the resources to manage and train employees effectively
b) Not all customers want a relationship with the company
c) The expense of building and maintaining a customer database
d) All of the above
11. ____________ is the difference between the prospective customer's evaluation of all the
benefits and all the costs of an offering and the perceived alternatives.
a) Customer cost
b) Value delivery system
c) Value proposition
d) Customer perceived value
12. "Quality is defined by the customer" is
a) An unrealistic definition of quality
b) A user-based definition of quality
c) A manufacturing-based definition of quality
d) A product-based definition of quality
e) The definition proposed by the American Society for Quality Control
13. Which of the following is not one of the major categories of costs associated with quality?
a) Appraisal costs
b) Internal failures
c) External failures
d) None of the above, they are all major categories of costs associated with quality
14. According to the manufacturing-based definition of quality,
a) Quality is the degree of excellence at an acceptable price and the control of variability at
an
b) Acceptable cost
c) Quality depends on how well the product fits patterns of consumer preferences
d) Even though quality cannot be defined, you know what it is
e) Quality is the degree to which a specific product conforms to standards
15. All of the following costs are likely to decrease as a result of better quality except
a) Customer dissatisfaction costs
b) Inspection costs

c) Warranty and service costs


d) Maintenance costs
16. Inspection, scrap, and repair are examples of
a) Internal costs
b) External costs
c) Costs of dissatisfaction
d) Societal costs
17. ISO 9000 seeks standardization in terms of
a) Products
b) Production procedures
c) Suppliers' specifications
d) Procedures to manage quality
18. Which of the following is true about ISO 14000 certification?
a) It is a prerequisite for ISO 9000 certification
b) It indicates a higher level of adherence to standards than ISO 9000
c) It is only sought by companies exporting their goods
d) It deals with environmental management
19. Total Quality Management emphasizes
a) The responsibility of the Quality Control staff to identify and solve all quality-related
problems
b) A commitment to quality that goes beyond internal company issues to suppliers and
customers
c) A system where strong managers are the only decision makers
d) A process where mostly statisticians get involved
20. A successful TQM program incorporates all of the following except
a) Continuous improvement
b) Employment involvement
c) Benchmarking
d) Centralized decision making authority
Answers for Self Assessment Questions
1. (b)
2. (c)
3. (d)
6. (b)
7. (b)
8. (c)
11. (d)
12. (b)
13. (d)
16. (a)
17. (d)
18. (d)

4.(a)
9. (a)
14. (d)
19. (b)

5. (d)
10. (d)
15. (d)
20. (d)

Chapter 10: Supply Chain Management


Self Assessment Questions
1. An appropriate strategy to achieve timely, accurate, paperless information flow is:
a) Efficient store assortments.
b) Revision of organization processes supported by information systems.
c) Efficient replacement.
d) Integrate this activity into all supply chain planning.
e) None of the above.
2. An appropriate strategy to maximize efficiency of promotions is:
a) Efficient replacement.
b) Efficient store assortments..
c) Revision of organization processes supported by information systems.
d) Integrate this activity into all supply chain planning.
3. An appropriate strategy to optimize for time and cost in the ordering process is:
a) Efficient store assortments.
b) Integrate this activity into all supply chain planning.
c) Revision of organization processes supported by information systems.
d) Efficient replacement.
4. An appropriate strategy to optimize the productivity of retail space and inventory is:
a) Integrate this activity into all supply chain planning.
b) Efficient store assortments.
c) Revision of organization processes supported by information systems.
d) Efficient replacement.
5. The upstream supply chain is:
a) Exclusively inside an organization.
b) Involved with procurement of material from suppliers.
c) The distribution of products or delivery of services to customers.
d) Both the first and third answer above.
6. The downstream supply chain is:
a) Exclusively inside an organization.
b) Involved with procurement of material from suppliers.
c) The distribution of products or delivery of services to customers.
d) Both the first and third answer above.
7. The correct sequence of an organizations supply chain from a systems perspective is:
a) Transformation process, delivery to customers, acquisition of resources.
b) Acquisition of resources, transformation process, delivery to customers.
c) Delivery to customers, acquisition of resources, transformation process.
d) Transformation process, acquisition of resources, delivery to customers.
8. ______ offers the opportunity to buy direct from the supplier with reduced costs and shorter
cycle.
a) Contramediation

b) Reintermediation
c) Disintermediation
d) Countermediation
9. IS can be used to reduce cycle time by:
a) Improved data integration between elements of the supply chain.
b) Increased efficiency of individual processes.
c) Reduced cost through outsourcing.
d) Reduced complexity of the supply chain.
10. The typical aim of the push approach to supply chain management is:
a) To reduce costs of distribution.
b) To enhance product and service quality.
c) To reduce costs of new product development.
d) Both the first and third answer above.
11. Supply chain management is essentially the optimisation of material flows and associated
information flows involved with an organisation's operations. To manage these flows, e-business
applications are essential to bring such benefits as noted in 'Internet retailing' in 2010 which
reported that the average rates of return to a high street retailer could be as high as 10%. What
did the same source report as the average rate of return for UK e-commerce sites?
a) 15%
b) 22%
c) 18%
d) 12%
12. Supply chain (SC) management involves the coordination of all supply activities of an
organisation from its suppliers to the delivery of products to its customers. There are various
features associated with this area of e-commerce and which refers to what is known as efficient
consumer response (ECR):
a) Transactions between an organisation and its customers and intermediaries
b) The links between an organisation and all partners involved
c) Creating and satisfying customer demand by optimizing strategies, promotions and
product introductions
d) None of the above
13. An organisation's supply chain can be viewed from a system's perspective that starts with the
acquisition of resources which are then transformed into products or services. Simply, put the
sequence is represented:
a) Inputs - process - outputs
b) Sourcing - input - process - outputs
c) Process - inputs - outputs
d) Inputs - outputs - process
14. Logistics is an integral part of supply chain management. Which explanation best represents
outbound logistics?
a) A supply chain that emphasises distribution of a product to passive customers
b) The management of resources supplied from an organisation to its customers and
intermediaries

c) An emphasis on using the supply chain to deliver value to customers who are actively
involved in product and service specification
d) The management of material resources entering an organisation from its suppliers and
other partners
15. The 'value chain' idea is a concept that has been well established for the past three decades
and it refers to considering key activities that an organization can conduct to add value for the
customer. It traditionally distinguished between primary activities and support activities. Why is
this concept regarded as outdated with the development of e-business?
a) There is a clear distinction between primary and support activities
b) The support activities offer far more than just support
c) Support activities have been subsumed under primary activities
d) The concept still holds and does not need revision
16. A value chain analysis provides an analytical framework for an organisation to examine
individual activities and determine value added at each stage. The principles can also be applied
to an organisation's external value stream analysis which considers how the whole production
and delivery process can be made more efficient. The activities can be categorized into those:
a) All of the below
b) Those required for product development or production systems
c) Those that do not add value
d) That create value as perceived by the customer
17. Improvements in the value chain can be implemented by following Kjellsdotter and Jonsson's
iterative planning cycle. Which of the following does not form part of the cycle?
a) Creating a preliminary delivery plan
b) Creating a preliminary production plan
c) Creating a consensus forecast
d) Creating a quality control plan
18. What does the following definition refer to: an organisation which uses communications
technology to allow it to operate without clearly define physical boundaries between different
functions?
a) Cloud organisation
b) Base-free organisation
c) E-organisation
d) Virtual organisation
19. Using digital communication to improve supply chain efficiency is dependent on effective
exchange and sharing of information. The challenges of achieving standardized data formats and
data exchange have given rise to the study of the optimisation of the:
a) Information supply chain
b) Virtual integration
c) Vertical integration
d) Information asymmetry
20. The typical benefits of e-supply chain management gained by a B2B company are quite
comprehensive. Which of the following is false though?
a) Increased efficiency of individual processes

b) Increased costs through outsourcing


c) Improved data integration between elements of the supply chain
d) Reduced complexity of the supply chain
Answers for Self Assessment Questions
1. (b)
2. (d)
3. (d)
6. (c)
7. (b)
8. (c)
11. (b)
12. (c)
13. (a)
16. (a)
17. (d)
18. (d)

4.(b)
9. (b)
14. (b)
19. (a)

5. (b)
10. (d)
15. (b)
20. (b)