All organizations, including service firms such as banks and hospitals, have a production function.

Answer: ________True_____
Operations management is the set of activities that creates value in the form of goods and services by
transforming inputs into outputs.
Answer: ______true_______
Operations management is applicable:
A) mostly to the service sector.
B) to services exclusively.
C) mostly to the manufacturing sector.
D) to all firms, whether manufacturing or service.
E) to the manufacturing sector exclusively.
Answer: __________D___
________ is the set of activities that creates value in the form of goods and services by transforming inputs
into outputs.
Answer:
Which of the following are the primary functions of all organizations?
A) production/operations, marketing, and human resources
B) marketing, human resources, and finance/accounting
C) sales, quality control, and production/operations
D) marketing, production/operations, and finance/accounting
E) research and development, finance/accounting, and purchasing
Answer: _______D______
Which of the following pioneers was NOT making a professional impact during the Scientific
Management Era?
A) Frank Gilbreth
B) W. Edwards Deming
C) Henry L. Gantt
D) Lillian Gilbreth
E) Frederick W. Taylor
Answer: ______B_______
Which of the following would NOT be an operations function in a commercial bank?
A) auditing
B) teller scheduling
C) maintenance
D) collection
E) check clearing
A

The marketing function's main concern is with:

A) producing goods or providing services.
B) procuring materials, supplies, and equipment.
C) building and maintaining a positive image.
D) generating the demand for the organization's products or services.
E) securing monetary resources.
Answer: ______D_______
Which of the following tasks within an airline company are related to operations?
A) crew scheduling
B) international monetary exchange
C) sales
D) advertising
E) accounts payable
Marketing, production/operations, and ____Finance/accounting____ are the three functions that all
organizations must perform to create goods and services.
Competition in the 21st century is no longer between companies; it is between supply chains.
Answer: _______True______
An accounting firm that provides tax services for a company would be considered to be part of that
company's supply chain.
Answer: ______True_______
What is a global network of organizations and activities that supply a firm with goods and services?
A) supply tree
B) provider network
C) supply chain
D) vendor network
E) vendor tree
Which of the following fosters specialization and worldwide supply chains?
A) more expensive transportation
B) instant communication
C) economies of scope
D) managers with a broad knowledge of many things
E) high trade tariffs
A(n) _____Supply chain___ is a global network of organizations and activities that supply a firm with
goods and services.
Answer:
Competition in the 21st century is no longer between companies; it is between ___supply chain_____.
Answer:

One reason to study operations management is to learn how people organize themselves for
productive enterprise.
Answer: _________True____
Reasons to study operations management include:
A) studying how people organize themselves for productive enterprise.
B) knowing how goods and services are consumed.
C) understanding what human resource managers do.
D) learning about a costly part of the enterprise.
E) A and D
Reasons to study operations management include learning about:
A) how people organize themselves for productive enterprise.
B) how goods and services are produced.
C) what operations managers do.
D) a costly part of the enterprise.
E) all of the above.
Brandon Production is a small firm focused on the assembly and sale of custom computers. The firm is
facing stiff competition from low-priced alternatives, and is looking at various solutions to remain
competitive and profitable. Current financials for the firm are shown in the table below. In the first
option, marketing will increase sales by 50%. The next option is Vendor (Supplier) changes, which
would result in a decrease of 10% in the cost of inputs. Finally there is an OM option, which would
reduce production costs by 25%. Which of the options would you recommend to the firm if it can only
pursue one option? In addition, comment on the feasibility of each option.
Business Function
Cost of Inputs
Production Costs
Revenue
Answer:

Current Value
$50,000
$25,000
$80,000

The operations manager performs the management activities of planning, organizing, staffing,
leading, and controlling of the OM function.
Answer: _________TRUE____
"Considers inventory ordering and holding decisions" is within the strategic operations management

decision area of managing quality.

Answer: ____False_________
What are the five elements in the management process?
A) plan, direct, update, lead, and supervise
B) accounting, finance, marketing, operations, and management
C) organize, plan, control, staff, and manage
D) plan, organize, staff, lead, and control
E) plan, lead, organize, manage, and control
Answer: _________D____

Which of the following is NOT an element of the management process?

A) controlling
B) leading
C) planning
D) pricing
E) staffing
An operations manager is NOT likely to be involved in:
A) the design of goods and services to satisfy customers' wants and needs.
B) the quality of goods and services to satisfy customers' wants and needs.
C) the identification of customers' wants and needs.
D) work scheduling to meet the due dates promised to customers.
E) maintenance schedules.
All of the following decisions fall within the scope of operations management EXCEPT for:
A) creating the company income statement.
B) design of goods and services.
C) location strategy.
D) managing quality.
E) human resources and job design.
The 10 strategic operations management decisions include:
A) layout strategy.
B) maintenance.
C) process and capacity design.
D) managing quality.
E) all of the above.
9) Which of the following is NOT one of the 10 strategic operations management decisions?
A) layout strategy
B) maintenance
C) process and capacity design
D) mass customization
E) supply chain management

Which of the following is one of the 10 strategic operations management decisions?

A) depreciation policy for tax returns
B) advertising
C) process and capacity design
D) pricing
E) debt/equity ratio

Which of the following are among the 10 strategic operations management decisions?
I. design of goods and services
II. managing quality
III. layout strategy
IV. marketing
V. pricing of goods and services
A) I, II, V
B) I, II, IV
C) II, III, V
D) I, II, III
E) All of the above
Which of the following influences layout design?
A) inventory requirements
B) capacity needs
C) personnel levels
D) technology
E) All of the above influence layout decisions.
Which of the following is NOT a strategic operations management decision?
A) maintenance
B) price
C) layout design
D) quality
E) inventory
The field of operations management is shaped by advances in which of the following fields?
A) chemistry and physics
B) industrial engineering and management science
C) biology and anatomy
D) information technology
E) all of the above

Customer interaction is often high for manufacturing processes, but low for services.
Answer: ______False_______

Which of the following is the best example of a pure service?

A) counseling
B) oil change
C) heart transplant
D) electric Co-Op
E) restaurant
Which is NOT true regarding differences between goods and services?
A) Tangible goods are generally produced and consumed simultaneously; services are not.
B) Most goods are common to many customers; services are often unique to the final customer.
C) Services tend to have a more inconsistent product definition than goods.
D) Services tend to have higher customer interaction than goods.
E) None, i.e., all of the above are true.
Which is NOT true regarding differences between goods and services?
A) Services are generally produced and consumed simultaneously; tangible goods are not.
B) Services tend to be more knowledge-based than goods.
C) Services tend to have a more inconsistent product definition than goods.
D) Goods tend to have higher customer interaction than services.
E) Reselling is unusual in services; goods often have some residual value.
Which of the following services is LEAST likely to be unique, i.e., customized to a particular
individual's needs?
A) dental care
B) hairdressing
C) legal services
D) elementary education
E) computer consulting
Which of the following is NOT a typical service attribute?
A) intangible product
B) easy to store
C) customer interaction is high
D) simultaneous production and consumption
E) difficult to resell
Which of the following attributes is most typical of a service?
A) production and consumption occur simultaneously
B) tangible
C) mass production
D) consistency
E) easy to automate
Which of the following is a similarity between goods and services?

A) mass production
B) consistency
C) automation
D) Both have quality standards.
E) Both can usually be kept in inventory.

Productivity is generally more difficult to improve in the service sector than in the manufacturing
sector.
Answer: ______TRUE_______
A knowledge society is one that has migrated from work based on knowledge to one based on manual
work.
Answer: ____False_________
Productivity is the total value of all inputs to the transformation process divided by the total value of
the outputs produced.
Answer: _______False______
Illiteracy and poor diets have been known to cost countries up to what percent of their productivity?
A) 2%
B) 5%
C) 10%
D) 20%
E) 50%
Answer: _________D____
A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10hour shift, the productivity of the line is:
A) 1.2 covers/hr.
B) 2 covers/hr.
C) 12 covers/hr.
D) 1200 covers/hr.
E) 120 covers/hr.
Answer: ______C_______
A foundry produces circular utility access hatches (manhole covers). Currently, 120 covers are
produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be:
A) 14.4 covers/hr.
B) 24 covers/hr.
C) 240 covers/hr.
D) 1200 covers/hr.
E) 10 covers/hr.
Answer: _______A______

Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves are produced in an 8hour shift, the productivity of the line is:
A) 2 valves/hr.
B) 40 valves/hr.
C) 80 valves/hr.
D) 200 valves/hr.
E) 1600 valves/hr.
Answer: ____D_________
Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves each
8-hour shift. If the productivity is increased by 10%, it would then be:
A) 180 valves/hr.
B) 200 valves/hr.
C) 220 valves/hr.
D) 880 valves/hr.
E) 1760 valves/hr.
Answer: __________C___
Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves per
shift. If the production is increased to 2000 valves per shift, labor productivity will increase by:
A) 10%.
B) 20%.
C) 25%.
D) 40%.
E) 50%.
Answer: _________C____
The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. What is the
productivity of the plant?
A) 25 boxes/hr.
B) 50 boxes/hr.
C) 5000 boxes/hr.
D) 0.04 boxes/hr.
E) 250 boxes/hr.
Answer: _______A______
The Dulac Box plant works two 8-hour shifts each day. In the past, 500 cypress packing boxes were
produced by the end of each day. The use of new technology has enabled them to increase
productivity by 30%. Productivity is now approximately:
A) 32.5 boxes/hr.
B) 40.6 boxes/hr.
C) 62.5 boxes/hr.
D) 81.25 boxes/hr.
E) 300 boxes/hr.
Answer: ______B_______
The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Due to higher demand,

they have decided to operate three 8-hour shifts instead. They are now able to produce 600 boxes per
day. What has happened to productivity?
A) It has not changed.
B) It has increased by 37.5 boxes/hr.
C) It has increased by 20%.
D) It has decreased by 8.3%.
E) It has decreased by 9.1%

Productivity measurement is complicated by:

A) the competition's output.
B) the fact that precise units of measure are often unavailable.
C) stable quality.
D) the workforce size.
E) the type of equipment used.
Answer: _____________
The total of all outputs produced by the transformation process divided by the total of the inputs is:
A) utilization.
B) greater in manufacturing than in services.
C) defined only for manufacturing firms.
D) multifactor productivity.
E) single-factor productivity.
Answer: _____________
Which productivity variable has the greatest potential to increase productivity?
A) labor
B) globalization
C) management
D) capital
E) energy
Answer: _____________
Which of the following nets the largest productivity improvement?
A) increase output 15%
B) decrease input 15%
C) increase both output and input by 5%
D) increase output 10%, decrease input 3%
E) decrease input 10%, increase output 3%
Answer: _____________
Productivity can be improved by:
A) increasing inputs while holding outputs steady.
B) decreasing outputs while holding inputs steady.
C) increasing inputs and outputs in the same proportion.
D) decreasing inputs while holding outputs steady.
E) none of the above.
Answer: _____________
Which of the following is NOT true when explaining why productivity tends to be lower in the
service sector than in the manufacturing sector?
A) Services are typically labor-intensive.
B) Services are often difficult to evaluate for quality.
C) Services are often an intellectual task performed by professionals.
D) Services are difficult to automate.
E) Service operations are typically capital intensive.
Answer: _____________

Three commonly used productivity variables are:

A) quality, external elements, and precise units of measure.
B) labor, capital, and management.
C) technology, raw materials, and labor.
D) education, diet, and social overhead.
E) quality, efficiency, and low cost.
Answer: _____________
The service sector has lower productivity improvements than the manufacturing sector because:
A) the service sector uses less skilled labor than manufacturing.
B) the quality of output is lower in services than manufacturing.
C) services usually are labor-intensive.
D) service sector productivity is hard to measure.
E) the service sector is often easy to mechanize and automate.
Answer: _____________
Productivity tends to be more difficult to improve in the service sector because the work is:
A) often difficult to automate.
B) typically labor-intensive.
C) frequently processed individually.
D) often an intellectual task performed by professionals.
E) All of the above make service productivity more difficult.
Answer: _____________
A small metal shop operates 10 hours each day, producing 100 parts/hour. If productivity were
increased 20%, how many hours would the plant have to work to produce 1000 parts?
A) less than 2 hours
B) between 9 and 10 hours
C) between 2 and 6 hours
D) between 6 and 8 hours
E) between 8 and 9 hours
A cleaning company uses 10 lbs each of chemicals A, B and C for each house it cleans. After some
quality complaints, the company has decided to increase its use of chemical A by an additional 10 lbs
for each house. By what % has productivity (houses per pound of chemical) fallen?
A) 0%
B) 10%
C) 15%
D) 25%
E) 33%
A cleaning company uses $10 of chemicals, $40 of labor, and $5 of misc. expenses for each house it
cleans. After some quality complaints, the company has decided to increase its use of chemicals by
50%. By what percentage has multifactor productivity fallen?
A) 0%
B) 8.3%
C) 25%
D) 50%

E) 16.7%
Productivity is the ratio of __OUTPUTS_ to ___INPUTS___. Using this relationship, productivity can
be improved by REDUCING INPUTS WHILE HOLDING OUTPUTS CONSTANT or __INCREASING
OUTPUTS WHILE HOLDING INPUTS CONSTANT____.
Answer:
Susan has a part-time business producing seasonal plywood yard ornaments for resale at local craft
fairs and bazaars. She currently works 8 hours per day to produce 16 ornaments.
a. What is her productivity?
b. She thinks that by redesigning the ornaments and switching from use of a wood glue to a hot-glue gun
she can increase her total production to 20 ornaments per day. What is her new productivity?
c. What is her percentage increase in productivity?
Answer:
A) 16 ORNAMENTS/8HOURS=2 ORNAMENTS/HOUR
B) 20 ORNAMENTS/8 HOURS=2,5 ORNAMENTS/HOUR
C) CHANGE IN PRODUCTIVITY=0,5 ORNAMENTS/HOUR CHANGE=0,5/2=25%
A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm typically
cleaned 70 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees
worked 20 days per month, 8 hours a day. The company decided to switch to a larger cleaning machine.
Last April, they cleaned 60 tank cars in only 15 days. They utilized 12 gallons of solvent, and the two
employees worked 6 hours a day.
(a) What was their raw material and their labor productivity with the standard equipment?
(b) What is their raw material and their labor productivity with the larger machine?
(c) What is the change in each productivity measure?
Answer:
(a) Standard
Resource
Equipment
(b) Larger Machine (c) Percent Change
Solvent
Labor

The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current
operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift).
The company has introduced some small changes in equipment, and conducted appropriate job
training, so that production levels have risen to 300 boxes per shift. These changes did not require any
change in the amount of capital spending or energy use. What is the firm's new labor productivity?
Answer:
600 BOXES PER DAY/16 HOURS=37,5 BOXES PER HOUR
Mark's Ceramics spent $4000 on a new kiln last year in the belief that it would cut annual energy
usage 25% over the old kiln. This kiln is an oven that turns "greenware" into finished pottery. Mark is
concerned that the new kiln requires extra labor hours for its operation. Mark wants to check the
energy savings of the new oven, and also to look over other measures of their productivity to see if the
change really was beneficial. Mark has the following data to work with:

Production (finished units)

Greenware (pounds)
Labor (hrs)
Capital ($)
Energy (kWh)

Last Year
4000
5000
350
15000
3000

This Year
4000
5000
375
19000
2600

Were the modifications beneficial?

Answer:

Resource
Labor
Capital
Energy

Last Year
4000/350=11.43
4000/15000=0.27
4000/3000=1.33

Resource Last Year

Labor
Utilities
Capital

This Year
4000/375=10.67
4000/19000=0.21
4000/2600=1.54

This Year

Change
-0.76
-0.060
0.21

Pct.
Change
-6.65%
-22.22%
15.79%

Change

Pct.
Change

The local fast food store experienced the following number of customers on the night shift:
Hour----------------Customers
12 AM
23
1 AM
20
2 AM
15

3 AM
5
4 AM
2
5 AM
1
If the store was staffed by two workers, what was the average productivity per worker, in
customers/hour?
Answer:
(23+20+15+5+2+1)CUSTOMERS/(2 WORKERS* 6 HOURS/WORKER)=5.5 CUSTOMERS/HOUR
1) One phase of a large project is scheduling.
Answer: _____________
5) The phases of project management are:
A) planning, scheduling, and controlling.
B) planning, programming, and budgeting.
C) planning, organizing, staffing, leading, and controlling.
D) different for manufacturing projects than for service projects.
E) GANTT, CPM, and PERT.
Answer: _____________
6) Which of the following is NOT one of the phases of project management?
A) planning
B) scheduling
C) controlling
D) budgeting
E) All of the above are project management phases.
Answer: _____________
1) A project organization works best for an organization when the project resides in only one of its
functional areas.
Answer: _____False project planning________
2) One responsibility of a project manager is to make sure that the project meets its quality goals.
Answer: _______TRue______
3) Work breakdown structure is a useful tool in project management because it addresses the timing of
individual work elements.
Answer: ______false_______
4) Project managers have their own code of ethics, established by the Project Management Institute.
Answer: _______true______
5) Ethical issues that can arise in projects include gifts from contractors, pressure to mask delays with
false status reports, and pressure to compromise project quality to meet bonuses or avoid penalties
related to schedules.
Answer: _____________
6) A project organization:

A) is effective for companies with multiple large projects.

B) is appropriate only in construction firms.
C) often fails when the project cuts across organizational lines.
D) is most helpful for ongoing projects with no termination date.
E) is most helpful when the work contains simple and unrelated tasks.
Answer: _____________

7) A code of ethics especially for project managers:

A) has been established by the Project Management Institute.
B) has been formulated by the Federal government.
C) has been formulated by the World Trade Organization.
D) is inappropriate, since everyone should use the same guidance on ethical issues.
E) does not exist at this time.
Answer: _____________
8) Ethical issues that may arise in projects large and small include:
A) gifts from contractors.
B) exaggerated expense reports.
C) compromised quality standards to meet bonuses or avoid penalties related to schedules.
D) pressure to mask delays with false status reports.
E) all of the above.
Answer: _____________
9) The project organization works best when which of the following conditions are satisfied?
I. Work tasks can be defined with a specific goal and deadline.
II. The job is typical and familiar to the existing organization.
III. The work contains interrelated tasks requiring specialized skills.
IV. The project is temporary but unimportant to long-term organizational success.
V. The project cuts across organizational lines.
A) I, II, III, IV, V
B) None of the above conditions need to be satisfied.
C) I, III, V
D) I, II, III, V
E) I, III, IV, V
Answer: _____________

11) WBS stands for which of the following project management tools?
A) work break schedule
B) work breakdown status
C) work breakdown schedule
D) work breakdown structure
E) work break status
Answer: _____________

12) Match the following steps in Microsoft's development of Windows 8 to their respective WBS level.
Step
Level
Develop Windows 8 Operating System
?
System Testing
?
Compatible with Windows 7
?
Develop GUI's
?
Module Testing
?
A) Level 1, Level 2, Level 4, Level 3, Level 3
B) Level 1, Level 2, Level 3, Level 4, Level 5
C) Level 0, Level 1, Level 2, Level 3, Level 4
D) Level 0, Level 2, Level 2, Level 3, Level 3
E) Level 5, Level 3, Level 4, Level 1, Level 2
Answer: _____________
14) A(n) ________ divides a project into more and more detailed components.
Answer:
_____________________________________________________________________________________________
___________
1) Gantt charts give a timeline for each of a project's activities, but they do not adequately illustrate the
interrelationships between the activities and the resources.
Answer: _____________
2) PERT, but not CPM, has the ability to consider the precedence relationships in a project.
Answer: _____________
4) Which of the following statements regarding Gantt charts is true?
A) Gantt charts give a timeline and precedence relationships for each activity of a project.
B) Gantt charts use the four standard spines of Methods, Materials, Manpower, and Machinery.
C) Gantt charts are visual devices that show the duration of activities in a project.
D) Gantt charts are expensive.
E) All of the above are true.
Answer: _____________

1) The control of projects involves close monitoring of which of the following?

A) resources
B) costs
C) quality
D) budgets
E) all of the above
Answer: _____________
1) The shortest of all paths through the network is the critical path.
Answer: ______ On a specific project, there can be multiple critical paths, all with exactly

the same duration

_______

3) The main difference between PERT and CPM is that:

A) PERT is more accurate than CPM.
B) PERT assumes that activity durations are known.
C) PERT ignores activity costs.
D) CPM assumes activity durations can vary.
E) PERT employs three time estimates for each activity.
Answer: _____________

5) A simple CPM network has five activities, A, B, C, D, and E. A is an immediate predecessor of C and of
D. B is also an immediate predecessor of C and of D. C and D are both immediate predecessors of E.
Which of the following statements is true?
A) There are two paths in this network.
B) There are four paths in this network.
C) There are five paths in this network.
D) There are 25 paths in this network.
E) There are six paths in this network.
Answer: _____________
6) The ________ is a project management technique using only one time factor per activity that enables
managers to schedule, monitor, and control large and complex projects.
Answer:
7) The ___critical path_____ is the computed longest time path(s) through a network.
Answer:

1) The ES of an activity that has only one predecessor is simply the EF of that predecessor.
Answer: _____________
2) Slack is the amount of time an activity can be delayed without delaying the entire project.
Answer: _____________
3) Every network has at least one critical path.
Answer: _____________
5) Which of the following statements regarding critical paths is true?
A) The shortest of all paths through the network is the critical path.
B) Some activities on the critical path may have slack.
C) Every network has only one critical path.
D) On a specific project, there can be multiple critical paths, all with exactly the same duration.
E) The duration of the critical path is the average duration of all paths in the project network.
Answer: _____________
6) Which of the following statements regarding CPM is true?
A) The critical path is the shortest of all paths through the network.
B) The critical path is that set of activities that has positive slack.

C) Some networks have no critical path.

D) All activities on the critical path have their LS equal to the maximum EF of all immediate predecessors.
E) All activities on the critical path have their ES equal to their LF.
Answer: _____________
8) A simple CPM network has three activities, D, E, and F. D is an immediate predecessor of E and of F.
E is an immediate predecessor of F. The activity durations are D=4, E=3, F=8.
A) The critical path is D-E-F, duration 15.
B) The critical path is D-F, duration 12.
C) Slack at D is 3 periods.
D) Slack at E is 3 periods.
E) Both A and C are true.
Answer: _____________

13) The critical path for the network activities shown below is ________ with duration ________.

Activity
A
B
C
D
E

Duration
4
2
7
4
5

Immediate
Predecessors
--A
-A
B,C,D

A) A-B-D; 10
B) A-B-E; 11
C) C-E; 12
D) A-D-E; 13
E) A-B-C-D-E; 22
Answer: _____________

22) The network below represents a project being analyzed by the critical path method. Activity durations
are A=5, B=2, C=12, D=3, E=5, F=1, G=7, H=2, I=10, and J=6.

a. What task must be on the critical path, regardless of activity durations?

b. What is the duration of path A-B-E-H-J?
c. What is the critical path of this network?
d. What is the length of the critical path?
e. What is slack time at activity H?
f. What is the Late Finish of activity H?
g. If activity C were delayed by two time units, what would happen to the project duration?
Answer:

_____________________________________________________________________________________________
___________
Results
Task

Early Start Early Finish Late Start Late Finish

Project

Slack

24) The network below represents a project being analyzed by the critical path method. Activity durations
are indicated on the network.

a. Identify the activities on the critical path.

b. What is the duration of the critical path?
c. Calculate the amount of slack time at activity H.
d. If activity I were delayed by ten time units, what would be the impact on the project duration?
Answer:
Task

Early Start Early Finish Late Start Late Finish

Slack

Project

a.
b.
c.

The critical path

The minimum project duration
The amount of slack for each activity

Activity
A
B
C
D
E
F
G

Duration
(hours)
4
3
10
7
1
1
5

Immediate
Predecessors
None
None
None
B,C
D
E
A,F

Answer:

1) Forecasts may be influenced by a product's position in its life cycle.

Answer: _____________

2) Demand forecasts serve as inputs to financial, marketing, and personnel planning.

Answer: _____________
4) As compared to long-range forecasts, short-range forecasts:
A) are less accurate.
B) deal with less comprehensive issues supporting management decisions.
C) employ similar methodologies.
D) all of the above
E) none of the above
Answer: _____________

One use of short-range forecasts is to determine:

A) planning for new products.
B) capital expenditures.
C) research and development plans.
D) facility location.
E) job assignments.
Answer: _____________
6) Forecasts are usually classified by time horizon into which three categories?
A) short-range, medium-range, and long-range
B) finance/accounting, marketing, and operations
C) strategic, tactical, and operational
D) exponential smoothing, regression, and time series
E) departmental, organizational, and industrial
Answer: _____________
7) A forecast with a time horizon of about 3 months to 3 years is typically called a:
A) long-range forecast.
B) medium-range forecast.
C) short-range forecast.
D) weather forecast.
E) strategic forecast.
Answer: _____________
8) Forecasts used for new product planning, capital expenditures, facility location or expansion, and
R&D typically utilize a:
A) short-range time horizon.
B) medium-range time horizon.
C) long-range time horizon.
D) naive method, because there is no data history.
E) trend extrapolation.
Answer: _____________

9) The three major types of forecasts used by organizations in planning future operations are:
A) strategic, tactical, and operational.
B) economic, technological, and demand.
C) exponential smoothing, Delphi, and regression.
D) causal, time-series, and seasonal.
E) departmental, organizational, and territorial.
Answer: _____________
10) Which of the following most requires long-range forecasting (as opposed to short-range or mediumrange forecasting) for its planning purposes?
A) job scheduling
B) production levels
C) cash budgeting
D) capital expenditures
E) purchasing
Answer: _____________
11) Short-range forecasts tends to ________ longer-range forecasts.
A) be less accurate than
B) be more accurate than
C) have about the same level of accuracy as
D) employ the same methodologies as
E) deal with more comprehensive issues than
Answer: _____________
1) Forecasts of individual products tend to be more accurate than forecasts of product families.
Answer: _____________
2) Most forecasting techniques assume that there is some underlying stability in the system.
Answer: _____________
3) Which of the following is NOT a step in the forecasting process?
A) Determine the use of the forecast.
B) Eliminate any assumptions.
C) Determine the time horizon of the forecast.
D) Select the forecasting model.
E) Validate and implement the results.
Answer: _____________
2) A time-series model uses a series of past data points to make the forecast.
Answer: _____________

4) The two general approaches to forecasting are:

A) qualitative and quantitative.
B) mathematical and statistical.
C) judgmental and qualitative.
D) historical and associative.
E) judgmental and associative.
Answer: _____________
3) A nave forecast for September sales of a product would be equal to the sales in August.
Answer: _____________
4) One advantage of exponential smoothing is the limited amount of record keeping involved.
Answer: _____________
5) The larger the number of periods in the simple moving average forecasting method, the greater the
method's responsiveness to changes in demand.
Answer: _____________
6) Mean squared error and exponential smoothing are two measures of the overall error of a forecasting
model.
Answer: _____________
7) In trend projection, the trend component is the slope of the regression equation.
Answer: _____________
8) In trend projection, a negative regression slope is mathematically impossible.
Answer: _____________
10) A trend projection equation with a slope of 0.78 means that there is a 0.78 unit rise in Y per period.
Answer: _____________
11) Demand for individual products can be driven by product life cycles.
Answer: _____________
13) Time-series data may exhibit which of the following behaviors?
A) trend
B) random variations
C) seasonality
D) cycles
E) They may exhibit all of the above.
Answer: _____________
14) Gradual upward or downward movement of data over time is called:
A) seasonality.
B) a cycle.
C) a trend.
D) exponential variation.

E) random variation.
Answer: _____________
15) Which of the following is not present in a time series?
A) seasonality
B) operational variations
C) trend
D) cycles
E) random variations
Answer: _____________
16) The fundamental difference between cycles and seasonality is the:
A) duration of the repeating patterns.
B) magnitude of the variation.
C) ability to attribute the pattern to a cause.
D) all of the above
E) none of the above
Answer: _____________
17) In time series, which of the following cannot be predicted?
A) large increases in demand
B) cycles
C) seasonal fluctuations
D) random variations
E) large decreases in demand
Answer: _____________

18) What is the forecast for May using a four-month moving average?
Nov.
39

Dec.
36

Jan.
40

Feb.
42

Mar.
48

April
46

A) 38
B) 42
C) 43
D) 44
E) 47
Answer: _____________
19) Which time-series model below assumes that demand in the next period will be equal to the most
recent period's demand?
A) nave approach
B) moving average approach
C) weighted moving average approach
D) exponential smoothing approach
E) trend projection
Answer: _____________
20) John's House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns
a weight of 5 to the previous month's demand, 3 to demand two months ago, and 1 to demand three
months ago. If sales amounted to 1000 pancakes in May, 2200 pancakes in June, and 3000 pancakes in July,
what should be the forecast for August?
A) 2400
B) 2511
C) 2067
D) 3767
E) 1622
Answer: _____________
21) A six-month moving average forecast is generally better than a three-month moving average forecast if
demand:
A) is rather stable.
B) has been changing due to recent promotional efforts.
C) follows a downward trend.
D) exceeds one million units per year.
E) follows an upward trend.
Answer: _____________
22) Increasing the number of periods in a moving average will accomplish greater smoothing, but at the
expense of:
A) manager understanding.
B) accuracy.
C) stability.
D) sensitivity to real changes in the data.
E) All of the above are diminished when the number of periods increases.

Answer: _____________
27) Given an actual demand this period of 103, a forecast value for this period of 99, and an alpha of .4,
what is the exponential smoothing forecast for next period?
A) 94.6
B) 97.4
C) 100.6
D) 101.6
E) 103.0
Answer: _____________
28) A forecast based on the previous forecast plus a percentage of the forecast error is a(n):
A) qualitative forecast.
B) naive forecast.
C) moving average forecast.
D) weighted moving average forecast.
E) exponential smoothing forecast.
Answer: _____________
29) Given an actual demand this period of 61, a forecast for this period of 58, and an alpha of 0.3, what
would the forecast for the next period be using exponential smoothing?
A) 45.5
B) 57.1
C) 58.9
D) 61.0
E) 65.5
Answer: _____________

31) A forecasting method has produced the following over the past five months. What is the mean
absolute deviation?
Actual
10
8
10
6
9

Forecast
11
10
8
6
8

Error
-1
-2
2
0
1

|Error|
1
2
2
0
1

A) -0.2
B) -1.0
C) 0.0
D) 1.2
E) 8.6
Answer: _____________
32) The primary purpose of the mean absolute deviation (MAD) in forecasting is to:

A) estimate the trend line.

B) eliminate forecast errors.
C) measure forecast accuracy.
D) seasonally adjust the forecast.
E) remove random variations.
Answer: _____________
33) Given forecast errors of -1, 4, 8, and -3, what is the mean absolute deviation?
A) 2
B) 3
C) 4
D) 8
E) 16
Answer: _____________
36) For a given product demand, the time-series trend equation is 53 - 4x. The negative sign on the slope
of the equation:
A) is a mathematical impossibility.
B) is an indication that the forecast is biased, with forecast values lower than actual values.
C) is an indication that product demand is declining.
D) implies that the coefficient of determination will also be negative.
E) implies that the cumulative error will be negative.
Answer: _____________

37) Yamaha manufactures which set of products with complementary demands to address seasonal
variations?
A) golf clubs and skis
B) swimming suits and winter jackets
C) jet skis and snowmobiles
D) pianos and guitars
E) ice skates and water skis
Answer: _____________

61) Given the following data, calculate the three-year moving averages for years 4 through 10.
Year
1
2
3
4
5
6

Demand
74
90
59
91
140
98

7
8
9
Answer:
Year
Demand

110
123
99

3-Year Moving Ave.

7) If two variables were perfectly correlated, what would the coefficient of correlation r equal?
A) 0
B) -1
C) 1
D) B or C
E) none of the above
Answer: _____________

8) Linear regression is known as a(n) ________ model because it incorporates variables or factors that
might influence the quantity being forecast.
Answer:
___________________________________________________________________________________________
9) The ________ measures the strength of the relationship between two variables.
Answer:
___________________________________________________________________________________________

2) Product strategy may focus on developing a competitive advantage via differentiation, low cost, rapid
response, or a combination of these.
Answer: _____________
3) The objective of the product decision is to develop and implement a product strategy that meets the
demands of the marketplace with a competitive advantage.
Answer: _____________

4) The four phases of the product life cycle are incubation, introduction, growth, and decline.
Answer: _____________
5) In the maturity stage of the product life cycle, operations managers will be particularly concerned with
adding capacity or enhancing existing capacity to accommodate the increase in product demand.
Answer: _____________
6) Relatively few new product ideas, perhaps only 1 in 250, become successfully marketed products.
Answer: _____________
10) The three major elements of the product decision are:
A) selection, definition, and design.
B) goods, services, and hybrids.
C) strategy, tactics, and operations.
D) cost, differentiation, and speed of response.
E) legislative, judicial, and executive.
Answer: _____________
11) In which stage of the product life cycle should product strategy focus on process modifications as the
product is being "fine-tuned" for the market?
A) introduction
B) growth
C) maturity
D) decline
E) incubation
Answer: _____________

12) A product's life cycle is divided into four stages, which are:
A) introduction, growth, saturation, and maturity.
B) introduction, growth, stability, and decline.
C) introduction, maturity, saturation, and decline.
D) introduction, growth, maturity, and decline.
E) incubation, growth, maturity, and decline.
Answer: _____________
13) When should product strategy focus on forecasting capacity requirements?
A) at the introduction stage of the product life cycle
B) at the growth stage of the product life cycle
C) at the maturity stage of the product life cycle
D) at the decline stage of the product life cycle
E) at the saturation stage of the product life cycle
Answer: _____________
15) At which stage of the product life cycle is product strategy likely to focus on improved cost control?
A) introduction
B) growth
C) maturity
D) saturation
E) inflation
Answer: _____________
16) ________ is used to rank a company's products to determine which products represent the best use of
the firm's resources, or, perhaps, to determine which products are to be eliminated.
A) Value analysis
B) Value engineering
C) Financial analysis
D) Product-by-value analysis
E) Product cost justification
Answer: _____________

19) In the ________ phase of the product life cycle, the product design has begun to stabilize.
Answer:
20) ________ lists products in descending order of the individual dollar contribution to the firm.
Answer:
1) Quality function deployment refers to both (1) determining what will satisfy the customer and
(2) translating those customer desires into a target design.
Answer: _____________

2) Which of the following is true regarding value engineering?

A) Value engineering occurs only after the product is selected and designed.
B) Value engineering creates fragile design.
C) Value engineering is oriented toward improvement of design.
D) Value engineering occurs during production when it is clear the product is a success.
E) Value engineering can save substantial amounts of product cost, but quality suffers.
Answer: _____________
3) Reducing the complexity of a product and improving a product's maintainability are activities of:
A) product lifecycle management (PLM).
B) product-by-value analysis.
C) manufacturability and value engineering.
D) organizing for product development.
E) design for destruction (DFD).
Answer: _____________
4) Quality function deployment (QFD):
A) determines what will satisfy the customer.
B) translates customer desires into the target design.
C) is used early in the design process.
D) is used to determine where to deploy quality efforts.
E) all of the above
Answer: _____________
5) A graphic technique for defining the relationship between customer desires and product (or service) is:
A) product lifecycle management.
B) the house of quality.
C) the moment of truth.
D) the assembly drawing.
E) modular design.
Answer: _____________
6) A result of concurrent engineering in product design is:
A) speedier product development.
B) lower quality.
C) less customer demand.
D) higher costs.
E) all of the above.
Answer: _____________

8) Manufacturability and value engineering has which of the following benefits?

I. Reduced complexity of the product
II. Reduction of environmental impact
III. Additional standardization of components
IV. Robust design
V. Improved job design and safety

A) I, III, V
B) II, IV
C) I, III, IV
D) IV
E) I, II, III, IV, V
Answer: _____________
9) ________ is a process for determining customer requirements and translating them into attributes that
each functional area can understand and act upon.
Answer:
10) The ________ is a part of the quality function deployment process that utilizes a planning matrix to
relate customer "wants" to "how" the firm is going to meet those "wants."
Answer:
2) Robust design ensures that small variations in production or assembly do not adversely affect the
product.
Answer: _____________
3) Modular design exists only in tangible products; it makes no sense in services.
Answer: _____________
4) Which of the following is TRUE regarding computer-aided design?
A) It is too expensive to use in most manufacturing and design settings.
B) It is an obsolete technology.
C) It results in longer development cycles for virtually all products.
D) It is the use of computers to interactively design products and prepare engineering documentation.
E) It is the use of information technology to control machinery.
Answer: _____________
5) Which of the following is TRUE concerning advantages of CAD?
A) It provides accurate information flows to other departments.
B) Most product costs are determined at the design stage.
C) Design options are easier to review before final commitments are made.
D) Virtually all products have their development cycle shortened.
E) All of the above are true.
Answer: _____________
6) What is the use of information technology to control machinery?
A) CAM
B) CAD
C) QFD
D) DFMA
E) STEP
Answer: _____________
D) CAD.
E) Value analysis.
Answer: _____________

8) Value analysis takes place:

A) when the product is selected and designed.
B) during the initial stages of production when something needs to be done to assure product success.
C) when the product is first conceived.
D) during the production process when it is clear that the new product is a success.
E) when the product cost is very low.
Answer: _____________

3) An engineering drawing shows the:

A) dimensions, tolerances, materials, and finishes of a component.
B) dimensions, tolerances, cost, and sales or use volume of a component.
C) materials, finishes, machining operations, and dimensions of a component.
D) cost, materials, tolerances, and lead-time for a component.
E) cost, dimensions, and machining operations for a component.
Answer: _____________
4) The dimensions, tolerances, materials, and finishes of a component are typically shown on a(n):
A) assembly chart.
B) engineering drawing.
C) bill of material.
D) assembly drawing.
E) route sheet.
Answer: _____________
1) A work order is a list of the hierarchy of components, their description, and the quantity of each
required to make one unit of the product.
Answer: _____________
2) An assembly drawing lists the operations necessary to produce the component.
Answer: _____________
3) An assembly chart shows an exploded view of the product, usually a three-dimensional or isometric
drawing.
Answer: _____________
4) Which of the following shows in schematic form how a product is assembled?
A) an engineering drawing
B) an assembly routing
C) an assembly chart
D) a route sheet
E) a process sheet
Answer: _____________

6) An assembly drawing:
A) shows, in schematic form, how the product is assembled.
B) shows an exploded view of the product.
C) lists the operations, including assembly and inspection, necessary to produce the component with the
material specified in the bill of material.
D) provides detailed instructions on how to perform a given task.
E) describes the dimensions and finish of each component.
Answer: _____________
7) An assembly chart:
A) shows graphically how the product is assembled.
B) shows an exploded view of the product.
C) lists the operations, including assembly and inspection, necessary to produce the component with the
material specified in the bill of material.
D) provides detailed instructions on how to perform a given task.
E) describes the dimensions and finish of each component.
Answer: _____________
8) A process sheet is a type of:
A) assembly drawing.
B) assembly chart.
C) route sheet.
D) work order.
E) bill of material.
Answer: _____________

9) Which of the following documents lists the operations necessary to produce the component with the
material specified in the bill of material?
A) an engineering drawing
B) an assembly drawing
C) a route sheet
D) an assembly chart
E) an operations chart
Answer: _____________
10) A restaurant kitchen contains a wall poster that shows, for each sandwich on the menu, a sketch of the
ingredients and how they are arranged to make the sandwich. This is an example of a(n):
A) assembly drawing.
B) route sheet.
C) bill of material.
D) work order.
E) assembly chart.
Answer: _____________
11) A document for production that gives the instruction to make a given quantity of a particular item,
usually to a given schedule, is a(n):
A) work order.
B) route sheet.
C) bill of information.
D) assembly chart.
E) value analysis.
Answer: _____________
12) An exploded view of the product is a(n) ________.
Answer: _____________

8) A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10
years since the club is planning on relocating after 10 years. A concrete shell would cost $100,000 and last
for all 10 years. Another option is to install a vinyl liner that would cost only $75,000 to install. However,
the vinyl is not guaranteed to last for all 10 years, and it has a 33% chance of breaking down. Repair of the
vinyl would cost $40,000 and would extend the life of the vinyl liner to the 10-year mark. If both options
are acceptable to the swim club, which one minimizes their cost?
Answer:

9) A company producing apps for a social networking site is deciding which path to pursue. The first is to
create an app that has universal appeal but faces a crowded market. This app, A, would have sales of
100,000 copies at $1 each under ideal conditions, but under tough conditions would have sales of only
60,000 copies at $.80 each. The other app, B, would have sales of 500,000 units at $.50 each under ideal
conditions but sales would be reduced to 10,000 units at $.50 each under tough conditions. If ideal and
rough conditions occur with the same frequency, which app should the company produce? Note: both
apps cost the same amount to develop.
Answer: