CH 06

File: ch06, Chapter 6: Processes and Technology
True/False
1. A process is a group of unrelated tasks with specific inputs and outputs.
Ans: False
Difficulty: Easy
Feedback: Process Planning
2. Process design specifies what tasks need to be done and how they are to be
coordinated among functions, people, and organizations.
Ans: True
Difficulty: Easy
3. Planning, analyzing, and improving processes is the purpose of operations

management.
Ans: True
Difficulty: Easy
4. The organization’s overall approach for producing goods and providing services is
its process strategy.
Ans: True
Difficulty: Easy
5. Process strategy defines what tasks need to be done and how they are to be
coordinated among functions, people, and organizations.
Ans: False
Difficulty: Easy
6. A firm’s process strategy rarely defines its capital intensity.
Ans: False
Difficulty: Easy
Feedback: Process Analysis
7. A firm’s process strategy defines the extent of customer involvement in providing

a service.
Ans: True
Difficulty: Easy
8. Process planning determines how a manufactured good is produced or a service is

provided.
Ans: True
Difficulty: Easy
9. Companies that control the production of virtually all of the parts that go into a
product are said to be horizontally integrated.
Ans: False
Difficulty: Moderate
10. Companies that control the production of virtually all of the parts that go into a
product are said to be vertically integrated.
Ans: True
11. Outsourcing occurs when a company cannot or will not make all the parts that go
into a product.
Ans: True
Difficulty: Easy
12. Supplier speed is rarely an important consideration in outsourcing decisions.
Ans: False
Difficulty: Easy
13. Supplier reliability is often an important consideration in outsourcing decisions.
Ans: True
Difficulty: Easy
14. One-of-a-kind production of a product based on a customer’s unique

specifications is a called a project.
Ans: True
Difficulty: Easy
15. Customers are rarely involved in a project that takes an extended period of time to
complete
Ans: False
Difficulty: Easy
16. Subcontracting is rarely a source of human resources for a project.
Ans: False
Difficulty: Easy
17. Batch production is characterized by small volumes and high product variety.
Ans: True
Difficulty: Easy
18. One characteristic of batch production is variable demand.
Ans: True
Difficulty: Easy
19. Producing a high volume of a single product is a characteristic of batch

production.
Ans: False
Difficulty: Easy
20. Most of the operations in batch production involve the assembly rather than
fabrication.
Ans: False
Difficulty: Easy
21. Most of the operations in batch production involve fabrication rather than
assembly.
Ans: True
Difficulty: Easy
22. Batch production is also known as a job shop because it creates more jobs than
any of the other process choices
Ans: False
Difficulty: Easy
23. Mass production is characterized by high volumes of a customized product for a

mass market.
Ans: False
Difficulty: Easy
24. Mass production is characterized by high volumes of a standard product for a

mass market.
Ans: True
Difficulty: Easy
25. Mass production is often associated with assembly lines.
Ans: True
Difficulty: Easy
26. Mass production is characterized by the use of general equipment and highly
skilled labor.
Ans: False
Difficulty: Easy
27. Mass production is characterized by the use of specialized equipment and workers
with limited skills.
Ans: True
Difficulty: Easy
28. Continuous production is characterized by very high volumes of commodity

products.
Ans: True
Difficulty: Easy
29. Break-even analysis examines the cost tradeoffs associated with demand volume
when selecting a process.
Ans: True
Difficulty: Easy
30. A process flowcharts is a useful tool for analyzing a process because it often
highlights nonproductive activities.
Ans: True
Difficulty: Easy
31. Process innovation reflects the total redesign of a process for a breakthrough
improvement.
Ans: True
Difficulty: Easy
Feedback: Process Innovation
32. Vertical integration is the degree to which a firm produces the parts that go into its
products.
Ans: True
Difficulty: Easy
33. The best process strategy is usually found on the diagonal of the product-process
matrix.
Ans. True
34. Process plans are a set of documents that detail the steps in process selection
Ans. False
35. Process analysis yields a set of documents detailing manufacturing and service
delivery specifications.
Ans. False
36. The basic tools of process analysis include process flowcharts, diagrams and
maps.
Ans. True
37. Two approaches to process improvement include continuous and breakthrough.
Ans. True
38. Process innovation is most successful in organizations that view their systems as a
set of functional areas vying for limited resources.
Ans. False
39. Capital budgeting techniques are often one of the inputs used for technology
decisions.
Ans. True
Feedback: Technology Decisions
40. Technology decisions that involve the outlay of funds is considered a capital
investment.
Ans. True
41. Technology decisions are often a significant factor in process planning.
Ans. True
42. A high-level process map is a useful tool in beginning the redesign of a process.
Ans. True
43. Breakthrough improvement is often implemented when opportunities for

continuous improvement have been exhausted.
Ans. True
44. In general, processes should be analyzed for continuous improvement only after a
breakthrough improvement.
Ans. False
Multiple Choice
45. A firm’s process strategy defines all of the following except its
a. capital intensity.
b. process flexibility.
c. vertical integration.
d. process selection.
Ans: d
Difficulty: Hard
46. The extent to which the firm will produce the inputs and control the outputs of
each stage of the production process is known as
a. vertical integration.
b. process flexibility.
c. process planning.
d. capital intensity.
Ans: a
47. The ease of adjusting resources in response to changes in demand defines firm’s
a. vertical integration
b. process flexibility
c. customer involvement
d. capital intensity
Ans: b
Difficulty: Easy
48. Which of the following is not a potential risk associated with a project?
a. huge swings in resource requirements
b. extensive learning curve benefits
c. limited learning curve benefits
d. small swings in resource requirements
Ans: b
49. Variable demand and small to moderate quantities produced to order are
characteristics usually associated with
a. mass production
b. continuous production
c. projects
d. batch production
Ans: d
50. Most of the operations in batch production involve
a. fabrication
b. assembly
c. continuous processing
d. outsourcing
Ans: a
Difficulty: Easy
51. A print shop is an example of which of the following process choices?

a. project
b. batch production
c. continuous production
d. mass production
Ans: b
Difficulty: Easy
52. Which of the following is not an advantage of batch production?

a. frequent changes in product mix
b. flexibility
c. customization of output
d. quality reputation
Ans: a
53. Disadvantages of batch production include all of the following except

a. high per-unit costs.
b. frequent changes in product mix.
c. flexibility.
d. scheduling problems.
Ans: c
54. Complex scheduling problems are most likely to occur with which process type?
a. mass production systems
b. batch production systems
c. continuous production systems
d. repetitive manufacturing systems
Ans: b
55. Which of the following is not a characteristic of mass production?

a. made-to-stock
b. stable demand
c. high product variety
d. high product volume
Ans: c
Difficulty: Easy
56. Mass production systems tend to employ

a. specialized equipment and limited labor skills.
b. specialized equipment and specialized labor skills.
c. general purpose equipment and limited labor skills.
d. general purpose equipment and specialized labor skills.
Ans: a
Difficulty: Easy
57. One disadvantage of mass production is its

a. efficiency.
b. speed of production.
c. low per-unit costs.
d. lack of responsiveness.
Ans: d
Difficulty: Easy
58. Steel, paper, paints, and chemicals are examples of products that use
a. batch production.
b. repetitive production.
c. continuous production.
d. mass production.
Ans: c
59. As process selection moves up the diagonal from project to continuous

production
a. demand volume increases.
b. product variety increases.
c. capital intensity decreases.
d. flexibility increases.
Ans: a
60. A company is considering producing a product for a new market. The fixed costs
required for manufacturing and delivering the product is $50,000. Labor and material
costs are estimated to be approximately $25.00 per product. If the product is sold for
$35.00 each, the firm’s break-even volume would be
a. 50,000 units
b. 5,000 units
c. 2500 units
d. 500 units
Ans: b
Difficulty: Hard
61. If a firm can sell a product for $40.00 each, then what is the volume needed to
break-even if the fixed cost of production is $125,000.00 and labor and material costs are
$30.00 per item?
a. 125,000
b. 12,500
c. 4,167
d. 3,250
Ans: b
Difficulty: Hard
62. A company is evaluating which of two alternatives should be used to produce a

product that will sell for $35.00 per unit. The following cost information describes the
two alternatives
Process A Process B
Fixed Cost $500,000 $750,000
Variable Cost per Unit $25.00 $23.00
The break-even volume for Process A is

a. 50,000 units
b. 62,500 units
c. 30,000 units
d. 20,000 units
Ans: a
Difficulty: Hard

two alternatives
Process A Process B
Fixed Cost $500,000 $750,000
The break-even volume for Process B is

a. 50,000 units
b. 62,500 units
c. 30,000 units
d. 20,000 units
Ans: b
Difficulty: Hard

two alternatives
Process A Process B
Fixed Cost $500,000 $750,000
If total demand (volume) is 120,000 units, then the company should

a. select Process A with a profit of $940,000 to maximize profit
b. select Process B with a profit of $450,000 to maximize profit
c. select Process A with a profit of $700,000 to maximize profit
d. select Process B with a profit of $690,000 to maximize profit
Ans: c
Difficulty: Hard

two alternatives
Process A Process B
Fixed Cost $500,000 $750,000
If total demand (volume) is 150,000 units, then the company should

a. select Process A with a profit of $1,300,000 to maximize profit
b. select Process B with a profit of $750,000 to maximize profit
c. select Process A with a profit of $1,000,000 to maximize profit
d. select Process B with a profit of $1,050,000 to maximize profit
Ans: d
Difficulty: Hard
two alternatives
Process A Process B
Fixed Cost $500,000 $750,000
For what level of volume (output) would the firm prefer Process A to Process B?
a. for all volume levels greater than 75,000
b. for all volume levels greater than 97,500
c. for all volume levels greater than 117,500
d. for all volume levels greater than 125,000
Ans: d
Difficulty: Hard
67. A company is considering producing an item that can be sold for $37.50 per unit.
If the fixed costs for setting up production are $225,000 and the variable cost per unit for
the item is $35.00 then the break-even volume for this item is
a. 6,000 units
b. 6,429 units
c. 72,500 units
d. 90,000 units
Ans: d
Difficulty: Hard
68. All the following are factors influencing the outsourcing decision except
a. capacity.
b. expertise.
c. quality.
d. product variety.
Ans. d
69. The product-process matrix includes all the following process types except
a. mass production.
b. stable production.
c. continuous production.
d. batch production.
Ans. b
70. Which of the following is NOT associated with the sourcing continuum?
a. Joint venture
b. In-house production
c. Strategic alliance
d. Single contract
Ans. b
Difficulty: Hard
71. Technology decisions typical in operations management include all the following
areas except
a. information technology.
b. product technology.
c. process technology.
d. communication technology.
Ans. d
Difficulty: Hard
Short Answer Questions
72. What is a process strategy and how does it affect the firm?
Ans: A process strategy is an organization’s overall approach for physically producing
goods and providing services. Process decisions should reflect how the firm has
chosen to compete in the marketplace, reinforce product decisions, and facilitate the
achievement of corporate goals. A firm’s process strategy defines its: (1) capital
intensity, or mix of capital and labor; (2) process flexibility; (3) degree of vertical
integration; and (4) level of customer involvement in the production process.
Difficulty: Hard
73. List some non-economic factors that can influence a firm’s outsourcing decision.
Ans: There are several noneconomic factors which can influence or dominate the
economic considerations of a outsourcing decision. Among these are (1) the level of
capacity at which the company is operating; (2) the capability to provide quality parts
consistently; (3) the speed with which goods can be provided by a supplier; (4) the
reliability of suppliers; and (5) the expertise of the firm and its willingness to release
valuable product information to a supplier.
74. List six principles for redesigning processes for e-Business as suggested by Omar El
Sawy.
Ans: Student answers will vary but could include the following:
(a) remove waste, simplify, and consolidate similar activities
(b) link processes to create value
(c) let the swiftest and most capable enterprise execute the process
(d) flex the process for any time, any place, any way
(e) capture data digitally at the source and propagate it through the
process
(f) provide visibility through better information about process status
(g) fit the process with sensors and feedback loops that can prompt
action
(h) add analytic capabilities to the process
(i) connect, collect, and create knowledge around the process
(j) personalize the process with the preferences and habits of
participants
Difficulty: Hard

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File: ch06, Chapter 6: Processes and Technology

1. A process is a group of unrelated tasks with specific inputs and outputs.

3. Planning, analyzing, and improving processes is the purpose of operations

6. A firm’s process strategy rarely defines its capital intensity.

7. A firm’s process strategy defines the extent of customer involvement in providing

8. Process planning determines how a manufactured good is produced or a service is

12. Supplier speed is rarely an important consideration in outsourcing decisions.

13. Supplier reliability is often an important consideration in outsourcing decisions.

14. One-of-a-kind production of a product based on a customer’s unique

18. One characteristic of batch production is variable demand.

19. Producing a high volume of a single product is a characteristic of batch

23. Mass production is characterized by high volumes of a customized product for a

24. Mass production is characterized by high volumes of a standard product for a

25. Mass production is often associated with assembly lines.

28. Continuous production is characterized by very high volumes of commodity

37. Two approaches to process improvement include continuous and breakthrough.

41. Technology decisions are often a significant factor in process planning.

43. Breakthrough improvement is often implemented when opportunities for

51. A print shop is an example of which of the following process choices?

52. Which of the following is not an advantage of batch production?

53. Disadvantages of batch production include all of the following except

55. Which of the following is not a characteristic of mass production?

56. Mass production systems tend to employ

57. One disadvantage of mass production is its

59. As process selection moves up the diagonal from project to continuous

62. A company is evaluating which of two alternatives should be used to produce a

The break-even volume for Process A is

63. A company is evaluating which of two alternatives should be used to produce a

The break-even volume for Process B is

64. A company is evaluating which of two alternatives should be used to produce a

If total demand (volume) is 120,000 units, then the company should

65. A company is evaluating which of two alternatives should be used to produce a

If total demand (volume) is 150,000 units, then the company should

Short Answer Questions

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