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Exam Answers
Exam Answers
Name:_____________________________________
1) Operations management is the set of activities that creates value in the form of
_goods_____ and _services_____ by transforming inputs into outputs.
2) Which of the following are the primary functions of all organizations? __D___
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
3) Which of the following tasks within an airline company are related to operations? __A___
A) crew scheduling
B) international monetary exchange
C) sales
D) advertising
E) accounts payable
4) Which of the following are among the 10 strategic operations management decisions?
__D___
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
6) 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:
__C___
A) 180 valves/hr.
B) 200 valves/hr.
C) 220 valves/hr.
D) 380 valves/hr.
E) 460 valves/hr.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Last Year This Year
Output 10,500 units 12,100 units
Labor Hours 12,000 13,200
Utilities $7,600 $8,250
Capital $83,000 $88,000
Has Martin Manufacturing improved its productivity during the past year? Explain how
could you come to this conclusion. _____________________________ Productivity improved in all
three categories this year; utilities showed the greatest increase, and labor the least (Labor
4.55%, Utilities 7.69%, Capital 6.52%).______
8) Which of the following does NOT represent a valid reason for globalizing operations?
__C___
A) reduce costs
B) improve the Long-range forecasting
C) reduce responsiveness
D) attract and retain global talent
E) understand markets
9) Which of the following OM strategy/issues should a firm with a product in the maturity
stage of its life cycle be LEAST concerned with at the present time? __A____
A) increase capacity
B) long production runs
C) standardization
D) cost cutting
E) fewer rapid product changes
A) Alpha
B) Beta
C) Gamma
D) Phi
E) Omega
1) Which of the following is NOT one of the phases of project management? __D__
A) planning
B) scheduling
C) controlling
D) budgeting
E) All of the above are project management phases.
2) The critical path for the network activities shown below is ( ) with duration ( ).
___D___
Activity Duration Immediate Predecessors
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
A 4 ---
B 2 A
C 7 --
D 4 A
E 5 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
3) A project being analyzed by PERT has 38 activities, 16 of which are on the critical path.
If the estimated time along the critical path is 90 days with a project variance of 25, what is
the probability that the project will be completed in 88 days or less? _ B____
A) 0.0228
B) 0.3446
C) 0.6554
D) 0.9772
E) 18
4) 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.
What are slack time at activity H and the Late Finish of activity H? ___B ____
A) 0; 13
B) 5; 24
C) 7; 22
D) 10; 24
E) 12;30
5) In the graph above, if activity C were delayed by two time units, what would happen to
the project duration? ___A____
A) No delay
B) Delay by 2
C) Delay by 4
D) Delay by 5
E) It depends, and is not deterministic
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
6) Convert the following AOA Network to AON
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Minimum duration is the longest of the three paths, ADE, or a total of 19 days.
10) An activity on a PERT network has these time estimates: optimistic = 1, most likely = 2,
and pessimistic = 5. What is its expected activity time? ___B___
A) 2.00
B) 2.33
C) 2.67
D) 4.67
E) 14.00
2) Which of the following most requires long-range forecasting (as opposed to short-range
or medium-range forecasting) for its planning purposes? ___D____
A) job scheduling
B) production levels
C) cash budgeting
D) capital expenditures
E) purchasing
4) What is the forecast for May using a four-month moving average? __D___
Nov. Dec. Jan. Feb. Mar. April
39 36 40 42 48 46
A) 38
B) 42
C) 43
D) 44
E) 47
5) 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? ___C__
A) 94.6
B) 97.4
C) 100.6
D) 101.6
E) 103.0
6) Identify two advantages of the moving average forecasting model. Identify two
disadvantages of the moving average forecasting model.
Answer: Advantages of the model include: it uses simple calculations, it smoothes out
sudden fluctuations, and it is easy for users to understand. Disadvantages include:
increasing the size of n makes the method less sensitive to real changes in demand, they
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
require extensive record keeping of past data, and they do not pick up on trends very well.
7) A forecasting method has produced the following over the past five months. What is the
mean absolute deviation? ___D___
A) -0.2
B) -1.0
C) 0.0
D) 1.2
E) 8.6
8) If two variables were perfectly correlated, what would the coefficient of correlation r
equal? ___D__
A) 0
B) -1
C) 1
D) B or C
E) none of the above
9) A time-series trend equation is 25.3 + 2.1x. What is your forecast for period 7? __D___
A) 23.2
B) 25.3
C) 27.4
D) 40.0
E) 179.2
10) What is the forecast for May based on a weighted moving average applied to the
following past demand data and using the weights: 4, 3, 2 (largest weight is for most recent
data)?
1) ___T___ All organizations, including service firms such as banks and hospitals, have a
production function.
2) ___F___ In order to have a career in operations management, one must have a degree in
statistics or quantitative methods.
3) ___F____ Reselling of services is, in general, more common than reselling of goods.
4) ___T___ Productivity is generally more difficult to improve in the service sector than in the
manufacturing sector.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
6) ___F____ Core competencies are good candidates for outsourcing.
7) ___T____ NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico,
and the United States.
8) ___T___ The World Trade Organization has helped to significantly reduce tariffs around the
world.
10) ___T____ Outsourcing is the practice of transferring a firm's activities that have
traditionally been internal to external suppliers.
1) ___T___ Outsourcing is the practice of transferring a firm's activities that have traditionally
been internal to external suppliers.
4) ___F____ The shortest of all paths through the network is the critical path.
5) ___T____ One responsibility of a project manager is to make sure that the project meets its
quality goals.
7) ___T____ 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.
8) ___T____ Slack is the amount of time an activity can be delayed without delaying the
entire project.
9) ___F____ A project organization works best for an organization when the project resides in
only one of its functional areas.
1) ___T___ The ES of an activity that has only one predecessor is simply the EF of that
predecessor.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
3) ___F___ Shortening the project's duration by deleting unnecessary activities is called
"project crashing."
5) ___T__ In exponential smoothing, you should choose high values of lpha (a) when
underlying average is likely to change.
6) ___T__ The sales force composite forecasting method relies on salespersons' estimates of
expected sales.
7) ___T___ Qualitative forecasting methods are used when the situation is vague and little
data exist.
8) ___T____ A naïve forecast for September sales of a product would be equal to the sales for
August.
9) ___F____ The larger the standard error of the estimate, the more accurate the forecasting
model.
A. market segments
B. similarity of manufacturing process
C. the availability of materials
D. the availability of machinery
Product families are defined by the resources shared, which produces efficient
production runs.
Once the required resources are decided, the next step is to compare required
resources with AVAILABLE RESOURCES.
10. Which time series model uses past forecasts and past demand data to
generate a new forecast?
d. exponential smoothing
13. Mean squared error and exponential smoothing are two measures of the
overall error of a forecasting model.
Answer: FALSE
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
15. Which time-series model uses BOTH past forecasts and past demand
data to generate a new forecast?
A) naïve
B) moving average
17. iven 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
19. 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
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
22. The sales force composite forecasting method relies on salespersons'
estimates of expected sales. True
23. The two general approaches to forecasting are
a. qualitative and quantitative
29. Outsourcing
a. transfers traditional internal activities to outside vendors
b. utilizes the efficiency which comes with specialization
c. lets the outsourcing firm focus on its critical success factors
d. None of the above are true of outsourcing.
e. All of the above are true of outsourcing.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
34. Research data suggest that foreigners outsource far more services to the
US than American companies send abroad True
38. Which of the following is the number-one reason driving outsourcing for
many firms?
a. focusing on core competencies
b. gaining outside technology
c. improving operations and service
d. cost savings
e. gaining outside expertise
40. Some business activities, such as human resources and legal processes,
cannot be outsourced
False
53. Firms using the global strategy can be thought of as "world companies."
T/F
False
58. Which of the following activities takes place once the mission has been
developed?
a. The firm develops alternative or back-up missions in case the original
mission fails.
b. The functional areas develop their functional area strategies.
c. The functional areas develop their supporting missions.
d. The ten OM decision areas are prioritized.
e. Operational tactics are developed
61. According to the authors, which of the following strategic concepts allow
firms to achieve their missions?
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
a. productivity, efficiency, and quality leadership
b. differentiation, cost leadership, and quick response
c. differentiation, quality leadership, and quick response
d. distinctive competency, cost leadership, and experience
e. differentiation, distinctive competency, quality leadership, and capacity
62. The project organization works best when which conditions are met?
1. Work can be defined with a specific goal and deadline.
2. The work contains interrelated tasks requiring specialized skills
3. the project cuts across organizational lines
66. All of the following decisions fall within the scope of operations
management except for
a. financial analysis
b. design of goods and processes
c. location of facilities
d. managing quality
e. All of the above fall within the scope of operations management.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
69. Which of the following does NOT belong to the planning phase of project
management?
-goal setting
-team organization
-defining the project
-monitoring resources
70. Which of the following does NOT belong to the controlling phase of
project management?
-monitor resources, costs, quality, budgets
-revise plans
-shift resources
-define the project
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
d. Managing quality
e. all of the above
77. Which of the following is not one of The Ten Critical Decisions of
Operations Management?
a. Layout strategy
b. Maintenance
c. Process and capacity design
d. Mass customization
e. Supply chain management
80. 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
82. 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.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
D) naive method, because there is no data history.
E) trend extrapolation.
83. Which of the following most requires long-range forecasting (as opposed
to short-range or medium-range forecasting) for its planning purposes?
A) job scheduling
B) production levels
C) cash budgeting
D) capital expenditures
E) purchasing
87. Medium and long forecast are different from short range forecast by 3
features?
1. Intermediate and long forecast deal with more comprehensive issues
supporting management decisions.
2.Short term forecasting usually employs different methodologies than longer
term forecasting.
3.Short term forecast tend to be more accurate than longer range forecast.
89. A weighted moving average forecast will always lag behind a trend T or F
True
91. The weighted moving average technique is not well suited for forecasting
the demand for a very new product T or F True
92. Moving average: forecast uses an average of the most recent periods of
data to forecast the next period
94. What are some of the drawbacks of the moving average forecasting
model?
The disadvantages of moving average forecasting models are that the
averages always stay within past ranges, that they require extensive record
keeping of past data, and that they cannot be used to develop a forecast
several periods into the future
95. What is the forecast for May based on a weighted moving average
applied to the following past demand data and using the weights; 4, 3, 2
(largest weight is for the most recent data)?
Nov.-37 Dec.-36 Jan.-40 Feb.-42 Mar.-47 April-43
44.1
True
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
102. Which of the following is an example of competing on the basis of
differentiation?
a. A firm manufactures its product with less raw material waste than its
competitors do.
b. A firm's products are introduced into the market faster than its
competitors' products are.
c. A firm's distribution network routinely delivers its product on time.
d. A firm offers more reliable products than its competitors do.
e. A firm advertises more than its competitors do.
118. Which of the following does not represent reasons for globalizing
operations?
a. reduce costs
b. improve supply chain
c. reduce responsiveness
d. attract and retain global talent
e. All of the above are valid reasons for globalizing operations.
119. One reason for global operations is to gain improvements in the supply
chain.
True
123. Factor Rating offers a way for a team to compare projects on multiple
dimensions, which are weighted to reflect their relative importance. Have the
team brainstorm selection criteria and then reduce the number of criteria to
a manageable number.
125. 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.
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015
Problem Set, BUS 140: Fundamentals of OM, Jon Sung, Fall 2015