Intro to Operations Management
1. What is operations management?
A. Managing the marketing department
B. The management of systems or processes that create goods and/or provide services
C. The management of a company’s finance department
D. Managing only the logistics department
Explanation: Operations management focuses on managing processes that create products or deliver services effectively.
2. What is included in the supply chain?
A. Only the producers
B. Suppliers, producers, distributors, and customers
C. Only direct suppliers
D. Customers and marketers
Explanation: The supply chain involves a sequence of activities and organizations that create and deliver goods or services.
3. What is a transformation process?
A. A process where outputs become inputs
B. A process that converts inputs into outputs
C. The transportation of goods to customers
D. Changing products into services
Explanation: The transformation process converts resources such as land, labor, and capital into goods or services.
4. Which of the following is a characteristic of a service?
A. It can be stored in inventory
B. It is tangible
C. It offers psychological value
D. It does not require customer interaction
Explanation: Services provide psychological value and often involve customer interaction, unlike physical goods.
5. Which of these is an example of a good?
A. Legal counsel
B. Oven
C. Haircut
D. Education
Explanation: Goods are tangible physical items, such as ovens, that can be stored in inventory.
6. What is the main difference between goods and services?
A. Goods require more customer contact
B. Services are always uniform in output
C. Goods are tangible, while services are intangible
D. Services are easier to store in inventory
Explanation: Goods can be touched and stored, whereas services are intangible and often consumed at the point of delivery.
7. What does feedback in the transformation process represent?
A. Product returns
B. Measurements taken at various points
C. Inventory restocking
D. Customer reviews
Explanation: Feedback refers to performance measurements collected throughout the process to ensure standards are met.
8. What type of variation is beyond management’s control?
A. Structural variation
B. Assignable variation
C. Random variation
D. Seasonal variation
Explanation: Random variation naturally occurs in all processes and cannot be directly managed or influenced by managers.
9. Which decision involves determining where work will be performed?
A. When decision
B. How decision
C. What decision
D. Where decision
Explanation: “Where” decisions focus on determining the location or place where activities or operations will occur.
10. What is a core function of the operations manager?
A. Developing marketing strategies
B. Ensuring personnel satisfaction
C. Guiding system design and operations
D. Managing stock investments
Explanation: Operations managers make key decisions in both system design and daily operations to ensure smooth workflows.
11. What does the term “value-added” refer to?
A. Additional costs in production
B. Feedback incorporated into the final product
C. The difference between the input value and output value
D. Market value adjustments over time
Explanation: Value-added represents the enhancement a company gives its products or services before offering them to customers.
12. Which function does not belong in the basic functions of business organizations?
A. Operations
B. Finance
C. Marketing
D. Public Relations
Explanation: The basic functions of a business organization are operations, finance, and marketing, which are interdependent.
13. What does the “Pareto phenomenon” emphasize?
A. All tasks have equal importance
B. Critical few factors account for most outcomes
C. All systems are self-correcting over time
D. Random efforts are more effective than focused ones
Explanation: The Pareto principle suggests that a small number of factors often account for a large portion of the results.
14. Which decision is tactical rather than strategic?
A. Facility layout
B. Managing personnel
C. Facility location
D. Product planning
Explanation: Tactical decisions deal with day-to-day operations, such as personnel management, while strategic decisions have long-term implications.
15. What is an example of a supporting process?
A. Production
B. Marketing
C. Accounting
D. Facility layout
Explanation: Supporting processes, like accounting, aid the core processes but are not directly involved in production or service delivery.
16. What is the focus of quantitative approaches in decision making?
A. Finding creative solutions
B. Obtaining mathematically optimal solutions
C. Exploring subjective opinions
D. Emphasizing team collaboration
Explanation: Quantitative approaches use mathematical models to find optimal solutions to problems, often relying on computer calculations.
17. Which system perspective emphasizes the relationship among subsystems?
A. Linear thinking
B. Systems perspective
C. Reductionist approach
D. Departmental isolation
Explanation: The systems perspective emphasizes the interrelationship between parts of an organization, recognizing that they must work together.
18. What was a key feature of the scientific management movement?
A. Promoting creativity in the workplace
B. Applying statistical procedures
C. Maximizing output through standardized methods
D. Focusing solely on employee satisfaction
Explanation: Scientific management, led by Frederick Taylor, focused on observation and standardized methods to improve efficiency.
19. What is one challenge faced by supply chains today?
A. Reducing the need for transportation
B. Increasing levels of outsourcing
C. Eliminating e-business
D. Simplifying global operations
Explanation: Many supply chains now outsource parts of their operations, which adds complexity and potential risks.
20. What is a major issue for operations managers today?
A. Ignoring environmental concerns
B. Risk management
C. Eliminating productivity metrics
D. Reducing global competition
Explanation: Risk management has become increasingly important, especially in managing uncertainties in global operations.
Competitiveness, Strategy, and Productivity
1. What is competitiveness in business?
A. Selling at the lowest price
B. How effectively an organization meets customer needs relative to competitors
C. Offering the highest quality products only
D. Focusing solely on marketing
Explanation: Competitiveness refers to the ability of a business to satisfy customers better than its competitors.
2. What is an essential factor that influences competitiveness through marketing?
A. Advanced technology
B. Inventory levels
C. Identifying customer wants and needs
D. Reducing costs only
Explanation: Understanding customer needs and wants is key to creating relevant products and services.
3. Which of the following is NOT a reason why organizations fail?
A. Ignoring operations strategy
B. Emphasizing long-term R&D investment
C. Poor internal communication
D. Failing to consider customer needs
Explanation: Organizations often fail when they prioritize short-term gains over investments in R&D.
4. What does a mission statement define?
A. The operational plans for the year
B. The methods to achieve strategic goals
C. The reason for an organization’s existence
D. The financial status of the organization
Explanation: A mission statement outlines the fundamental purpose and focus of an organization.
5. What is the purpose of organizational goals?
A. To replace the mission statement
B. To act as specific methods for tactics
C. To provide detail and scope for the mission
D. To define individual employee tasks
Explanation: Goals translate the mission into specific objectives that guide the organization.
6. Which term describes a plan to achieve organizational goals?
A. Mission
B. Strategy
C. Tactics
D. Operations
Explanation: A strategy outlines how the organization will achieve its long-term goals.
7. What are tactics?
A. The strategic objectives of the organization
B. Detailed methods to achieve strategies
C. The financial plan for achieving success
D. The mission of the organization
Explanation: Tactics represent the “how to” aspect, focusing on actions to implement strategies.
8. What are core competencies?
A. Weaknesses of an organization
B. Special attributes or abilities that give a competitive edge
C. Non-essential activities in a business
D. The mission of the organization
Explanation: Core competencies are unique strengths that allow a company to compete effectively.
9. What is an example of an order winner?
A. The minimum acceptable standard for product design
B. A feature that makes the product superior to competitors
C. A feature that guarantees no product returns
D. The minimum price of a product
Explanation: Order winners differentiate products or services, making them more attractive to customers.
10. What does environmental scanning help an organization identify?
A. Only internal strengths
B. Only external threats
C. Both internal and external factors
D. Future product innovations
Explanation: Environmental scanning helps identify strengths, weaknesses, opportunities, and threats.
11. Which strategy emphasizes reducing time to complete tasks?
A. Cost-based strategy
B. Quality-based strategy
C. Time-based strategy
D. Sustainability strategy
Explanation: Time-based strategies focus on faster processes to enhance productivity and customer service.
12. What is agile operations?
A. The practice of cutting costs in production
B. A strategic approach that emphasizes flexibility in changing environments
C. A focus on quality improvement only
D. Relying solely on automation
Explanation: Agile operations combine multiple competencies to adapt to market changes quickly.
13. What is the purpose of a balanced scorecard?
A. To track employee attendance
B. To translate strategy into action with measurable objectives
C. To determine product prices
D. To assess only financial performance
Explanation: The balanced scorecard helps align business activities with strategic goals using various perspectives.
14. How is productivity typically measured?
A. Input divided by profit
B. Output divided by input
C. Costs divided by sales
D. Customer satisfaction scores
Explanation: Productivity is the ratio of output generated to input used.
15. Why is productivity important?
A. It determines advertising budgets
B. It ensures constant product demand
C. It links to higher standards of living and competitive advantage
D. It eliminates the need for employee training
Explanation: Higher productivity helps improve living standards and offers a competitive edge in the market.
16. What is process yield in services?
A. Total revenue from services
B. Ratio of available services to total demand
C. Ratio of accepted students to those approved for admission
D. Number of customer complaints handled
Explanation: Process yield measures service outcomes based on specific metrics relevant to the service.
17. What is one challenge in measuring service productivity?
A. High equipment costs
B. Variability in service delivery
C. Standardization of tasks
D. Limited employee availability
Explanation: Services involve intellectual activities and have high variability, making productivity measurement difficult.
18. Which factor affects productivity?
A. Employee uniforms
B. Weather patterns
C. Technology
D. Company logos
Explanation: Technology improvements, such as AI and 3D printing, significantly impact productivity.
19. What does a sustainability strategy focus on?
A. Maximizing short-term profits
B. Meeting only environmental regulations
C. Aligning business practices with ecological sustainability goals
D. Ignoring economic factors
Explanation: Sustainability strategies integrate environmental goals with business operations to ensure long-term success.
20. What is a common technological factor improving productivity today?
A. Social media platforms
B. Drones
C. Virtual meetings
D. Manual record-keeping systems
Explanation: Drones and other technologies, such as AI and GPS, contribute to productivity improvements across industries.
Forecasting
1. What is forecasting?
A. Predicting only weather conditions
B. A statement about the future value of a variable of interest
C. A method to calculate current inventory levels
D. A tool used solely in marketing departments
Explanation: Forecasting involves making predictions about future events or variables, such as demand or resource availability.
2. What is a key feature of all forecasts?
A. They are always accurate
B. They assume future outcomes can be random
C. Forecast accuracy decreases as the forecasting horizon increases
D. Forecasts are only used for financial planning
Explanation: Longer-term forecasts tend to be less accurate than short-term ones.
3. Why are forecasts not perfect?
A. There are no tools to measure forecast accuracy
B. Models used are too complex
C. Random variations are always present
D. Forecasting methods always make errors intentionally
Explanation: Even with the best models, some random variations will result in errors.
4. Which is an element of a good forecast?
A. Complicated techniques
B. Should be expensive
C. Should be timely and accurate
D. Must rely only on historical data
Explanation: A good forecast must be accurate, timely, reliable, and expressed in meaningful units.
5. What is the first step in the forecasting process?
A. Select a forecasting technique
B. Establish a time horizon
C. Monitor forecast errors
D. Determine the purpose of the forecast
Explanation: The forecasting process starts with defining its purpose to guide the subsequent steps.
6. What distinguishes qualitative forecasting techniques?
A. Use of historical data
B. Reliance on personal opinions and soft information
C. Always more accurate than quantitative methods
D. Used only for short-term forecasts
Explanation: Qualitative forecasting incorporates subjective elements like opinions and hunches.
7. What is a naïve forecast?
A. Uses advanced mathematical models
B. The forecast equals the value of the previous period
C. Requires seasonal adjustments for every forecast
D. A complex method to handle irregular variations
Explanation: A naïve forecast assumes the next value will be the same as the most recent one.
8. Which method smooths variations by averaging recent data?
A. Linear trend forecasting
B. Moving average
C. Weighted moving average
D. Exponential smoothing
Explanation: The moving average method averages recent values to smooth out variations.
9. What happens when fewer data points are used in a moving average?
A. The forecast becomes less accurate
B. The model becomes more responsive
C. The forecast becomes insensitive to changes
D. The forecast error decreases
Explanation: Fewer data points make the model more responsive to recent changes.
10. What is the key characteristic of exponential smoothing?
A. Relies only on seasonal data
B. Uses equal weights for all data points
C. Incorporates a percentage of forecast error into predictions
D. Does not need historical data
Explanation: Exponential smoothing gives more weight to recent data and includes forecast error in adjustments.
11. What are the components of a trend-adjusted exponential smoothing forecast?
A. Seasonal index and smoothing factor
B. Smoothed error and trend factor
C. Forecast bias and random variation
D. Average and weighted trend
Explanation: Trend-adjusted exponential smoothing includes both smoothed error and trend adjustments.
12. What is a seasonal relative?
A. A measurement of irregular variations
B. A percentage used in the multiplicative forecasting model
C. A predictor variable for regression analysis
D. A random factor influencing forecasts
Explanation: Seasonal relatives adjust forecasts to reflect recurring seasonal variations.
13. What type of forecasting technique uses predictor variables?
A. Time-series analysis
B. Qualitative forecasting
C. Naïve forecasting
D. Associative techniques
Explanation: Associative forecasting relies on relationships between predictor variables and the variable of interest.
14. What is the goal of simple linear regression?
A. Calculate seasonal indices
B. Obtain an equation that minimizes squared deviations
C. Identify time-series cycles
D. Predict random variations
Explanation: Simple linear regression finds a line that best fits the data by minimizing the sum of squared deviations.
15. What does the correlation coefficient measure?
A. The difference between two forecasts
B. The strength and direction of the relationship between two variables
C. The average forecast error
D. The size of the seasonal relative
Explanation: The correlation coefficient, r, indicates how closely two variables are related.
16. What is the purpose of monitoring forecast errors?
A. To eliminate all forecast errors
B. To detect bias and non-random errors
C. To adjust past forecasts
D. To increase seasonal variations
Explanation: Monitoring helps identify trends or patterns in forecast errors that may indicate issues.
17. Which metric weighs errors by their relative size?
A. MAD (Mean Absolute Deviation)
B. MSE (Mean Squared Error)
C. MAPE (Mean Absolute Percentage Error)
D. Forecast variance
Explanation: MAPE expresses forecast errors as a percentage of actual values, weighing errors by their relative size.
18. What is a tracking signal used for?
A. To adjust seasonal indices
B. To monitor forecast bias
C. To identify cycles in data
D. To smooth random variations
Explanation: Tracking signals help detect persistent bias in forecasts by tracking cumulative errors.
19. What is a major factor to consider when choosing a forecasting technique?
A. Forecast popularity
B. The length of the forecast horizon
C. The number of predictors
D. Customer satisfaction scores
Explanation: The forecast horizon affects which forecasting techniques are most appropriate.
20. How can organizations improve forecast quality?
A. Extend the forecast horizon
B. Avoid using short-term forecasts
C. Share forecasts across the supply chain
D. Eliminate all predictor variables
Explanation: Sharing data and forecasts with supply chain partners can enhance forecast accuracy.
Product and Service Design
1. Why is product and service design important?
A. It reduces the need for marketing
B. It determines the structure of the entire organization
C. It focuses only on manufacturing costs
D. It delays product launches
Explanation: The essence of an organization is the products and services it offers, influencing all aspects of its structure.
2. Which is a responsibility of product and service design?
A. Avoiding inter-functional collaboration
B. Ignoring customer wants
C. Developing prototypes and testing them
D. Limiting product documentation
Explanation: Product and service design involves constructing and testing prototypes as part of development.
3. What is a key question in product and service design?
A. How to eliminate all competitors
B. What level of quality is appropriate?
C. How to reduce workforce levels
D. How to increase product price
Explanation: Designers need to determine the appropriate quality level to meet customer expectations and competitive standards.
4. What can trigger the need for product redesign?
A. Stable economic conditions
B. Competitive threats or technological advances
C. Absence of product liability laws
D. Low workforce turnover
Explanation: Market opportunities or threats such as technological changes can drive the need for product or service redesign.
5. What is reverse engineering?
A. Creating completely new designs
B. Dismantling a competitor’s product to find improvements
C. Testing a product for defects after sales
D. Forecasting future product demands
Explanation: Reverse engineering involves studying a competitor’s product to discover potential improvements.
6. Which type of research focuses on achieving commercial applications?
A. Basic research
B. Experimental research
C. Applied research
D. Development research
Explanation: Applied research aims at practical applications with commercial potential.
7. What is product liability?
A. A company’s right to modify products
B. A manufacturer’s responsibility for product-related harm
C. The cost of product development
D. The impact of brand image on product design
Explanation: Product liability holds manufacturers accountable for damages caused by faulty products.
8. What does the term “the 3 Rs” refer to?
A. Reduce, Reuse, Recycle
B. Research, Redesign, Reapply
C. Repair, Replace, Refund
D. Refine, Reassess, Retain
Explanation: The 3 Rs represent sustainable practices to minimize environmental impact.
9. What is the purpose of cradle-to-grave assessment?
A. Assessing customer satisfaction
B. Calculating manufacturing costs
C. Evaluating a product’s environmental impact over its life
D. Estimating product demand
Explanation: Cradle-to-grave assessment analyzes the environmental impact of a product throughout its lifecycle.
10. What does modular design allow?
A. Increased product complexity
B. Faster repairs and replacements
C. Unlimited product configurations
D. Elimination of manufacturing costs
Explanation: Modular design simplifies product maintenance by enabling quick replacements of components.
11. What is the goal of robust design?
A. Create products only for ideal conditions
B. Avoid international markets
C. Ensure products perform under varying conditions
D. Maximize product variety
Explanation: Robust design ensures products or services function well across a range of environments and conditions.
12. What does mass customization achieve?
A. Completely unique products for each customer
B. Standardized products without any customization
C. Standard goods with some customizable features
D. Reduction of production costs without customization
Explanation: Mass customization produces standardized goods with elements of customization to meet specific customer needs.
13. What is the House of Quality?
A. A tool to assess manufacturing costs
B. A framework to incorporate customer preferences into design
C. A method for managing product recalls
D. A strategy for mass production
Explanation: The House of Quality helps ensure customer needs are included in product and service development.
14. Which factor does standardization impact?
A. Increased product variation
B. Simplified purchasing and inspection
C. Higher training costs
D. Complex inventory systems
Explanation: Standardization reduces complexity, making processes like purchasing and inspection more routine.
15. What is delayed differentiation?
A. Postponing product launch indefinitely
B. Delaying product completion until customer preferences are known
C. Waiting for competitor products to launch first
D. Delaying manufacturing to reduce costs
Explanation: Delayed differentiation postpones product finalization to customize according to customer needs.
16. What is concurrent engineering?
A. Sequential product development
B. Isolating manufacturing from design
C. Collaboration between design and manufacturing teams early in the process
D. Outsourcing product design
Explanation: Concurrent engineering integrates multiple functions to improve product design and development.
17. Which is a disadvantage of modular design?
A. Limited product configurations
B. Easier diagnosis of failures
C. Reduced training costs
D. Simplified assembly processes
Explanation: Modular design limits the number of product configurations possible due to standardized modules.
18. What is the Kano model used for?
A. Identify product manufacturing issues
B. Classify customer requirements based on their impact on satisfaction
C. Analyze product lifecycles
D. Forecast future product trends
Explanation: The Kano model distinguishes between basic, performance, and excitement qualities in customer expectations.
19. What is a benefit of component commonality?
A. Reduced product quality
B. Increased design complexity
C. Simplified inventory management
D. Higher training costs
Explanation: Component commonality reduces the number of different parts, streamlining inventory processes.
20. What is an important issue in service design?
A. Focusing only on back-end operations
B. Minimizing customer involvement
C. Managing the degree of customer contact
D. Reducing service variations
Explanation: Service design must consider how much interaction customers have with the service delivery process.