Operations Management Exam 4
Question 1
Consider a packaged milk products supply chain. A lumber company provides wood to a paper
mill, who supplies cardboard to a container manufacturer, who supplies containers to the milk
products manufacturer. The lumber company is:
Answer
a tier one supplier.
a tier two supplier.
a tier three supplier.
a tier four supplier.
not in the supply
chain.
Question 2
Which term refers to inaccurate or distorted demand information created in the supply chain?
Answer
Battle axe
effect
Cobra effect
Bullwhip
effect
Lasso effect
Whirlpool
effect
Question 3
Which of the following is not one of the four major causes of the bullwhip effect?
Answer
Demand forecast updating
Order batching
Price fluctuations
The business cycle
Rationing and shortage
gaming
Question 4
When do rationing and shortage gaming occur?
Answer
Supply exceeds demand.
Demand exceeds supply.
Government contracts are awarded.
Transportation workers go on strike.
Marginal revenue exceeds marginal
cost.
Question 5
Online retailing, or B2C, has shifted:
Answer
the cost of doing business.
the power from the suppliers to the
consumers.
the way the internet works.
internal corporate power to the IT
department.
corporate funding levels to the IT
department.
Question 6
What refers to owning or controlling sources of raw materials and components?
Answer
Backward integration
Horizontal integration
Encapsulating
integration
Forward integration
Subsuming integration
Question 7
According to several studies, what are the three most important criteria for selecting suppliers?
Answer
Price, quality, fast delivery
Quality, fast delivery, on-time
delivery
Price, flexibility, on-time delivery
Quality, flexibility, fast delivery
Price, quality, on-time delivery
Question 8
Early supplier involvement refers to the involvement of critical suppliers for what?
Answer
Strategic planning
Assembly line design
Speedy delivery
planning
Selection of new
suppliers
New product design
Question 9
What is the process whereby shipments are transferred directly from inbound trailers to outbound
trailers?
Answer
crossdocking
directdocking
nodocking
simuldocking
transferdockin
g
Question 10
Benetton is well known for the practice of assembling all white sweaters and waiting to dye them
much closer to the time of sale. This is an example of what?
Answer
Stupidity
Postponement
Fractionalizati
on
Partitioning
Genericness
Question 11
Supply chain velocity refers to
Answer
how fast the transportation vendor is
how fast the company pays the supply chain vendors
how fast the purchasing department responds to a request
the speed at which a product moves through a pipeline from the manufacturer to the
customer
the speed at which the warehouse is able to crossdock a shipment
Question 12
Which of the following is not a typical result of the bullwhip effect?
Answer
Absenteeism
Lost revenues
Ineffective transportation use
Poor customer service levels
Misused manufacturing
capacity
Question 13
Which of the following is not a remedy for the bullwhip effect?
Answer
Allocate units based on past
demand
Price stabilization
Fill orders based on a set
percentage
Eliminate order batching
Information sharing
Question 14
Which of the following is NOT a positive attribute of Multiple Suppliers?
Answer
provides a greater flexibility of volume
eliminates a supplier's dependence on the purchaser
probability of assured supply is better
deliveries can be schedule more easily
allows for testing of new suppliers without jeopardizing the flow of
materials
Question 15
Companies want a supply chain that makes it possible to:
Answer
manage all suppliers' development costs.
manage and adapt to all of the business
dynamics.
manage distribution display.
manage distribution outlet retail prices.
manage customer demands.
Question 16
Will's omelet factory produces 2,500 omelets a day. They've determined that their daily fixed
costs are $4,000 with a variable cost of fifteen cents per omelet. What should Will charge for
each omelet to make a 10% profit, rounded to the next whole dollar?
Answer
5.0
0
4.0
0
3.0
0
2.0
0
1.0
0
Question 17
Logo, Inc., can transport its own goods for a $140,000 annual cost and $25 per unit. A logistics
supplier offers a contract for a $100,000 annual cost at $30 per unit. What is the indifference
point?
Answer
800
0
700
0
600
0
500
0
Question 18
Simuelson Industries can produce its own motors for a $60,000 fixed monthly cost and a $50
variable cost per unit. Alternatively, Simuelson Industries can purchase the motors from an
outside supplier for $50,000 per month and $58 per unit. What option should be chosen if
monthly demand is 1200 units?
Answer
in-house
production
outsourcing
Question 19
Yannis Corporation is trying to decide whether to produce its own subassemblies or outsource
them. In-house production costs would include an annual fixed cost of $250,000, materials costs
per unit of $7, and labor costs per unit of $5. Teshtown, Inc. has agreed to provide the
subassemblies for an annual cost of $400,000 and a unit cost of $8 per subassembly. Over what
ranges of demand is outsourcing best option?
Answer
Less than 37500
Greater than or equal to
37500
Can not be determined
Question 20
Big Oil Refinery is losing money every month. They cannot shut down the refinery. What
quantity (in gallons) of product should they make in an effort to break even? Their primary
product sale price is $1.50 per gallon. The production fixed cost is $36,000/day. The variable
cost per gallon is $1.30.
Answer
36,000
18,000
180,00
0
30,000
Question 21
Twenty samples of n = 200 were taken by an operator at a workstation in a production process.
The number of defective items in each sample was recorded as given in the following table.
Management wants to develop a p-chart. The desired confidence level is 80.0 percent. What is
the upper control limit?
Sampl Number of
Sampl Number of
e
Defectives
e
Defectives
1
12
11
16
2
18
12
15
3
10
13
13
4
15
14
16
5
16
15
18
6
19
16
17
7
17
17
18
8
12
18
20
9
11
19
21
10
14
20
22
Answer
close to 0.08
close to
0.019
close to 1.28
close 0.105
close to 0.8
Question 22
Cans of soup are supposed to weigh exactly 16 oz. Inspectors want to develop process control
charts. They take eight samples of five boxes and weigh them. They obtain the following data.
What is the upper control limit for the x-bar chart?
Sample
Mean
Range
1
15.2
1.8
2
14.6
0.7
3
16.5
0.5
4
18.1
0.4
5
13.2
0.2
6
16.0
0.4
7
15.9
0.5
8
Answer
close to
15.79
close to
15.93
close to
15.54
close to
15.82
14.8
0.9
Question 23
Cans of soup are supposed to weigh exactly 16 oz. Inspectors want to develop process control
charts. They take eight samples of five boxes and weigh them. They obtain the following data.
What is the upper control limit for the R chart?
Sample
Mean
Range
1
15.2
1.8
2
14.6
0.7
3
16.5
0.5
4
18.1
0.4
5
13.2
0.2
6
16.0
0.4
7
15.9
0.5
8
14.8
0.9
Answer
close to
1.42
close to
0.78
close to
1.12
close to
0.82
Question 24
Cans of soup are supposed to weigh exactly 16 oz. Inspectors want to develop process control
charts. They take eight samples of five boxes and weigh them. They obtain the following data. Is
the process in a state of control?
Sample
Mean
Range
1
15.2
1.8
2
14.6
0.7
3
16.5
4
18.1
5
13.2
6
16.0
7
15.9
8
14.8
Answer
yes (in control)
0.5
0.4
0.2
0.4
0.5
0.9
no (not in
control)
Question 25
Eight samples of n = 50 were taken by an operator at a workstation in a production process. The
number of defective items in each sample was recorded as follows. Is the process in a state of
control? Assume z =3.
Sample Number of Defectives
1
10
2
0
3
12
4
8
5
10
6
16
7
14
8
10
Answer
yes (in control)
no (out of
control)
Question 26
Cholesterol Palace is a fast-food restaurant. Management was concerned with errors in filling
orders at its drive-up window. It hired several undercover quality inspectors to randomly place
100 orders while the process seemed to be in control. The completed orders were then checked
for accuracy. What is the average number of defects per order based on these data?
Defect
Frequency
Incomplete, shorter order
12
Unordered items dispensed
2
Wrong product dispensed
Wrong toppings
Wrong size drink
Drink lid not sealed
No drinking straw with soft drink order
No napkins
Far too many condiment packets
No salt with sandwich or fries order
Wrong change
Other
14
14
2
17
0
18
65
10
3
12
Answer
close to
1.69
close to
169
close to
0.59
close to
2.00
Question 27
Cholesterol Palace is a fast-food restaurant. Management was concerned with errors in filling
orders at its drive-up window. It hired several undercover quality inspectors to randomly place
100 orders while the process seemed to be in control. The completed orders were then checked
for accuracy. What is the lower control limit for a c-chart. Use z =3.
Defect
Frequency
Incomplete, shorter order
12
Unordered items dispensed
2
Wrong product dispensed
14
Wrong toppings
14
Wrong size drink
2
Drink lid not sealed
17
No drinking straw with soft drink order
0
No napkins
18
Far too many condiment packets
65
No salt with sandwich or fries order
10
Wrong change
3
Other
12
Answer
close to
-2.21
close to 1.3
close to 3.0
zero (0)
close to
1.69
Question 28
Cholesterol Palace is a fast-food restaurant. Management was concerned with errors in filling
orders at its drive-up window. It hired several undercover quality inspectors to randomly place
100 orders while the process seemed to be in control. The completed orders were then checked
for accuracy.
Defect
Frequency
Incomplete, shorter order
12
Unordered items dispensed
2
Wrong product dispensed
14
Wrong toppings
14
Wrong size drink
2
Drink lid not sealed
17
No drinking straw with soft drink order
0
No napkins
18
Far too many condiment packets
65
No salt with sandwich or fries order
10
Wrong change
3
Other
12
A quality inspector just used the drive-up window and now checks her order. Her cheeseburger
has mustard on it although she ordered it without ketchup or mustard. Three handfuls of ketchup
and mustard packets (far too many) are in the sack, but no napkins. And hot coffee has spilled
because the lid wasn't properly sealed. Is the drive-up process in control?
Answer
yes (in control)
no (not in
control)
Question 29
In a single sampling plan the sample size n =5. The submitted lot has on an average 25%
defective items. Three acceptance numbers ( c = 0, c =1, and c=2) are being negotiated between
the manufacturer and the buyer. Which acceptance number is most desirable from the
manufacturer's viewpoint. You may use the following OC curve to find the answer.
Answer
c=
0
c=
1
c=
2
Question 30
In a double sampling plan the two acceptance numbers are: c1 = 8 and c2 = 12. The number of
defectives found in the first sample is 9. Therefore, a second sample is taken. What is the
maximum number of defectives allowed in the second sample for the lot to be accepted?