Operations Management and Supply Chain Exam Prep

OPRE 3310 Exam 1 Practice Questions

1) A supply chain with a distributor has more product handling than one without a distributor.

▢ True ▢ False

2) Lead time is a way to measure the availability of inventory.

▢ True ▢ False

3) Goods-producing organizations are not involved in service activities.

▢ True ▢ False

4) Service operations require additional inventory because of the unpredictability of consumer demand.

▢ True ▢ False

5) Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom-made parts.

▢ True ▢ False

6) Services can be stored and are not provided “on demand.”

▢ True ▢ False

7) Productivity is defined as the ratio of output to input.

▢ True ▢ False

8) As long as we match a competitor on quality and price, we will gain market share.

▢ True ▢ False

9) Lead time is the time between when an order is _________ and when it is _________.

• A) submitted, delivered
• B) submitted, canceled
• C) delivered, returned
• D) returned, canceled

10) When should the inventory manager reorder stock (considering demand rate and lead time) if the demand rate is ten per week and lead time is five weeks?

• A) 5
• B) 10
• C) 250
• D) 50

11) The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the _________ phenomenon.

• A) Irwin
• B) Pareto
• C) Stevenson
• D) Tellier
• E) Adam Smith

12) Productivity is expressed as:

• A) output plus input.
• B) output minus input.
• C) output times input.
• D) output divided by input.
• E) input divided by output.

13) Which of the following is not a key step toward improving productivity?

• A) developing productivity measures for all operations
• B) improving the bottleneck operations
• C) establishing reasonable goals for improvement
• D) considering incentives to reward workers
• E) converting bond debt to stock ownership

14) The external elements of SWOT analysis are:

• A) strengths and weaknesses.
• B) strengths and threats.
• C) opportunities and threats.
• D) weaknesses and opportunities.
• E) strengths and opportunities.

15) In an assembly operation at a furniture factory, six employees assembled an average of 450 standard dining chairs per five-day week. What is the labor productivity of this operation?

• A) 90 chairs/worker/day
• B) 20 chairs/worker/day
• C) 15 chairs/worker/day
• D) 75 chairs/worker/day
• E) 60 chairs/worker/day

16) A graphical representation of a process is called a _________.

• A) process flow diagram
• B) process flow chart
• C) process activity diagram
• D) process activity chart

17) Arrivals and departures to C&A Optometrist are collected and reported below:

What is the average flow time of its patients in minutes?

• A) 90
• B) 65
• C) 63
• D) 60

18) Each of these is a key metric in Little’s Law EXCEPT _________.

• A) flow rate
• B) flow unit
• C) flow time
• D) inventory

19) C&A Dairy uses 600 pounds of milk per day to make ice cream. On average, C&A Dairy uses 3 pounds of milk to make one gallon of ice cream in 5 hours. How many gallons of ice cream are being made on average at any one time if C&A Dairy operates for 10 hours a day?

• A) 25
• B) 50
• C) 100
• D) 120

20) A manufacturing company plans to implement a process improvement that will increase the process flow rate by 25% and decrease the process flow time by 15%. What will be the percentage change in the average number of units in the process?

• A) 2.25%
• B) 4.75%
• C) 6.25%
• D) 10%

Answer Key and Explanations

Version 1 3 OPRE 3310 EXAM 1

Test name: OPRE 3310 S25 Exam 1

1) TRUE: A supply chain with a distributor has to do extra loading and unloading at the distribution center and therefore has more product handling than one without a distributor.

2) TRUE: Inventory availability measures the extent to which customers’ demands are satisfied. Therefore, it is a way to evaluate the performance of a supply chain from a service perspective.

3) FALSE: The lead time is the time between when an order is received and when it is delivered. It depends on the availability of inventory.

4) TRUE: Greater customer involvement leads to greater variation in the goods and services provided. This creates greater variation in production or service requirements and results in more complexity in the design and management of operations.

5) FALSE: There are very few pure goods or pure services, so most companies sell product packages, which combine goods and services. Therefore, most production systems involve a blend of goods and services.

6) FALSE: Service operations cannot use inventory as a hedge against unpredictable demand.

7) FALSE: Models are useful, but their use does not guarantee the best decisions.

8) FALSE: Technology also refers to the technology involved in new products and services and the technology involved in resource transformations.

9) TRUE: After the Industrial Revolution, more standardized approaches became common.

10) TRUE: Ford made mass production a practical success.

11) FALSE: Unlike manufactured goods, services cannot be stored. Instead, they must be provided “on demand.”

12) TRUE: Divide outputs by inputs to get productivity.

13) TRUE: Productivity trends direct attention toward problems and opportunities.

14) FALSE: An organization's ability to compete is directly affected by its productivity.

15) FALSE: We usually have to better a competitor to win market share.

16) FALSE: We usually have to better a competitor to win market share.

17) TRUE: Standardization leads to reduced variability.

18) TRUE: Process metrics measure the performance and capability of a process.

19) FALSE: Little’s Law can be used to identify the average time a flow unit spends in the process.

20) TRUE: Inventory = 5 customers. Flow rate = 200 customers ÷ 10 hours = 20 customers per hour. Flow time = Inventory ÷ Flow rate = 5 ÷ 20 = 0.25 hour, or 15 minutes.

21) A: Lead time is the time between when an order is submitted and when it is delivered.

22) D: Supply chain decisions are about selecting the right level of flexibility to counteract the amount of variability in a supply chain.

23) D: ROP is 50. Make-to-order is viable if customers desire a broad selection of products.

24) B

25) C: A supply chain starts with raw materials and ends with final users.

26) B: There are three components of demand variability: level, variety, and location.

27) A: Manufacturing and service operations both use forecasting and capacity planning to match supply and demand.

28) B: Pareto phenomena direct our attention to the difference between the "important few" and the "trivial many."

29) D: The choice to offer customers greater variety might increase variation but increase productivity even more.

30) C: A company can be competitive relative to similar companies and still be unprofitable if the competitive environment is inherently unprofitable.

31) B: Scheduling decisions are made low in the hierarchy.

32) D: Productivity is the ratio of outputs to inputs.

33) E: These don't lead to fundamental changes in operations.

34) E: A firm's productivity is independent of its capital structure.

35) C: Corporate strategy shapes strategies at lower levels.

36) B: Operations is a prime area for improving competitiveness.

37) C: Opportunities and threats relate to the organization and its external environment.

38) C: Divide the output of 450 chairs by the input of 30 worker-days.

39) A: Crews of two workers are most productive with an average of ((716 + 702) ÷ 2 ) ÷ 2) = 354.5 yards/worker installed. The average productivity of three-worker crews is 336.5 yards/worker and for four-worker crews it is 322 yards/worker.

40) A: Customization and variety lead to variation that must be accommodated.

41) C: What is an order qualifier and what is an order winner changes over time.

42) A: A process flow diagram provides a graphical representation of a process.

43) D: A process flow diagram can have multiple resources with the output of some resources used as inputs to other resources.

44) B: Flow rate tells us how much stuff moves through the process per unit of time.

45) B: Subtract each patient’s departure time from the arrival time to give the flow time for each patient. For example, patient 1 spends 60 minutes. The flow times for the five patients are 60, 60, 30, 90, and 85. The average flow time is found by dividing total flow time by five patients: 325 ÷ 5 = 65 minutes.

46) D: Flow rate = 10 customers ÷ 2 hours = 5 customers per hour.

47) B: The flow rate upon entry to the process will not match the flow rate upon exit of the process at every moment. However, they will match over the long run since "what goes in must come out."

48) B: Little’s Law relates inventory as the product of flow rate and flow time.

49) C: Flow rate = 600 pounds of milk per day ÷ 3 pounds of milk per gallon of ice cream = 200 gallons of ice cream per day. Flow time = 5 hours ÷ 10 hours a day = 0.5 day. Inventory = 200 gallons per day × 0.5 day = 100 gallons.

50) C: Before the change, assume average flow rate = 2 and average flow time = 2. Therefore, average inventory before the change = 2 × 2 = 4 units. After the 25% increase in flow rate, the new average flow rate = 2.5. After the 15% decrease in flow time, the new average flow time = 1.7. Therefore, average inventory after the change = 2.5 × 1.7 = 4.25 units. The percent change in inventory is therefore (4.25 − 4) ÷ 4 × 100 = 6.25%.

Study Outline: Chapters 1 - 4

Chapter 1: Supply Chain Structure and Roles

• Tier Suppliers: Manufacturers, Distributors, Retailers.
• Distribution Centers (DC): Role of distribution in handling; increased costs in distribution.
• Channels: Brick and Mortar vs. Online.
• Metrics of Supply Chain Management: In-stock, stockout, fill rate.
• Availability: Measures and customer service.
• Reorder Point (ROP): Depends on lead time and demand.
• Sources of Variability: Demand, level, variety, location; Bullwhip effect.
• Lead Time: Time between order placed and delivered.
• Customer Involvement: Variations leading to product and service variation.
• Performance: Quality, delivery, disruption.
• Strategies: Outsourcing; Make-to-Order versus Make-to-Stock.

Chapter 2: Operations Management Fundamentals

• Goods vs. Services:
  • Goods are physical items including materials and final products; they have time and space separation.
  • Services provide combinations of time, location, form, or psychological value.
  • Services are harder to manage due to unpredictability and customer involvement.
  • Goods-service Continuum: Most items are not "pure" goods or services.
  • Service operations cannot store inventory.
• Basic Functions: Marketing, Operations, Finance.
• Process Variation: Variety in products, structural variation, random variation, and assignable variation.
• Decision Making: Modeling (physical, schematic, mathematical); models do not guarantee good solutions.
• Priorities: Pareto Phenomenon - a few factors account for a high percentage of occurrences (the "critical few").
• Historical Evolution: Industrial Revolution (standardization), Scientific Management, Human Relations, Decision Models, and Japanese manufacturing influence.

Chapter 3: Competitiveness and Strategy

• Competitiveness: Combination of marketing and operations. Matching competitors does not guarantee market share.
• Mission and Goals: Mission is the reason for existence; goals provide detail and scope.
• Strategies: Organizational (overall) and Functional (departmental).
• Quality and Time-Based Strategies: Focus on excellence and speed.
• Tactics: Methods and actions taken to accomplish strategies.
• SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats (external elements are harder to recognize).
• Order Qualifiers vs. Order Winners: Minimum requirements vs. traits that win the contract.
• Balanced Scorecard: Finance, Customer, Internal Business Processes, Learning and Growth.
• Productivity Formulas:
  • Productivity = Output / Input
  • Partial Measures: Output / Labor; Output / Capital.
  • Multifactor Measures: Output / (Labor + Machine); Output / (Labor + Capital + Energy).
  • Total Measure: Goods or services produced / All inputs used.
  • Productivity Growth: [(Current - Previous) / Previous] × 100%
• Service Sector Productivity: Difficult to measure due to intellectual activities and high variability.
• Bottlenecks: Determine critical operations; do not confuse productivity with efficiency.

Chapter 4: Process Metrics and Little's Law

• Process: Activities that take inputs and yield outputs.
• Process Flow Diagram: Graphical description using boxes (resources), arrows (flows), and triangles (inventory).
• Three Key Process Metrics:
  • Inventory (I): Number of flow units within a process.
  • Flow Rate (R): Rate at which units move through per unit of time.
  • Flow Time (T): Time a unit spends in the process from start to finish.
• Little’s Law: Inventory = Flow Rate × Flow Time (I = R × T).
• Efficiency: Takt time vs. cycle time.