Operations Fundamentals Mid-Term Name:_________________________________ Date:______________________ Multiple Choice: Select the most appropriate answer for each question. 1. Operation Management is a set of activities that forms goods and service by? a.

Operations Fundamentals Mid-Term Name:_________________________________ Date:______________________ Multiple Choice: Select the most appropriate answer for each question. 1. Operation Management is a set of activities that forms goods and service by? a. Transforming inputs into outputs. b. Managing raw material and inventory. c. Efficient and effective processes. d. Transforming ideas into action. 2. three functions are necessary in order to produce a product or deliver a service? a. IT, Finance and Sales b. Operations, Finance and IT c. Marketing, Operations and Finance d. Strategic planning, Marketing and Sales 3. When defining the supply chain, which does NOT belong? a. A global network of organizations and activities that supplies a firm with goods and services. b. Specialize expert knowledge, instant communications, and cheaper transportation. c. Organizations rely on other organization’s product and services to reduce cost. d. Raw materials received and stored in inventory for operations. 4. The operations management process include which of the following? a. Planning b. Organizing c. Staffing d. Leading e. Controlling f. All the above Operations Fundamentals Mid-Term 2 5. The objective of Inventory Management is to…… a. Ensure product is available to meet customer demands. b. Strike a balance between inventory investment and customer service. c. Minimize costs of buy raw materials. d. Maintain enough raw materials for production. 6. Inventory management solves what two basic issues? a. The amount of raw material needed for production and customers. b. The cost of raw materials and the timing when the materials are needed. c. How much and when to order. d. How much goods and services are needed to meet demand and how to deliver the goods and services. 7. Which type of demand is influenced by the market? a. Dependent b. Independent c. Co-dependent d. Inherent 8. Which demand exhibits on-again, off again patterns? a. Dependent b. Independent c. Co-dependent d. Inherent 9. The Economic Order Quantity is used to assist an organization to determine? a. The amount of goods customers need to order to be consider economical. b. The desired inventory level. c. The level of product needed to meet demands. d. The amount of goods customer can order before organizations realize a loss. Operations Fundamentals Mid-Term 3 10. The following are components of what type of inventory cost: order preparation expenses, mailing charges, shipping cost? a. Total cost b. Ordering cost c. Holding cost d. Maintenance cost 11. The following are components of what type of inventory cost: finance charges, warehousing, and shelf space, handling equipment, bookkeeping, insurance, taxes or spoilage? a. Total cost b. Ordering cost c. Holding cost d. Maintenance cost 12. Ordering costs ______________ as the order size increases. a. Declines b. Increases c. Constant d. No effect 13. Holding costs are __________ regardless of the number of units ordered. a. Declines b. Increases c. Constant d. No effect 14. An inventory system can be designed by defining two inventory rules: a. Order Quantity and Re-order Point b. Ordering and Holding c. Order Quantity and Inventory Quantity d. Production cycle and Customer Demands Operations Fundamentals Mid-Term 4 15. Units that an organization will carry over and above Q in order to meet contingency is known as? a. Overflow stock b. Extra inventory c. Safety Stock d. Safety inventory 16. Savings are realized through reduced ordering cost and lower cost of buying is a result of? a. Quantity Discount b. Vendor Discount c. Inventory Discount d. Sales Quantity 17. The production order quantity model s organizations by? a. Finding the correct inventory amount needed to support production at the most economical cost of the inventory system. b. Finding the best batch size for production at the most economical cost of the inventory system. c. Finding the correct amount of units needed to support demand. d. None of the above. 18. type of decision would political risks, cultural issues and exchange rates be part of? a. Site b. Region c. Country d. Rural 19. type of decision would taxes, labor availability and environmental regulations part of? a. Site b. Region c. Country Operations Fundamentals Mid-Term 5 d. Rural 20. The most popular method of evaluating locations is? a. The Factor- Rating Method b. Location Cost-Volume Analysis c. Center-of-Gravity Method d. Transportation Model 21. Method used to find a distribution center that will minimize distribution costs? a. The Factor- Rating Method b. Location Cost-Volume Analysis c. Center-of-Gravity Method d. Transportation Model 22. Method used to determine the best routes to ship from several points of supply (sources) to points of demands (destination) to minimize production and shipping costs. a. The Factor- Rating Method b. Location Cost-Volume Analysis c. Center-of-Gravity Method d. Transportation Model 23. of the following is NOT a goal of a plant, office or retail layout? a. gher utilization of space, equipment, and people b. Improved flow of information, materials, or people c. Improved use of utility resources. d. Improved employee morale and safe working conditions e. Improved customer/client interaction 24. Ambient conditions, spatial layout, signs, symbols or artifacts are part of which layout concept? a. Cross-docking b. Workcell c. Servicescapes d. Product-oriented Operations Fundamentals Mid-Term 6 25. Match the ten strategic operations management to the correct description. Put the appropriate letter in the answer column. (10 pts.) Decisions Answer Description of decision Design of goods and services A. The integration capacity needs, staffing, technology, and inventory requirements to determine efficient flow of materials, people or information Managing Quality B. Decisions that consider facility capacity, production demands, and staff necessary to maintain a reliable and stable process Process strategy C. Consider ordering and holding decisions to optimize. Location strategies D. Determine customer’s quality expectations Layout strategies E. Integration of external network of vendors or partners into firm’s strategy. Human Resources F. Determining where to place the factory while considering customers, labor sources, costs, infrastructure, logistics and government. Supply-chain management G. Determines how the product will be made or how the service will be delivered. Inventory management H. How to recruit workers, motivate and retain them with the right skills Scheduling I. Determine schedule that best utilizes staff and facilities to meet customer demands Maintenance J. Define what is needed in each of the other OM decision Operations Fundamentals Mid-Term 7 26. ABC Company has a demand for 2000 units each year. The cost of each unit is $100. It costs ABC $200 to place an order and $4 to carry a unit in the stock pear year. Further, the supplier needs week and a half to deliver their order. Assume 50 weeks to a year. a. Calculate the total annual cost of the system. 27. The VAHC Lab uses 500 test kits each year. CO = $10, CH = $2/ kit/ year. Orders of fewer than (A) 73 kits cost $60/case; (B) 73 through 144 kits cost $55/ kit; and (C) larger orders cost $50/ kit. a. Determine the optimal order quantity. 28. The VAHC Lab uses 500 test kits each year. CO = $10, CH = $2/ kit/ year. Orders of fewer than (A) 73 kits cost $60/case; (B) 73 through 144 kits cost $55/ kit; and (C) larger orders cost $50/ kit. a. Determine which order volume gives the most discount. Operations Fundamentals Mid-Term 8 29. Ashlee’s Beach Chairs Company produces upscale beach chairs. Annual demand for the chairs is estimated at 1,000 units. The frames are made in batches before the final assembly process. Ashlee’s final assembly department needs frames at a rate of 20 per week. Ashlee’s frame department can produce 25 frames per week. The setup cost is $100/setup, the annual holding cost per frame is $4, and the cost of production $30 a frame. The company operates 50 weeks per year. Find the optimal batch quantity. Operations Fundamentals Mid-Term 9 30. Ashlee’s Beach Chairs Company produces upscale beach chairs. Annual demand for the chairs is estimated at 1,000 units. The frames are made in batches before the final assembly process. Ashlee’s final assembly department needs frames at a rate of 20 per week. Ashlee’s frame department can produce 25 frames per week. The setup cost is $100/setup, the annual holding cost per frame is $4, and the cost of production $30 a frame. The company operates 50 weeks per year. Find the total cost of the system. Operations Fundamentals Mid-Term 10 31. Using the Factoring Rate Method table which location is best? Key Success Factors Weight Scores (Out of 100) Weighted scores China Taiwan China Taiwan Labor market .20 80 60 People to car ratio .05 50 60 Per capita income .10 80 80 Tax structure .40 70 70 Education & health .25 60 70 Totals Operations Fundamentals Mid-Term 11 32. Drew Rosen Corp. is considering adding a fourth plant to its three existing plants in Decatur, Minneapolis and Carbondale. Both St. Louis and East St. Louis are being considered. Evaluating only the transportation costs per units as provided, decide which site is best. From Existing Plants To Decatur Minneapolis Carbondale Demand Blue Earth $20 $17 $21 250 Ciro $25 $27 $20 200 Desmoines $22 $25 $22 350 Capacity 300 200 150 From Proposed Plants To East St. Louis St. Louis Blue Earth $29 $27 Ciro $30 $28 Desmoines $30 $31 Capacity 150 150 Operations Fundamentals Mid-Term 12