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Chapter 08

Managing Service and Manufacturing Operations

True / False Questions

1. The transformation process occurs only in companies that manufacture tangible


goods.
True

False

2. Production refers to all the activities involved in producing products, while operations
refers to the physical process of transforming resources into goods and services.
True

False

3. Outputs include labor, materials, energy, and money.


True

False

4. The transformation process is at the heart of operations management.


True

False

5. Operations management refers to those processes used in making both tangible and
intangible products.
True

False

6. The number of steps in the transformation process is always the same, no matter
what the good or service.
True

False

Multiple Choice Questions

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

7. If an employee is involved with transforming resources into goods and services, then
he is in

A.
B.
C.
D.
E.

marketing.
financing.
human resources.
operations management.
budgeting.

8. If an employee is associated with producing goods, services, and ideas that satisfy
the needs of customers, then she works most closely with

A.
B.
C.
D.
E.

financing.
budgeting.
production.
human resources.
operations.

9. The transformation process is

A. the development and administration of activities that transform resources into


goods, services, and ideas.
B. the conversion of human, financial, and physical resources into goods, services,
and ideas.
C.
labor, materials, energy, and money.
D.
goods and services.
E. the development, promotion, pricing, and distribution of products.
10. The transformation process occurs in

A.
B.
C.
D.
E.

service companies.
all organizations, regardless of product.
manufacturing companies.
idea consultants.
government agencies.

11. Operations management includes responsibility for

A.
B.
C.
D.
E.

customer service.
inputs and outputs.
product development.
pricing.
promotion.

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12. Viewed from the perspective of operations, the money used to purchase a
carpenter's tools and the electricity used to run his power saw are

A.
B.
C.
D.
E.

processes.
outputs.
inventory.
inputs.
maintenance costs.

13. From an operations perspective, food sold at a restaurant and services provided by a
plumbing company are

A.
B.
C.
D.
E.

processes.
inputs.
outputs.
inventory.
costs.

14. To ensure quality and efficiency, operations managers take ________ at various points
in the transformation process and compare them to established standards.

A.
B.
C.
D.
E.

breaks
adjustments
calculations
marketing research
feedback

15. Operations management has the primary responsibility for

A.
B.
C.
D.
E.

determining customer wants and needs.


conducting research on goods/service feasibility.
creating products that satisfy customers.
developing an appropriate distribution system.
deciding what promotional activities will be best.

16. Transformation processes occur

A.
B.
C.
D.
E.

only in manufacturing organizations.


only in marketing departments.
in all organizations.
only in service providers.
only in industrial plants.

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Essay Questions

17. Describe the transformation process, from inputs to outputs, for a good or service of
your choosing.

18. What is operations management?

True / False Questions

19. For most organizations, the ultimate goal of the transformation process is to produce
outputs that are worth more than the combined costs of inputs.
True

False

20. Different kinds of transformation processes take place in organizations that provide
services.
True

False

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21. In a nonprofit organization like Habitat for Humanity, inputs such as money,
materials, information, and volunteer time and labor are used to transform raw
materials into homes for needy families.
True

False

22. Manufacturers and service providers differ in the nature and consumption of their
output.
True

False

23. Service providers are generally less labor-intensive because of the high degree of
customization.
True

False

24. Variations in demand, service requirements, and the intangibility of the product make
measuring productivity more difficult for manufacturers.
True

False

Multiple Choice Questions

25. Which of the following is not a point of difference between service providers and
manufacturers?

A.
Services are more labor-intensive
B.
Manufacturing has more uniform outputs
C. Services do not undergo a transformation process
D. It is straightforward to measure manufacturing productivity
E. Services have less control over the variability of their inputs
26. To receive a haircut, you generally have to go to a barbershop or salon. To which of
the following characteristics does this pertain?

A.
B.
C.
D.
E.

Uniformity of inputs
Uniformity of outputs
Labor required
Measurement of productivity
Nature and consumption of output

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27. Why do the products of service providers tend to be more customized than those of
manufacturers?

A.
B.
C.
D.
E.

Differing customers have differing needs


Because all customers are the same
Technological innovations have reduced variability
There is more capital required in service provision
It is easy to measure productivity

28. Money, employees, time, and equipment represent an airline's ________ to the
transformation process.

A.
B.
C.
D.
E.

outputs
inputs
products
services
intangibles

29. For most organizations, the ultimate objective is for produced outputs to be

A.
B.
C.
D.
E.

easy to develop.
tangible, hard goods.
inexpensive.
worth more than the costs of input.
equal to the costs of input.

30. The fact that a hairdresser gives each customer a different haircut relates to which of
the following points of difference between service providers and manufacturers?

A.
B.
C.
D.
E.

Nature and consumption of output.


Uniformity of inputs.
Labor required.
Measurement of productivity.
Uniformity of output.

31. The nature of the service provider's product requires

A.
B.
C.
D.
E.

less employee input.


a higher degree of customer contact.
a lesser degree of customer contact.
more expensive inputs.
more standardization.

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32. Actual performance of the service provider's product typically occurs

A.
B.
C.
D.
E.

several days after purchase.


outside the service provider's facility.
at the point of consumption.
in the buyer's home.
before the point of consumption.

33. Manufacturers' products are typically

A.
B.
C.
D.
E.

more labor intensive than service providers'.


less uniform than service providers'.
more difficult to inventory than service providers'.
more standardized than service providers'.
cheaper than service providers'.

34. Compared to service providers, manufacturers generally

A.
B.
C.
D.
E.

are more labor intensive.


are more capital intensive.
customize their outputs.
have difficulty measuring productivity.
produce intangible outputs.

Essay Questions

35. Why do services tend to be more labor-intensive than manufacturing?

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36. How do operations for manufacturers and service providers differ?

True / False Questions

37. A company that uses a fixed-position layout is often called a project organization
because it is involved in large, complex projects.
True

False

38. It is not necessary for a product to satisfy a need or a want.


True

False

39. Consumer needs and wants often dictate a production process.


True

False

40. Modular design allows products to be repaired quickly, but the components are often
expensive.
True

False

41. Taxes are an important consideration when deciding where to locate a production
facility.
True

False

42. Intermittent organizations typically use the fixed-position layout.


True

False

Multiple Choice Questions


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43. If ABC Computer Company is determining demand for its future products and how
much consumers are willing to pay, the company will likely rely on

A.
B.
C.
D.
E.

the economy.
marketing research.
the competition.
the past.
intuition.

44. The term standardization means

A. ensuring that every product has the same quality.


B. that similar products, manufactured by different companies, all operate in the
same manner.
C. making identical, interchangeable components or products.
D. making the exact product a particular customer needs or wants.
E. making an item in self-contained units that can be interchanged to create different
products.
45. A primary reason for using standardization is to

A.
B.
C.
D.
E.

reduce production costs.


increase consumer options.
reduce product quality.
increase variations.
foster creativity.

46. Building a computer so that components can be installed in different configurations


to meet customers' needs is a result of

A.
B.
C.
D.
E.

flexible manufacturing.
modular design.
customization.
specialization.
varied engineering.

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47. Facility location decisions are complex because

A.
all customers want plants nearby.
B.
transportation costs are prohibitively high.
C.
delivery speed is not very important.
D.
proximity to market is not very important.
E. they involve the evaluation of a number of important factors and the costs are
high.
48. A company that manufactures large products, such as houses or bridges, may require
that all resources be brought to a central location during production. This type of
facility layout is called

A.
B.
C.
D.
E.

fixed-position.
product.
line.
central control.
assembly line.

49. A company performing large, complex tasks such as construction or exploration is


called a(n)

A.
B.
C.
D.
E.

continuous manufacturing organization.


intermittent organization.
project organization.
construction company.
oil company.

50. A metal fabrication plant with a cutting department, a drilling department, and a
polishing department would likely use which of the following layouts?

A.
B.
C.
D.
E.

Fixed position
Horizontal position
Process
Geographical
Customer based

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51. A hospital having an x-ray, obstetrics, emergency room, and other units probably
would best be classified as a(n)

A.
B.
C.
D.
E.

intermittent organization.
project organization.
continuous manufacturing organization.
fixed organization.
HMO.

52. An organization that creates many products with similar characteristics, such as
automobiles, television sets, or vacuum cleaners, would most likely be which of the
following types of organizations?

A.
B.
C.
D.
E.

Continuous manufacturing
Intermittent manufacturing
Project manufacturing
Assembly line
Fixed-position

Essay Questions

53. What is sustainability and how does it pertain to manufacturing?

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54. How have computers and robots influenced the operations of business?

True / False Questions

55. A just-in-time inventory management system saves money and requires less storage
space by using smaller amounts of materials that arrive just when they are needed.
True

False

56. Operations managers have little concern for supply-chain management activities.
True

False

57. Managing finished products and packaging them are activities most closely
associated with marketing.
True

False

58. Purchasing is the buying of all materials needed by the organization.


True

False

59. The majority of companies purchase all materials needed to make their finished
products.
True

False

60. A planning system that schedules the precise quantity of materials needed for
production is called a just-in-time system.
True

False

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Multiple Choice Questions

61. Which of the following activities is not included in supply chain management?

A.
B.
C.
D.
E.

Getting products to customers


Obtaining and managing raw materials
Managing finished products
Packaging finished products
Researching and developing products

62. All activities involved in obtaining and managing raw materials and component parts,
managing finished products, packaging them, and getting them to customers are part
of

A.
B.
C.
D.
E.

resource management.
supply chain management.
engineering.
finance.
strategic planning.

63. Within organizations, purchasing is also referred to as

A.
B.
C.
D.
E.

consumption.
disposition.
acquisitions.
procurement.
budgeting.

64. The buying of all materials needed by the organization is called

A.
B.
C.
D.
E.

consumer behavior.
capital expenditures.
purchasing.
buyer behavior.
acquisitions.

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65. The process of determining how many supplies and goods are needed, keeping track
of quantities on hand, each item's location, and who is responsible for it is called

A.
B.
C.
D.
E.

the economic order quantity model.


just-in-time inventory management.
material-requirements planning.
inventory control.
procurement.

66. The term used to refer to the raw materials, components, completed or partially
completed products, and pieces of equipment a firm uses is

A.
B.
C.
D.
E.

inventory.
order quantities.
production.
tangibles.
intangibles.

67. Materials that have been purchased to be used in making other products are included
in

A.
B.
C.
D.
E.

finished inventory.
partial inventory.
raw materials inventory.
supplier inventory.
components parts inventory.

68. A model that identifies the optimum number of items to minimize the costs of
managing them is called

A.
B.
C.
D.
E.

just-in-time management.
flexible scheduling.
material requirements planning.
the economic order quantity model.
logistics.

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69. Minimizing inventory by providing an almost continuous flow of items from suppliers
to the production facility is referred to as

A.
B.
C.
D.
E.

just-in-time management.
economic ordering.
material requirements planning.
logistics.
operations management.

70. A planning system that schedules the precise quantity of materials needed for
production is called

A.
B.
C.
D.
E.

just-in-time management.
material-requirements planning.
economic order quantities.
flexible scheduling.
cycle time management.

Essay Questions

71. What is the economic order quantity model?

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72. What considerations must managers make after materials have been procured and
their use has been determined?

True / False Questions

73. The ISO 9000 is a series of international quality management standards for
organizations.
True

False

74. Quality is a critical element of operations management.


True

False

75. The degree to which a good or service meets the demands and requirements of
customers is called customer satisfaction.
True

False

76. Determining quality can be difficult.


True

False

77. Service businesses cannot incorporate quality standards.


True

False

78. Inspection reveals whether a product meets quality standards.


True

False

Multiple Choice Questions


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79. When managing quality in manufacturing, when is sampling likely to be used?

A.
When inspection tests are destructive
B. When every product absolutely must be tested because of human life and safety
C.
To assess the quality of services
D. To assess the quality of work-in-process goods
E. Sampling is generally used in conjunction with inspection tests
80. It is especially difficult to measure quality characteristics when

A.
B.
C.
D.
E.

a firm uses ISO 9000.


a firm has a total quality management program.
the product is a good.
the product is a service.
a firm uses statistical process control.

81. Quality

A.
B.
C.
D.
E.

is a concern only for manufacturing companies.


is a concern only for service providers.
refers to the price charged for a product.
is a critical element of operations management.
depends on employees' perceptions.

82. The degree to which a good or service meets the demands and requirements of
customers is called

A.
B.
C.
D.
E.

efficiency.
productivity.
quality.
effectiveness.
customer satisfaction.

83. The processes an organization uses to maintain its established quality standards are
called

A.
B.
C.
D.
E.

quality control.
implementation.
inspections.
operations management.
total quality management.

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84. The system in which management collects and analyzes information about the
production process to pinpoint quality problems in the production system is called

A.
B.
C.
D.
E.

total quality management.


statistical process control.
quality control.
operations control.
production control.

85. The first step in quality control for any organization is

A.
B.
C.
D.
E.

inspection.
establishing standards.
sampling.
implementation.
correction.

86. ________ is a philosophy that uniform commitment to quality in all areas of an


organization will promote a culture that meets customers' perceptions of quality.

A.
B.
C.
D.
E.

The marketing concept


Total quality manufacturing
ISO 9000
Statistical process control
Total quality management

87. Determining how many items are to be inspected is called

A.
B.
C.
D.
E.

efficiency.
sampling.
appraisal.
effectiveness.
specifications.

88. It is desirable to test only a sample of the product in all of the following
circumstances except when

A.
inspection procedures are expensive.
B.
elaborate testing equipment is required.
C. testing takes a significant number of hours to complete.
D.
the product is destroyed by sampling.
E. sampling is the cheapest option and does not destroy the product

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Essay Questions

89. What is total quality management?

90. What is quality control?

Multiple Choice Questions

91. What does McKing Corporation wish to do?

A.
To release a new line of sandwiches
B. To start selling its food products in grocery stores
C.
To diversify into selling pizzas
D.
To start selling insurance
E. McKing wants to keep selling the same products it always has

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92. What is the problem with McKing's plan to start selling 16" pizzas?

A.
There is no market for 16" fast food pizzas
B. McKing's target market does not eat very much pizza
C. The pizzas are too expensive for the average consumer
D. The pizzas are too large to be passed through existing drive-through windows
E. McKing's franchisees do not want to sell pizza

Essay Questions

93. What mistake did McKing make in approaching the introduction of pizza?

94. How could this product introduction have been coordinated to avoid the problems
that were encountered?

95. If you were an executive at McKing, how would you proceed with the introduction of
pizza into the restaurants?

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Chapter 08 Managing Service and Manufacturing Operations


Answer Key

True / False Questions

1.

The transformation process occurs only in companies that manufacture tangible


goods.
FALSE
The transformation process occurs in the production of both goods and services.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

2.

Production refers to all the activities involved in producing products, while


operations refers to the physical process of transforming resources into goods and
services.
FALSE
Production refers to the activities and processes used in making tangible products,
while operations are the activities and processes used in making both tangible and
intangible products.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

3.

Outputs include labor, materials, energy, and money.


FALSE
Outputs refer to the goods, services, and ideas that result from the conversion of
inputs.

AACSB: Reflective Thinking


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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

4.

The transformation process is at the heart of operations management.


TRUE
At the heart of operations management is the transformation process through
which inputs (resources such as labor, money, materials, and energy) are
converted into outputs (goods, services, and ideas).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

5.

Operations management refers to those processes used in making both tangible


and intangible products.
TRUE
At the heart of operations management is the transformation process through
which inputs (resources such as labor, money, materials, and energy) are
converted into outputs (goods, services, and ideas).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

6.

The number of steps in the transformation process is always the same, no matter
what the good or service.
FALSE
The number of steps in the transformation process can vary greatly from one to
many steps.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multiple Choice Questions

7.

If an employee is involved with transforming resources into goods and services,


then he is in

A.
B.
C.
D.
E.

marketing.
financing.
human resources.
operations management.
budgeting.

Operations management (OM) is the development and administration of the


activities involved in transforming resources into goods and services.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

8.

If an employee is associated with producing goods, services, and ideas that satisfy
the needs of customers, then she works most closely with

A.
B.
C.
D.
E.

financing.
budgeting.
production.
human resources.
operations.

Employees involved in operations management develop and administer activities


involved in transforming resources into goods and services that are designed to
meet the desires of customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9.

The transformation process is

A. the development and administration of activities that transform resources into


goods, services, and ideas.
B. the conversion of human, financial, and physical resources into goods, services,
and ideas.
C.
labor, materials, energy, and money.
D.
goods and services.
E. the development, promotion, pricing, and distribution of products.
At the heart of operations management is the transformation process through
which inputs (resources such as human, financial, and physical resources) are
converted into outputs (goods, services, and ideas).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

10.

The transformation process occurs in

A.
B.
C.
D.
E.

service companies.
all organizations, regardless of product.
manufacturing companies.
idea consultants.
government agencies.

Transformation processes occur in all organizations, regardless of what they


produce or their objectives.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

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11.

Operations management includes responsibility for

A.
B.
C.
D.
E.

customer service.
inputs and outputs.
product development.
pricing.
promotion.

At the heart of operations management is the transformation process through


which inputs (resources such as labor, money, materials, and energy) are
converted into outputs (goods, services, and ideas).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

12.

Viewed from the perspective of operations, the money used to purchase a


carpenter's tools and the electricity used to run his power saw are

A.
B.
C.
D.
E.

processes.
outputs.
inventory.
inputs.
maintenance costs.

Inputs are the resourcessuch as labor, money, materials, and energythat are
converted into outputs.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

8-25
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

13.

From an operations perspective, food sold at a restaurant and services provided by


a plumbing company are

A.
B.
C.
D.
E.

processes.
inputs.
outputs.
inventory.
costs.

Outputs are the goods, services, and ideas that result from the conversion of
inputs.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

14.

To ensure quality and efficiency, operations managers take ________ at various


points in the transformation process and compare them to established standards.

A.
B.
C.
D.
E.

breaks
adjustments
calculations
marketing research
feedback

Operations managers control the transformation process by taking measurements


(feedback) at various points in and comparing them to previously established
standards.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

8-26
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

15.

Operations management has the primary responsibility for

A.
B.
C.
D.
E.

determining customer wants and needs.


conducting research on goods/service feasibility.
creating products that satisfy customers.
developing an appropriate distribution system.
deciding what promotional activities will be best.

Operations management is the core of most organizations because it is primarily


responsible for the creation of their goods and services.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

16.

Transformation processes occur

A.
B.
C.
D.
E.

only in manufacturing organizations.


only in marketing departments.
in all organizations.
only in service providers.
only in industrial plants.

The transformation process occurs in the production of both goods and services in
all organizations, including nonprofits.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

Essay Questions

8-27
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

17.

Describe the transformation process, from inputs to outputs, for a good or service
of your choosing.

Students' answers will vary depending on the product they choose. Refer to the
furniture example in the book for a template.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 3 Hard
Topic: The Nature of Operations Management

18.

What is operations management?

Operations management is the development and administration of the activities


involved in transforming resources into goods and services. OM applies to the
creation of both tangible and intangible products.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-01 Define operations management; and differentiate between operations and
manufacturing.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

True / False Questions

19.

For most organizations, the ultimate goal of the transformation process is to


produce outputs that are worth more than the combined costs of inputs.
TRUE
For most organizations, the ultimate goal of the transformation process is to
produce outputs that are worth more than the combined costs of inputs.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

8-28
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

20.

Different kinds of transformation processes take place in organizations that


provide services.
TRUE
Different types of transformation processes take place in organizations that
provide services, such as airlines, colleges, and most nonprofit organizations.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

21.

In a nonprofit organization like Habitat for Humanity, inputs such as money,


materials, information, and volunteer time and labor are used to transform raw
materials into homes for needy families.
TRUE
Habitat for Humanity also utilizes inputs, outputs, and the transformation process.
Inputs such as money, materials, information, and volunteer time and labor are
used to transform raw materials into homes for needy families.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

22.

Manufacturers and service providers differ in the nature and consumption of their
output.
TRUE
Manufacturers and service providers differ in several respects, including the nature
and consumption of their output, the uniformity of outputs, the uniformity of
inputs, the labor required, and the measurement of productivity.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

8-29
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

23.

Service providers are generally less labor-intensive because of the high degree of
customization.
FALSE
Service providers are generally more labor-intensive because of the high level of
customer contact, perishability of the output (must be consumed immediately),
and high degree of variation of inputs and outputs (customization).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

24.

Variations in demand, service requirements, and the intangibility of the product


make measuring productivity more difficult for manufacturers.
FALSE
For a service provider, variations in demand (e.g., higher demand for air travel in
some seasons than in others), variations in service requirements from job to job,
and the intangibility of the product make productivity measurement more difficult.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

Multiple Choice Questions

25.

Which of the following is not a point of difference between service providers and
manufacturers?

A.
B.
C.
D.
E.

Services are more labor-intensive


Manufacturing has more uniform outputs
Services do not undergo a transformation process
It is straightforward to measure manufacturing productivity
Services have less control over the variability of their inputs

All products and services undergo a transformation process.

AACSB: Reflective Thinking


8-30
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Blooms: Understand
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

26.

To receive a haircut, you generally have to go to a barbershop or salon. To which of


the following characteristics does this pertain?

A.
B.
C.
D.
E.

Uniformity of inputs
Uniformity of outputs
Labor required
Measurement of productivity
Nature and consumption of output

Most services are consumed at the point of production. Hence, in order to get a
haircut, one generally must go to an establishment that cuts hair.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

27.

Why do the products of service providers tend to be more customized than those
of manufacturers?

A.
B.
C.
D.
E.

Differing customers have differing needs


Because all customers are the same
Technological innovations have reduced variability
There is more capital required in service provision
It is easy to measure productivity

Services are more likely to incorporate the specific needs of individual customers
into the service provision, resulting in more "customized" products.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

8-31
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

28.

Money, employees, time, and equipment represent an airline's ________ to the


transformation process.

A.
B.
C.
D.
E.

outputs
inputs
products
services
intangibles

An airline transforms inputs such as employees, time, money, and equipment


through processes such as booking flights, flying airplanes, maintaining
equipment, and training crews.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

29.

For most organizations, the ultimate objective is for produced outputs to be

A.
B.
C.
D.
E.

easy to develop.
tangible, hard goods.
inexpensive.
worth more than the costs of input.
equal to the costs of input.

For most organizations, the ultimate objective is for the produced outputs to be
worth more than the combined costs of the inputs.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

8-32
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

30.

The fact that a hairdresser gives each customer a different haircut relates to which
of the following points of difference between service providers and
manufacturers?

A.
B.
C.
D.
E.

Nature and consumption of output.


Uniformity of inputs.
Labor required.
Measurement of productivity.
Uniformity of output.

Manufacturers and service providers also differ in the uniformity of their output,
the final product. Because of the human element inherent in providing services,
each service tends to be performed differently; if a barber or stylist performs 15
haircuts in a day, it is unlikely that any two of them will be exactly the same.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

31.

The nature of the service provider's product requires

A.
B.
C.
D.
E.

less employee input.


a higher degree of customer contact.
a lesser degree of customer contact.
more expensive inputs.
more standardization.

Service providers are generally more labor-intensive (require more labor) because
of the high level of customer contact, perishability of the output (must be
consumed immediately), and high degree of variation of inputs and outputs
(customization).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

8-33
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

32.

Actual performance of the service provider's product typically occurs

A.
B.
C.
D.
E.

several days after purchase.


outside the service provider's facility.
at the point of consumption.
in the buyer's home.
before the point of consumption.

The actual performance of the service typically occurs at the point of consumption.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

33.

Manufacturers' products are typically

A.
B.
C.
D.
E.

more labor intensive than service providers'.


less uniform than service providers'.
more difficult to inventory than service providers'.
more standardized than service providers'.
cheaper than service providers'.

The products produced by manufacturers are more likely to be standardized than


the products produced by service organizations.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 1 Easy
Topic: The Nature of Operations Management

34.

Compared to service providers, manufacturers generally

A.
B.
C.
D.
E.

are more labor intensive.


are more capital intensive.
customize their outputs.
have difficulty measuring productivity.
produce intangible outputs.

Manufacturers are more capital intensive than services providers, who are more
labor intensive.

AACSB: Reflective Thinking


Blooms: Remember
8-34
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

Essay Questions

35.

Why do services tend to be more labor-intensive than manufacturing?

Service providers are generally more labor-intensive (require more labor) because
of the high level of customer contact, perishability of the output (must be
consumed immediately), and high degree of variation of inputs and outputs
(customization).

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

36.

How do operations for manufacturers and service providers differ?

Operations for manufacturers and service providers differ in several respects,


beginning with the nature and consumption of their output. Manufacturers' outputs
are tangible, while service providers' outputs are more intangible. The two types of
firms also differ in terms of the uniformity of their inputs and outputs, the labor
required to produce output, and the ease of productivity measurement.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-02 Explain how operations management differs in manufacturing and service firms.
Level of Difficulty: 2 Medium
Topic: The Nature of Operations Management

True / False Questions

8-35
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

37.

A company that uses a fixed-position layout is often called a project organization


because it is involved in large, complex projects.
TRUE
A company that uses a fixed-position layout is often called a project organization
because it is involved in large, complex projects such as construction or
exploration.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

38.

It is not necessary for a product to satisfy a need or a want.


FALSE
Before making any product, a company first must determine what consumers want
and then design a product to satisfy that want.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

39.

Consumer needs and wants often dictate a production process.


TRUE
Often, consumers' specific needs and desires dictate a process.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

40.

Modular design allows products to be repaired quickly, but the components are
often expensive.
TRUE
Modular design allows products to be repaired quickly, thus reducing the cost of
labor, but the component itself is expensive, raising the cost of repair materials.

AACSB: Reflective Thinking


8-36
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

41.

Taxes are an important consideration when deciding where to locate a production


facility.
TRUE
Inducements and tax reductions have become an increasingly important criterion
in recent years when determining a facility location.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

42.

Intermittent organizations typically use the fixed-position layout.


FALSE
Intermittent organizations deal with products of a lesser magnitude than do project
organizations; they are not related to a fixed-position layout.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

Multiple Choice Questions

8-37
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

43.

If ABC Computer Company is determining demand for its future products and how
much consumers are willing to pay, the company will likely rely on

A.
B.
C.
D.
E.

the economy.
marketing research.
the competition.
the past.
intuition.

Marketing research can also help gauge the demand for a product and how much
consumers are willing to pay for it.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

44.

The term standardization means

A.
ensuring that every product has the same quality.
B. that similar products, manufactured by different companies, all operate in the
same manner.
C. making identical, interchangeable components or products.
D. making the exact product a particular customer needs or wants.
E. making an item in self-contained units that can be interchanged to create
different products.
Standardization is making identical, interchangeable components or even
complete products.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

8-38
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

45.

A primary reason for using standardization is to

A.
B.
C.
D.
E.

reduce production costs.


increase consumer options.
reduce product quality.
increase variations.
foster creativity.

With standardization, a customer may not get exactly what he or she wants, but
most firms that manufacture products in large quantities for many customers have
found that they can make them cheaper and faster by standardizing designs.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

46.

Building a computer so that components can be installed in different


configurations to meet customers' needs is a result of

A.
B.
C.
D.
E.

flexible manufacturing.
modular design.
customization.
specialization.
varied engineering.

Modular design involves building an item in self-contained units, or modules, that


can be combined or interchanged to create different products.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

8-39
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

47.

Facility location decisions are complex because

A.
all customers want plants nearby.
B.
transportation costs are prohibitively high.
C.
delivery speed is not very important.
D.
proximity to market is not very important.
E. they involve the evaluation of a number of important factors and the costs are
high.
When a company decides to relocate or open a facility at a new location, it must
pay careful attention to factors such as proximity to market, availability of raw
materials, availability of transportation, availability of power, climatic influences,
availability of labor, community characteristics (quality of life), and taxes and
inducements.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

48.

A company that manufactures large products, such as houses or bridges, may


require that all resources be brought to a central location during production. This
type of facility layout is called

A.
B.
C.
D.
E.

fixed-position.
product.
line.
central control.
assembly line.

A company using a fixed-position layout brings all resources required to create the
product to a central location.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

8-40
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

49.

A company performing large, complex tasks such as construction or exploration is


called a(n)

A.
B.
C.
D.
E.

continuous manufacturing organization.


intermittent organization.
project organization.
construction company.
oil company.

A company using a fixed position layout may be called a project organization


because it is typically involved in large, complex projects such as construction or
exploration.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 1 Easy
Topic: Planning and Designing Operations Systems

50.

A metal fabrication plant with a cutting department, a drilling department, and a


polishing department would likely use which of the following layouts?

A.
B.
C.
D.
E.

Fixed position
Horizontal position
Process
Geographical
Customer based

Firms that use a process layout organize the transformation process into
departments that group related processes. A metal fabrication plant, for example,
may have a cutting department, a drilling department, and a polishing
department.

AACSB: Reflective Thinking


Blooms: Understand
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

8-41
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

51.

A hospital having an x-ray, obstetrics, emergency room, and other units probably
would best be classified as a(n)

A.
B.
C.
D.
E.

intermittent organization.
project organization.
continuous manufacturing organization.
fixed organization.
HMO.

A hospital may have an X-ray unit, an obstetrics unit, and so on. These types of
organizations are sometimes called intermittent organizations, which deal with
products of a lesser magnitude than do project organizations, and their products
are not necessarily unique but possess a significant number of differences.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

52.

An organization that creates many products with similar characteristics, such as


automobiles, television sets, or vacuum cleaners, would most likely be which of
the following types of organizations?

A.
B.
C.
D.
E.

Continuous manufacturing
Intermittent manufacturing
Project manufacturing
Assembly line
Fixed-position

Companies that use assembly lines are usually known as continuous


manufacturing organizations, so named because once they are set up, they run
continuously, creating products with many similar characteristics. Examples of
products produced on assembly lines are automobiles, television sets, vacuum
cleaners, toothpaste, and meals from a cafeteria.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

Essay Questions

8-42
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

53.

What is sustainability and how does it pertain to manufacturing?

Sustainability deals with reducing the consumption of resources and the long-term
well-being of the planet, including natural entities and the interactions of
individuals, organizations, and businesses. Sustainability issues are becoming
increasingly important to stakeholders and consumers, as they pertain to the
future health of the planet.
Manufacturers increasingly are taking steps to reduce waste, recycle, conserve
energy, and use renewable energy not only to protect the environment, but can
also gain the support of stakeholders. Green operations and manufacturing can
improve a firm's reputation and customer and employee loyalty that leads to
improved profits.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

54.

How have computers and robots influenced the operations of business?

Technological developments like computers and robots have strongly influenced


the operations of many businesses. Some examples include computer-assisted
design (CAD), which helps engineers design components, products, and processes
on the computer instead of on paper; computer-assisted manufacturing (CAM), in
which specialized computer systems actually guide the transformation process;
and flexible manufacturing, which uses computers to direct machinery to adapt to
different versions of similar operations. The use of robots has also become
important in industries in which human lives might be otherwise put at risk.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-03 Describe the elements involved in planning and designing an operations system.
Level of Difficulty: 2 Medium
Topic: Planning and Designing Operations Systems

True / False Questions

8-43
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

55.

A just-in-time inventory management system saves money and requires less


storage space by using smaller amounts of materials that arrive just when they are
needed.
TRUE
Just-in-time (JIT) inventory management eliminates waste by using smaller
quantities of materials that arrive "just in time" for use in the transformation
process and therefore require less storage space and other inventory management
expense.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

56.

Operations managers have little concern for supply-chain management activities.


FALSE
A major function of operations is supply chain management, which refers to
connecting and integrating all parties or members of the distribution system to
satisfy customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

57.

Managing finished products and packaging them are activities most closely
associated with marketing.
FALSE
Also called logistics, supply chain management includes all the activities involved
in obtaining and managing raw materials and component parts, managing finished
products, packaging them, and getting them to customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

8-44
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

58.

Purchasing is the buying of all materials needed by the organization.


TRUE
Purchasing, also known as procurement, is the buying of all the materials needed
by the organization.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

59.

The majority of companies purchase all materials needed to make their finished
products.
FALSE
Often, companies can make some components more economically and efficiently
than can an outside supplier. Firms also sometimes find that it is uneconomical to
make or purchase an item, and instead arrange to lease it from another
organization.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

60.

A planning system that schedules the precise quantity of materials needed for
production is called a just-in-time system.
FALSE
Material-requirements planning is an inventory management system that
schedules the precise quantity of materials needed to make a product.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

8-45
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multiple Choice Questions

61.

Which of the following activities is not included in supply chain management?

A.
B.
C.
D.
E.

Getting products to customers


Obtaining and managing raw materials
Managing finished products
Packaging finished products
Researching and developing products

Supply chain management includes all the activities involved in obtaining and
managing raw materials and component parts, managing finished products,
packaging them, and getting them to customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

62.

All activities involved in obtaining and managing raw materials and component
parts, managing finished products, packaging them, and getting them to
customers are part of

A.
B.
C.
D.
E.

resource management.
supply chain management.
engineering.
finance.
strategic planning.

Supply chain management includes all the activities involved in obtaining and
managing raw materials and component parts, managing finished products,
packaging them, and getting them to customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

8-46
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

63.

Within organizations, purchasing is also referred to as

A.
B.
C.
D.
E.

consumption.
disposition.
acquisitions.
procurement.
budgeting.

Purchasing is also known as procurement.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

64.

The buying of all materials needed by the organization is called

A.
B.
C.
D.
E.

consumer behavior.
capital expenditures.
purchasing.
buyer behavior.
acquisitions.

Purchasing is the buying of all the materials needed by the organization.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

8-47
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

65.

The process of determining how many supplies and goods are needed, keeping
track of quantities on hand, each item's location, and who is responsible for it is
called

A.
B.
C.
D.
E.

the economic order quantity model.


just-in-time inventory management.
material-requirements planning.
inventory control.
procurement.

Inventory control is the process of determining how many supplies and goods are
needed and keeping track of quantities on hand, where each item is, and who is
responsible for it.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

66.

The term used to refer to the raw materials, components, completed or partially
completed products, and pieces of equipment a firm uses is

A.
B.
C.
D.
E.

inventory.
order quantities.
production.
tangibles.
intangibles.

Every raw material, component, completed or partially completed product, and


piece of equipment a firm usesits inventorymust be accounted for, or
controlled.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 1 Easy
Topic: Managing the Supply Chain

8-48
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

67.

Materials that have been purchased to be used in making other products are
included in

A.
B.
C.
D.
E.

finished inventory.
partial inventory.
raw materials inventory.
supplier inventory.
components parts inventory.

Raw materials inventory includes all the materials that have been purchased to be
used as inputs for making other products.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

68.

A model that identifies the optimum number of items to minimize the costs of
managing them is called

A.
B.
C.
D.
E.

just-in-time management.
flexible scheduling.
material requirements planning.
the economic order quantity model.
logistics.

The economic order quantity model identifies the optimum number of items to
order to minimize the costs of managing (ordering, storing, and using) them.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

8-49
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

69.

Minimizing inventory by providing an almost continuous flow of items from


suppliers to the production facility is referred to as

A.
B.
C.
D.
E.

just-in-time management.
economic ordering.
material requirements planning.
logistics.
operations management.

Just-in-time management minimizes inventory by providing an almost continuous


flow of items from suppliers to the production facility.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

70.

A planning system that schedules the precise quantity of materials needed for
production is called

A.
B.
C.
D.
E.

just-in-time management.
material-requirements planning.
economic order quantities.
flexible scheduling.
cycle time management.

Materials-requirement planning is a planning system that schedules the precise


quantity of materials needed to make the product.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 2 Medium
Topic: Managing the Supply Chain

Essay Questions

8-50
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

71.

What is the economic order quantity model?

To control the number of items maintained in inventory, managers need to


determine how much of any given item they should order. One popular approach is
the economic order quantity (EOQ) model, which identifies the optimum number of
items to order to minimize the costs of managing (ordering, storing, and using)
them.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 3 Hard
Topic: Managing the Supply Chain

72.

What considerations must managers make after materials have been procured and
their use has been determined?

Managers must consider routing and scheduling. Routing means determining the
sequence of operations through which the product must pass. The sequence
depends on the product specifications developed by the company's engineering
department. Once routing has been determined, the actual work can be
scheduled. Scheduling assigns the tasks to be done to departments or even
specific machines, workers, or teams.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-04 Specify some techniques managers may use to manage the logistics of transforming
inputs into finished products.
Level of Difficulty: 3 Hard
Topic: Managing the Supply Chain

True / False Questions

8-51
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

73.

The ISO 9000 is a series of international quality management standards for


organizations.
TRUE
The ISO 9000 is a series of voluntary international quality management standards
for organizations.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

74.

Quality is a critical element of operations management.


TRUE
Quality, like cost and efficiency, is a critical element of operations management,
for defective products can quickly ruin a firm.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

75.

The degree to which a good or service meets the demands and requirements of
customers is called customer satisfaction.
FALSE
Quality is the degree to which a good or service meets the demands and
requirements of customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

76.

Determining quality can be difficult.


TRUE
Determining quality can be difficult because it depends on customers' perceptions
of how well a product meets or exceeds their expectations.

AACSB: Reflective Thinking


8-52
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

77.

Service businesses cannot incorporate quality standards.


FALSE
Quality standards can be incorporated into service businesses as well, although
measuring quality in the services industry is especially difficult.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

78.

Inspection reveals whether a product meets quality standards.


TRUE
Inspection reveals whether a product meets quality standards.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

Multiple Choice Questions

8-53
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

79.

When managing quality in manufacturing, when is sampling likely to be used?

A.
When inspection tests are destructive
B. When every product absolutely must be tested because of human life and
safety
C.
To assess the quality of services
D.
To assess the quality of work-in-process goods
E. Sampling is generally used in conjunction with inspection tests
Because inspection tests can destroy the thing being inspected, sampling is
generally used to assess quality. For example, when a light bulb is tested, it is used
until it burns out to make sure it works for the number of hours claimed. A burnedout light bulb is no longer salable, so sampling is the preferred testing method.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

80.

It is especially difficult to measure quality characteristics when

A.
B.
C.
D.
E.

a firm uses ISO 9000.


a firm has a total quality management program.
the product is a good.
the product is a service.
a firm uses statistical process control.

It is especially difficult to measure quality when the product is a service.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

8-54
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

81.

Quality

A.
B.
C.
D.
E.

is a concern only for manufacturing companies.


is a concern only for service providers.
refers to the price charged for a product.
is a critical element of operations management.
depends on employees' perceptions.

Quality, like cost and efficiency, is a critical element of operations management,


for defective products can quickly ruin a firm.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

82.

The degree to which a good or service meets the demands and requirements of
customers is called

A.
B.
C.
D.
E.

efficiency.
productivity.
quality.
effectiveness.
customer satisfaction.

Quality reflects the degree to which a good or service meets the demands and
requirements of customers.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

8-55
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

83.

The processes an organization uses to maintain its established quality standards


are called

A.
B.
C.
D.
E.

quality control.
implementation.
inspections.
operations management.
total quality management.

Quality control refers to the processes an organization uses to maintain its


established quality standards.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

84.

The system in which management collects and analyzes information about the
production process to pinpoint quality problems in the production system is called

A.
B.
C.
D.
E.

total quality management.


statistical process control.
quality control.
operations control.
production control.

One method through which many companies have tried to improve quality is
statistical process control, which is a system in which management collects and
analyzes information about the production process.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

8-56
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

85.

The first step in quality control for any organization is

A.
B.
C.
D.
E.

inspection.
establishing standards.
sampling.
implementation.
correction.

Regardless of whether a company has a TQM program for quality control, it must
first determine what standard of quality it desires and then assess whether its
products meet that standard.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

86.

________ is a philosophy that uniform commitment to quality in all areas of an


organization will promote a culture that meets customers' perceptions of quality.

A.
B.
C.
D.
E.

The marketing concept


Total quality manufacturing
ISO 9000
Statistical process control
Total quality management

Total quality management (TQM) is a philosophy that uniform commitment to


quality in all areas of the organization will promote a culture that meets customers'
perceptions of quality.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

8-57
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

87.

Determining how many items are to be inspected is called

A.
B.
C.
D.
E.

efficiency.
sampling.
appraisal.
effectiveness.
specifications.

An important question relating to inspection is how many items should be


inspected, which requires sampling.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 1 Easy
Topic: Managing Quality

88.

It is desirable to test only a sample of the product in all of the following


circumstances except when

A.
B.
C.
D.
E.

inspection procedures are expensive.


elaborate testing equipment is required.
testing takes a significant number of hours to complete.
the product is destroyed by sampling.
sampling is the cheapest option and does not destroy the product

Some inspection procedures are quite expensive, use elaborate testing equipment,
destroy products, and/or require a significant number of hours to complete. In such
cases, it is usually desirable to test only a sample of the output.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

Essay Questions

8-58
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

89.

What is total quality management?

Total quality management (TQM) is a philosophy that uniform commitment to


quality in all areas of the organization will promote a culture that meets customers'
perceptions of quality. It involves coordinating efforts to improve customer
satisfaction, increase employee participation and empowerment, form and
strengthen supplier partnerships, and foster an organizational culture of
continuous quality improvement. TQM requires continuous quality improvement
and employee empowerment.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

90.

What is quality control?

Quality control refers to the processes an organization uses to maintain its


established quality standards. To be competitive in the marketplace, businesses
should incorporate quality control throughout the transformation process. Quality
control should be viewed as an element of the product itself, rather than as simply
a function of the operations process.

AACSB: Reflective Thinking


Blooms: Remember
Learning Objective: 08-05 Assess the importance of quality in operations management.
Level of Difficulty: 2 Medium
Topic: Managing Quality

Multiple Choice Questions

8-59
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

91.

What does McKing Corporation wish to do?

A.
B.
C.
D.
E.

To release a new line of sandwiches


To start selling its food products in grocery stores
To diversify into selling pizzas
To start selling insurance
McKing wants to keep selling the same products it always has

The company wants to diversify into the growing pizza business.

AACSB: Reflective Thinking


Blooms: Apply
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Level of Difficulty: 2 Medium
Topic: Solve the Dilemma

92.

What is the problem with McKing's plan to start selling 16" pizzas?

A.
There is no market for 16" fast food pizzas
B.
McKing's target market does not eat very much pizza
C. The pizzas are too expensive for the average consumer
D. The pizzas are too large to be passed through existing drive-through windows
E.
McKing's franchisees do not want to sell pizza
The problem that was discovered was that the pizzas are too large to be passed
through existing drive-through windows. The largest size that can be
accommodated is 12".

AACSB: Reflective Thinking


Blooms: Apply
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Level of Difficulty: 2 Medium
Topic: Solve the Dilemma

Essay Questions

8-60
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

93.

What mistake did McKing make in approaching the introduction of pizza?

McKing failed to consider operations issues when designing the product.


Specifically, it did not ensure that product delivery (the drive-through service) was
feasible for the new pizza product.

AACSB: Analytic
Blooms: Apply
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Level of Difficulty: 2 Medium
Topic: Solve the Dilemma

94.

How could this product introduction have been coordinated to avoid the problems
that were encountered?

Introduction of this product could have been coordinated better by teaming


operations management personnel with the research and design personnel.
Operations managers would know how to evaluate the product from an operational
issue, thus taking into consideration how the product will be produced and
delivered to the customer.

AACSB: Analytic
Blooms: Apply
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Level of Difficulty: 2 Medium
Topic: Solve the Dilemma

95.

If you were an executive at McKing, how would you proceed with the introduction
of pizza into the restaurants?

Students' answers will vary, but each should demonstrate an understanding of the
problem being corrected.

AACSB: Analytic
Blooms: Apply
Learning Objective: 08-06 Evaluate a business's dilemma and propose a solution.
Level of Difficulty: 2 Medium
Topic: Solve the Dilemma

8-61
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

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