Final Exam

Name:
(Problems 1 and 2.) Consider a medical clinic that operates 24 hours a day with one doctor
on duty at all times, who spends an exponentially distributed length of time with each
patient, averaging 26.5 minutes. Patients arrive according to a Poisson process, every 30
minutes on the average.
1. If you were to arrive at this clinic at some random time, how many people would you
expect to be there, not counting the patient actually being examined by the doctor? (2
points)

2. How long will the average patient wait in the office before seeing the doctor? (2 points)
True False: Circle the best answer.
True False 3. Inventory carrying costs consist of both implicit (direct) cost elements
and explicit (opportunity) cost elements.
True False 4. In a basic EOQ setting, if carrying cost were to double, both the EOQ
and the number of orders per year would increase.
True False 5. In ABC analysis, C items are tightly controlled, have accurate
records, and receive regular review by major decision makers.
True False 6. Carrying cost is a linear function of order size.
True False 7. The relationship between average inventory level and order size is
inverse
True False 8. Productivity is the total value of all inputs into the transformation
process divided by the total value of the outputs produced.
True False 9. The origins of the scientific management movement are generally
credited to Frederick Taylor.
True False 10. Continuous improvement attempts to accomplish gains in product or
service quality with major breakthroughs.
True False 11. The Central Limit Theorem states that, with a large enough sample
size, the distribution of sample means from a population with any
underlying distribution will be normally distributed.
True False 12. Project management differs from the management of more traditional
activities due to the limited lifetime of projects.
True False 13. Slack is the amount of time an activity can be delayed without
delaying the entire project, assuming its preceding activities are
completed as early as possible
True False 14. Crashing procedures must consider the impact of crashing on all paths
in the network.

Operations Management 2 Profs. Juran and Pinedo

Multiple Choice: Circle the best answer.
15. Which of the following statements about quantity discounts is TRUE?
a. In inventory management, item cost becomes relevant to inventory decisions only
when a quantity discount is available.
b. The larger is annual demand, the more enticing a discount schedule will be.
c. If carrying costs are expressed as a percent of value, EOQ is smaller at each lower
price in the discount schedule.
d. All of the above are true
e. Only a and b are true.
16. A firm has been ordering a certain item 200 units at a time. Holding cost is $2 per unit
per year, and ordering cost is $25 per order The assumptions of the basic EOQ model
are thought to apply. For what value of annual demand is their action optimal?
a. 800
b. 1600
c. 3200
d. none of the above is correct
e. cannot be determined from data provided
17. The basic Economic Order Quantity model is most relevant for which of the following
tasks?
a. ordering dependent demand items
b. determining fixed order quantities
c. calculating single-period inventory quantities
d. coordinating the purchase of several related items
f. calculating safety stock
18. In the most basic Economic Order Quantity model (constant demand, no shortages), if
the lead time increases from 2 days to 5, the EOQ will
a. increase proportionately
b. increase, but not proportionately
c. decrease.
d. be unchanged
e. none of the above
19. Manufacturers may use _____ inventories to offset distribution delays.
a. raw material
b. work in process
c. finished stock
d. anticipation stock
e. pipeline or in-transit

Operations Management 3 Profs. Juran and Pinedo

20. Of the following types of items, which would generally have independent demand?
a. subassemblies
b. component parts
c. finished goods
d. all of the these
e. none of these
Use this information for questions 21 through 24: Main Street Coffee Shop sells Earl Grey
tea in sufficient quantity to identify the item as an A item and control its inventory
carefully. The shop uses 3 pounds of Earl Grey tea weekly, and each pound costs $16.
Carrying costs are $5 per pound per month because space is very scarce. It costs MSCS $7
to prepare an order. Assume the basic EOQ model with no shortages applies (naturally
imagine telling customers their glass of tea will be ready in ten days).
21. The cost-minimizing solution for Main Street Coffee Shop is to order ______ pounds at
a time?
a. about 6
b. about 3
c. about 21
d. about 156
e. cannot be determined from the data provided
22. What is total annual cost (excluding item cost) of managing this item on a cost-
minimizing basis?
a. $4687
b. $397
c. $362
d. $2858
e. cannot be determined from the data provided
23. In pursuing lowest annual total cost, how many orders should Main Street Coffee
House place annually?
a. about 7
b. 1
c. 52
d. about 26
e. 156

Operations Management 4 Profs. Juran and Pinedo

24. How many days will there be between orders (assume 310 operating days) if Main
Street practices EOQ behavior?
a. about 12
b. about 122
c. 6
d. about 14
e. the number of days between orders is not constant
25. The person most responsible for initiating interchangeable parts in manufacturing was
a. Eli Whitney
b. Frederick Winslow Taylor
c. Henry Ford
d. Alfred P. Sloan, Jr.
e. Lillian Gilbreth
26. According to the scientific management approach, which of the following is a
responsibility of management?
a. to develop a science for only the important elements of a man's work
b. to let workers choose their own work
c. to let workers train themselves
d. to cooperate with workers to ensure all work was performed correctly
e. to ensure workers do all their work in a timely fashion
27. The purpose of an operating characteristics (OC) curve is to
a. show how product quality under different manufacturing conditions.
b. show how the probability of accepting a lot varies with the population percent
defective.
c. show when product specifications don't match process control limits.
d. show how operations affects certain characteristics of a product.
e. graphically display upper and lower product specifications.
28. Lost goodwill is an example of
a. internal failure costs.
b. external failure costs
c. appraisal costs.
d. prevention costs
e. none of the above

Operations Management 5 Profs. Juran and Pinedo

29. Which if the following statements regarding project management is TRUE?
a. The critical path is the shortest of all paths through the network
b. The critical path is that set of activities that have zero slack.
c. Every network has at least one critical path.
d. All of the above are true.
e. Only b and c are true.
30. Suppose activity "a" has 1 week of slack in a CPM network. Reducing the time required
to complete that activity by 1 week will have the effect of
a. reducing the duration of all paths containing that activity by 1 week.
b. producing a new critical path.
c. reducing the project completion time by 1 week.
d. all of the above are effects.
e. only a and c are effects.
31. Which of the following statements regarding project management is TRUE?
a. Project crashing is an optimizing technique.
b. Crashing procedures need not consider the impact of crashing an activity on
other paths in the network.
c. Shortening the project by reducing resources to one or more of the critical tasks
is called "project crashing."
d. Project crashing is a PERT technique.
e. None of the above is true
32. PERT is different from CPM because
a. It does not assume independence among the activities.
b. it does not assume precise breaking points between activities.
c. it does not focus too much attention on the activities on the critical path.
d. it does not assume certainty in activity durations.
e. it assumes activity durations are not crashable.
33. Which of the following statements regarding PERT times is TRUE?
a. "Most likely time" is calculated by t = (a + 4m + b)/6.
b. "Pessimistic time" estimates the minimum time an activity will require.
c. "Optimistic time" estimates the maximum time an activity will require.
d. "Optimistic time" estimates minimum time an activity will require.
e. "Most likely time" estimates the maximum time an activity will require.

Operations Management 6 Profs. Juran and Pinedo

34. A project being analyzed has 45 activities, 19 of which are on the critical path. Analysis
of the path reveals that the estimated time for the critical path is 120 days with a
variance of 100 days. There is a 0.75 probability that the project will be completed
before day ______
a. 130
b. 126.7
c. 1133
d. 1275
e. 100
35. An example of a project is
a. hand-tailored clothing
b. legal defense.
c. automobile manufacturing.
d. fast-food.
e. automobile repair.
Below are the activities, precedence information, and activity times for a project. Use this
information for questions 36-42.
Activity Immediate Predecessor(s) Duration
A 5
B A 5
C B 7
D B 10
E A 20
F C, D, E 5
36. The total number of paths in this network is ___
a. 1
b. 2
c. 3
d. 4
e. 5
37. The early start time for activity C is ____
a. 0
b. 5
c. 10
d. 15
e. 20

Operations Management 7 Profs. Juran and Pinedo

38. The early finish time for activity D is ____
a. 5
b. 10
c. 15
d. 20
e. 25
39. The late finish time for activity B is ____
a. 5
b. 10
c. 15
d. 20
e. 25
40. Slack time for activity D is ____
a. 0
b. 5
c. 7
d. 8
e. 10
41. The critical path of the network consists of activities
a. A-B-C-F.
b. A-B-D-F.
c. A-B-E-F.
d. A-E-F.
e. A-B-C-D-E-F.
42. The length of the critical path is
a. 20
b. 22
c. 25
d. 30
e. 52

Operations Management 8 Profs. Juran and Pinedo

Use the following cost information to answer questions 43 and 44 .
Variable Cost Product Revenue
Process Fixed Cost (per unit) (per unit)
A $300,000 $2.00 $10
B 150,000 3.00 10
C 100,000 5.00 10
43. Which process would you recommend if demand exceeds 150,000 units?
a) Process A
b) Process B
c) Process C
d) None of the above
44. At what level of demand would you recommend Process C?
a) below 20,000
b) between 20,000 and 25,000
c) between 25,000 and 50,000
d) above 50,000
45. A _____________ is a single waiting line.
a) finite population
b) queue
c) infinite population
d) calling population
46. _____________ represent the number of parallel servers.
a) channels
b) phases
c) queue disciplines
d) steps in a process
47. A system whose performance characteristics attain a constant average value after a
lengthy period of time is said to be
a) in transition
b) at optimum
c) in steady state
d) in decline
48. A personal computer with two CPUs is an example of a
a) single-channel, single-phase system
b) single-channel; multiple-phase system
c) multiple-channel, multiple-phase system
d) multiple-channel, single phase system
49. The probability distribution most often associated with the arrival rate is
a) Normal
b) Poisson
c) Beta
d) Negative exponential

Operations Management 9 Profs. Juran and Pinedo

50. The probability distribution most often associated with service times is
a) Normal
b) Poisson
c) Beta
d) Negative exponential
51. The probability Po = (1 - l / m) represents _______________________________.
a) the probability that a customer is in the queuing system.
b) the probability that no customers are in the queuing system.
c) the probability that a server is busy servicing an arrival.
d) none of the above.
52. l / m represents the ______________________.
a) arrival rate
b) service rate
c) mean service rate
d) utilization rate
53. Given an arrival rate of 20 and a mean service rate of 25 customers per hour, what is
the probability that a customer will be served without waiting in line?
a) 25%
b) 80%
c) 20%
d) 75%

Operations Management 10 Profs. Juran and Pinedo