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Operation Management Test Answers

Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization managed by General Management. Operations management is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. (investopedia.com)

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1. If a company is commissioned to build a bridge, it will use computer modeling as part of the design process. Which of the following would be benefits of computer modeling in this scenario?
 

 i)It is cheaper than building physical models.
 ii)It allows parameters to be rapidly adjusted and tested.
 iii)It guarantees that the finished product will perform as intended.
 Answers: • ii and iii only

 2. Which of the following is NOT an element in the 'Waterfall Model'?
 Answers: • Modification

 3. Which of the following statements is/are true?

 i)The 'Six Sigma' methodology developed by Motorola is about reducing time to market.
 ii)The 'Capability Maturity Model' relates specifically to software engineering.
 Answers: • Neither is true.

 4. The phenomenon where, in the log run, unit costs increase as the production volume increases is known as:
 Answers: • Diseconomy of scale

 5. Which of the following refers to an approach to reducing production costs developed by Toyota?
 Answers: • Lean production

 6. What does the term 'kaizen' refer to?
 Answers: • Continuous improvement

 7. Which of the following statements is/are true?

 i)A manufacturing organization's responsibility for its product ceases once it has been delivered to a retailer.
 ii)'Service integration' refers to organizations forming partnerships to link their services.
 Answers: • Only (ii) is true.

 8. Which of the following elements of 'marketing mix' relates to distribution?
 Answers: • Place

 9. The extent to which a company owns its suppliers and its buyers is known as:
 Answers: • vertical integration

 10. Which of the following statements is/are true?

 i)Systems engineering relates only to the technical aspects of projects.
 ii)IDEF0 is a modeling language for software engineering.
 Answers: • Neither is true.

 11. Under' Principles of Organization', what is meant by the expression 'Unity of Control'?
 Answers: • That each subordinate should have only one superior whose orders he has to obey.

 12. What process would a design engineer use to ensure a product meets the user's specifications?
 Answers: • Product Attribute Verification

 13. Which of the following is NOT characteristic of a primary industry?
 Answers: • Products tend to be sold directly to consumers.

 14. Which of the following is NOT a benefit of monitoring performance?
 Answers: • It reduces administrative costs

 15. Which of the following initiatives would a company expect to reduce its defect rate?

 i)Increased training of staff
 ii)Introducing simultaneous engineering
 Answers: • Only (i)

 16. Comparing performance with high-performing competitors is known as:
 Answers: • benchmarking

 17. A 'Just-In-Time' approach to production involves ________.
 Answers: • minimising the amount of unused stock.

 18. Which of the following is the best characterization of a decentralized organization?
 Answers: • The staff enjoy significant discretion.

 19. For targets to be effective, they should be 'SMART'. Which of the following is not part of the acronym 'SMART'?
 Answers: • They are all parts of the acronym.

 20. Which of the following is an example of a secondary industry?
 Answers: • Oil refining

 21. Which of the following statements is/are true?

 i)'Economies of scale' can be used to increase market share without cutting profit margins.
 ii)'Diseconomies of scale' may enable a company to achieve higher profit margins.
 Answers: • Only (i) is true.

 22. Which of the following statements is/are true?

 i)Increasing quality inevitably leads to higher production costs.
 ii)Pareto charts show the values being plotted arranged in the ascending order
 Answers: • Neither is true.

 23. The term 'cell production' refers to a situation in which:
 Answers: • production is divided into self-contained units undertaken by separate teams.

 24. A situation where there is one intermediary organization between the manufacturer and the consumer is known as:
 Answers: • three-level channel

 25. Which of the following statements is/are true?

 i)'Job' production is associated with low unit costs.
 ii)'Job' production permits customers to request a particular specification.
 Answers: • Both (i) and (ii) are true.

 26. Who developed the fourteen key principles for transforming business effectiveness?
 Answers: • W. Edwards Deming

 27. Which of the following is a potential problem /are potential problems associated with benchmarking?

 i)It leads to increased production costs.
 ii)Necessary information is difficult to obtain.
 iii)Organizations may not be directly comparable.
 Answers: • ii and iii only

 28. Which of the following would be a sensible response/sensible responses to a situation where a company finds that demand for its product is outstripping supply?

 i)Start a waiting list.
 ii)Decrease prices.
 iii)Attempt to boost capacity.
 Answers: • iii only

 29. Which of the following is a standard indicating a company's approach to 'quality'?
 Answers: • ISO 9000

 30. To what does the term 'purchasing economies of scale' refer?
 Answers: • Where costs are reduced through bulk buying.

 31. Which of the following is NOT part of the role of an industrial engineer?
 Answers: • Making products easier to manufacture.

 32. Which of the following products would be most suited to transportation by an airplane?
 Answers: • Mail

 33. Which of the following would NOT be addressed as part of a 'Quality' improvement initiative?
 Answers: • Target market

 34. Organizations often outsource elements of their operations in order to improve profitability. Which of the following activities may NOT be outsourced�?
 Answers: • Core business

 35. Which of the following is NOT a stage in the product life cycle?
 Answers: • Infancy

 36. Which of the following is a statistical measure of the ability of a process to deliver within the specification limits?
 Answers: • Production Output Norm

 37. Which of the following concepts developed by Dr Eliyahu Goldratt asserts that at any given time, there will be at least one factor hindering an organization's performance?
 Answers: • Theory of constraints

 38. Which of the following statements is/are true?

 i)Companies should always seek to hold large quantities of unused stock to ensure that production is not interrupted.
 ii)Service-based companies generally hold more stock than manufacturing-based ones.
 Answers: • Neither is true.

 39. Which of the following statements is/are true?

 i)Distribution channels refer only to physical products.
 ii)Under 'selective distribution', only a very limited number of retailers are allowed to sell a product in order to maintain exclusivity.
 Answers: • Neither is true.

 40. Which one of the Maslow's hierarchy of needs would primarily be addressed by introducing 'team-based management'?
 Answers: • Social/belonging

 41. Which of the following is an example of 'job' production?
 Answers: • A print run of 1,000 magazines

 42. Which of the following is an alternative term for the 'Scalar Principle'?
 Answers: • Chain of Command

 43. Which of the following statements is/are true?

 i)A capital intensive production process is one that involves a relatively-high proportion of labor.
 ii)Training staff can be an effective method of boosting productivity.
 Answers: • Only (i) is true.

 44. Which of the following factors must be balanced against 'schedule' to assess the effectiveness of a process?

 i)Quality
 ii)Scale
 iii)Cost
 Answers: • i only

 45. Which of the following statements is/are true?

 i)Implementing 'team-based management' may reduce output.
 ii)'Team-based management' is associated with the 'Theory X' approach.
 Answers: • Neither is true.

 46. Which of the following is/are a benefit/benefits of introducing the 'kaizen' techniques?
 Business
 i)Increased staff motivation
 ii)Reduced wastage
 iii)More efficient processes
 Answers: • All of the above

 47. What is the correct expansion of the acronym KPI?
 Answers: • Key Performance Indicator

 48. A factory can produce 1000 units per day but has only been able to produce 800 units due to a lack of skilled staff. What will its capacity utilization be after a 10% productivity increase?
 Answers: • 88%

 49. Which of the following is/are a disadvantage/disadvantages of gaining a quality award?

 i)Loss of administrative time required to prepare and apply for certification.
 ii)Increased requirement for record-keeping.
 iii)Decreased brand image with customers.
 Answers: • i and ii only

 50. Which of the following statements is/are correct?

 i)'Time and Motion' studies seek to improve a process by increasing the number of steps involved.

 ii)Decisions should be made only on the basis of quantitative data.
 Answers: • Neither is true.

 51. Which of the following situations would NOT cause 'diseconomies of scale'?
 Answers: • Increased manufacturing output

 52. What is meant by the term 'industrial design'?
 Answers: • Planning the machinery that will be required to manufacture a product.

 53. Which of the following statements is NOT true?
 Answers: • 'Operations Research Techniques' can be effectively applied in many situations where the underlying variables cannot be quantified, e.g. situations involving human qualities and interpersonal relations.

 54. Why would a design engineer perform 'structural analysis'?
 Answers: • To test what causes materials to fail.

 55. Which of the following terms refers to the comprehensive management of the flow of goods from the producer to the consumer?
 Answers: • Supply channel

 56. If a company invests in new equipment to make its production process more efficient, which of the following will be considered 'opportunity costs'?

 i)The cost of the new equipment.
 ii)The anticipated additional revenue.
 iii)The alternative improvements for which the capital might have been used.
 iv)The interest that could have been earned on the capital.
 Answers: • iii and iv only

 57. Which of the following is/are typically qualitative measures?

 i)Profit margin
 ii)Oral customer feedback
 iii)Share price
 Answers: • ii only

 58. A factory currently produces 1000 units at a unit cost of $3. If doubling output will decrease production costs by 20%, how much would it cost to produce 2000 units then?
 Answers: • $4,800

 59. Which of the following distribution methods would be best suited to reach the customers who are unable to visit shops and want a broad range of products?
 Answers: • Catalogue

 60. Which of the following is/are a variety/varieties of a 'prototype'?

 i)Visual prototype
 ii)Form study prototype
 iii)Proof-of-principle prototype
 Answers: • i and ii only

 61. Which of the following terms relates to ensuring that different elements of product development are undertaken at the same time rather than consecutively?
 Answers: • 'Simultaneous engineering'

 62. Which of the following methods would be used for the production of gas?
 Answers: • Continuous

 63. A company with 12 employees used to produce 600 units per week. Now with 16 employees, it produces 960 units per week. How much has each employee's productivity increased?
 Answers: • 20%

 64. Which of the following is NOT a reason for selling products via wholesalers?
 Answers: • Higher prices can be charged by doing so than by selling directly to consumers.

 65. Which of the following statements is/are true?

 i)Prototypes should be constructed using the same manufacturing processes as are intended for the final product.
 ii)The cost of producing a prototype will generally be higher than the unit cost of the final product.
 Answers: • Only (ii) is true.

 66. A 'balanced ________' is a tool for evaluating organisational performance across the full range of factors.
 Answers: • scorecard.

 67. Which of the following is an 'output'-related measure?
 Answers: • The number of units produced per day

 68. Which of the following statements are true?

 i)It is not necessary for all measures to be presented to the senior management.
 ii)The more KPIs an organization has, the more effective its performance measurement system will be.
 Answers: • Only (i) is true.

 69. What is reducing the number of levels within an organization's hierarchy known as?
 Answers: • Simplifying

 70. Which of the following describes the term 'time-based management'?
 Answers: • Monitoring staff productivity with a stop-watch.

 71. Which of the following courses of action would NOT be a sensible response where capacity is being under-utilized due to lack of demand for products?
 Answers: • Increase production.

 72. Which of the following statements is/are true?

 i)A firm may choose to subcontract where its capacity exceeds demand.
 ii)Subcontracting is an effective way of ensuring a high-quality product.
 Answers: • Neither is true.

 73. Which two of the following are used to calculate an 'efficiency ratio'?

 i)profit margin
 ii)expenses
 iii)output
 iv)revenue
 Answers: • ii and iv only

 74. Which of the following is NOT a feature of an effective organizational structure?
 Answers: • More managerial levels

 75. Which of the following is NOT a benefit of 'hub and spoke' distribution?
 Answers: • It reduces the number of miles traveled by each item.

 76. Which of the following is/are a reason/reasons for undertaking 'reverse engineering'?

 i)To check that a product functions properly.
 ii)To determine interoperability.
 iii)To examine rival products.
 Answers: • iii only

 77. Which of these is NOT generally associated with a 'Just-In-Time' approach to production?
 Answers: • Reduced motivation among workers.

 78. Which of the following is NOT a stage in the 'Business Process Re-engineering Cycle'?
 Answers: • Reviewing, updating, analyzing 'to-be'

 79. What does the term 'distribution chain' refer to?
 Answers: • A series of organizations involved in taking a product from the manufacturer to the consumer.