Operations Management Workbook for Icfai Students

Operations Management

2nd Edition

WORKBOOK

Icfai Center for Management Research Road # 3, Banjara Hills, Hyderabad 500 034

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ISBN 81-314-1126-5 Ref. No. OM WB 03 2K7 35 For any clarification regarding this book, students may please write to Icfai giving the above reference, and page number.

While every possible care has been taken in preparing this book, Icfai welcomes suggestions from students for improvement in future editions.

Icfai, March 2007. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means electronic, mechanical, photocopying or otherwise without prior permission in writing from Icfai.

Operations Management (2nd Edition) Workbook

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Contents

Part A

Multiple Choice Questions 3-67

Multiple Choice Answers and Explanations 71-136

Part B

Paper I

Paper I Model Test 1 139-148

Paper I Model Test 2 149-159

Paper I Model Test 1 Answers and Explanations 163-172

Paper I Model Test 2 Answers and Explanations 173-184

Paper II

Paper II Model Test 1 187-196

Paper II Model Test 2 197-207

Paper II Model Test 1 Answers and Explanations 211-221

Paper II Model Test 2 Answers and Explanations 222-231

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Detailed Contents

Part One: Introduction to Operations Management

1. OPERATIONS MANAGEMENT AN OVERVIEW

Operations Management Decisions The Historical Evolution of Operations Management Computers and Advanced Operations Technology

2. OPERATIONS STRATEGY

Operations Strategy as a Competitive Weapon Elements of Operations Strategy Developing an Operations Strategy Financial and Economic Analysis in Operations

3. FORECASTING DEMAND

Forecasting in Operations Forecast Components Demand Forecasting Process Forecasting Methods Selecting a Forecasting Method Measures of Forecasting Accuracy Monitoring and Controlling Forecasts

Part Two: Design of Facilities and Jobs

4. ALLOCATING RESOURCES TO STRATEGIC ALTERNATIVES

Allocation Decisions in Operations Strategy Linear Programming in Operations Management Formulation of Linear Programming Problems Solution of Linear Programming Problems The Transportation Problem in Linear Programming

5. DESIGN OF PRODUCTION PROCESSES

Process Planning and Design Major Factors Affecting Process Design Decisions Types of Process Designs Process Planning Aids Selecting the Type of Process Design

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6. FACILITY LOCATION AND LAYOUT

Importance of Location Factors Affecting the Location Decisions General Steps in Location Selection and Location Decision Process Location Evaluation Methods Locating Service Facilities Facility Layout Basic Layout Formats Developing a Process Layout Developing a Product Layout Developing a Cellular Manufacturing Layout Japanese Approaches and Trends in Manufacturing Layouts Service Facility Layouts

7. JOB DESIGN

Job Design Fundamentals Considerations in Job Design Work Environment Uses of Job Design

8. WORK MEASUREMENT

Uses of Setting Work Standards Work Measurement Techniques

Part Three: Operations Planning and Control

9. AGGREGATE PLANNING AND CAPACITY PLANNING Overview of Planning Activities The Aggregate Planning Process Strategies for Developing Aggregate Plans Aggregate Planning Techniques Master Production Schedule Implementing Aggregate Plans and Master Schedules Capacity Planning

10. FUNDAMENTALS OF INVENTORY CONTROL Purpose of Inventories Inventory Costs Inventory Systems Economic Order Quantity Model Inventory Classifications Models

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11. PURCHASE MANAGEMENT Importance of Purchasing Organizing Purchasing Responsibilities of a Purchasing Manager Purchasing Process Duties of Buyers Make-or-Buy Decisions Ethics in Buying

12. MATERIALS MANAGEMENT Necessity of Materials Management Functions of Materials Management Materials Management Technology Materials Management Techniques

13. MATERIALS REQUIREMENT PLANNING Fundamentals of Materials Requirement Planning Components of an MRP System Advantages and Disadvantages of an MRP System Problems in Implementing MRP Systems Manufacturing Resource Planning (MRP II)

14. OPERATIONS SCHEDULING Purpose of Scheduling Scheduling Methods Scheduling Activities Scheduling by Type of Operations Scheduling Personnel in Service Operations Scheduling Techniques

15. ENTERPRISE RESOURCE PLANNING Evolution of ERP Business Process Reengineering Business Modeling for ERP ERP Implementation ERP and Competitive Advantage

16. SUPPLY CHAIN MANAGEMENT Business Drivers in Supply Chain Performance Principles of Supply Chain Management Forces Shaping Supply Chain Management Supply Chain Management Framework Customer Focus in Supply Chain Management Electronic Supply Chain Management

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17. JUST-IN-TIME (JIT) MANUFACTURING SYSTEM The Concept of the JIT System Advantages of JIT Systems Characteristics of JIT Systems

18. PRODUCTIVITY AND QUALITY MANAGEMENT Productivity The Strategic Role of Quality Role of Inspection in Quality Control The Cost of Quality Statistical Concepts in Quality Control Computers in Quality Control Concept of TQM

19. FACILITIES AND MAINTENANCE MANAGEMENT Facilities Management Necessity of Maintenance Management Types of Maintenance Economics of Maintenance Evaluation of Preventive Maintenance Policies Maintenance Planning Modern Approaches to Preventive Maintenance Recent Trends in Maintenance

20. PROJECT MANAGEMENT Necessity of Project Management Network Modeling Project Planning Methods Project Crashing

Part Four: Technology and Globalization in Operations Management

21. TRENDS IN OPERATIONS TECHNOLOGY Automation Overview of Manufacturing Activities Artificial Intelligence (AI) Electronic Data Interchange (EDI)

22. GLOBALIZATION AND OPERATIONS MANAGEMENT Significance of Globalization Sources of Global Competitive Advantage Difficulties in Managing Globalization Changes in Operations Strategy Necessary due to Globalization Managing Globalization Operations in Global Business Strategy

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Part A Multiple Choice Questions: Relevant Chapters

Chapters Title Multiple Choice Questions

Chapter 1 Operations Management An Overview 1-16

Chapter 2 Operations Strategy 17-40

Chapter 3 Forecasting Demand 41-86

Chapter 4 Allocating Resources to Strategic Alternatives 87-113

Chapter 5 Design of Production Processes 114-140

Chapter 6 Facility Location and Layout 141-186

Chapter 7 Job Design 187-200

Chapter 8 Work Measurement 201-216

Chapter 9 Aggregate Planning and Capacity Planning 217-243

Chapter 10 Fundamentals of Inventory Control 244-278

Chapter 11 Purchase Management 279-300

Chapter 12 Materials Management 301-333

Chapter 13 Materials Requirement Planning 334-360

Chapter 14 Operations Scheduling 361-408

Chapter 15 Enterprise Resource Planning 409-425

Chapter 16 Supply Chain Management 426-443

Chapter 17 Just-In-Time (JIT) Manufacturing System 444-460

Chapter 18 Productivity and Quality Management 461-493

Chapter 19 Facilities and Maintenance Management 494-529

Chapter 20 Project Management 530-557

Chapter 21 Trends in Operations Technology 558-582

Chapter 22 Globalization and Operations Management 583-600

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This section consists of multiple-choice questions that test the students understanding of the basic concepts discussed in the textbook. Answering these questions will help students quickly recollect the theories theyve learnt and apply them to real-life business situations.

Part A: Multiple Choice Questions

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1. On the basis of Hawthorne studies, Elton Mayo and his team concluded that ________had a major impact on employee productivity.

a. Physical work conditions b. Importance and recognition given to

employees c. Job content d. Fear of losing job

2. Which company first adopted the concept of scientific management in the assembly line production system?

a. General electric b. Ford motors c. General motors d. Westinghouse

3. The computerization of operations began when the first computer was installed in General Electric Appliance Park in 1954. What was the basic objective of computer applications then?

a. Reducing manpower b. Reducing clerical costs c. Enhancing worker safety d. Increasing production

4. Operations management involves the functions of planning, organizing, controlling etc, in production systems. The activity of encouraging employees through praise, recognition and other intangibles is part of which function?

a. Controlling b. Motivating c. Coordinating d. Organizing

5. Decisions on production and process design, facility location and layout etc, are part of which decision category?

a. Strategic decisions b. Tactical decisions c. Operational decisions d. All of the above

6. Which of the following decision do not fall within the basic scope of operations management?

a. Analyzing the firms financial position b. Designing a new assembly line c. Determining the location of a new

distribution center d. Improving product quality

7. Division of labor or specialization is an outcome of ____________.

a. Industrial revolution b. World War II c. Scientific management d. Computerization of production systems

8. The decision of an operations manager about what products to make and when is part of which function?

a. Organizing b. Directing c. Planning d. Coordinating

9. The decisions that operations managers take can be broadly classified into various categories. What is the usual time-frame for tactical decisions?

a. Seven years or more b. One or two years c. Two to four months d. A couple of weeks

10. Operations Management deals with which of the following?

a. Design of products b. Design of services c. Acquisition of resources d. All of the above

11. Operations Management involves the activities of planning, organizing, controlling, directing, and coordinating in production systems. These systems convert resource inputs into products or services. Centralization and/or decentralization of operations fall under which of the following activities?

Part A: Multiple Choice Questions

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a. Planning b. Organizing c. Directing d. Controlling

12. The term Production Management was replaced by a more general term Operations Management in the 1970s. What led to the enlargement of the field and use of the new term?

i. Inclusion of purchasing function ii. Inclusion of dispatch and other related

activities iii. Inclusion of services related concepts and

procedures iv. Inclusion of manufacturing technologies

a. i, ii, iii b. iii, iii, iv c. i, iii, iv d. i, ii, iii, iv

13. Operations Research uses mathematical techniques to solve complex problems. When was the concept of operations research first introduced?

a. In the early 1940s during World War II b. In the late 1920s during Hawthorne studies c. In 1911 for the moving assembly line

production by Ford d. In the 1880s at Midvale Steel Works

14. Who was involved in the Hawthorne experiments at the Western Electric plant?

a. Frederick Taylor b. Henry Ford c. Elton Mayo d. Adam Smith

15. Which of the following technologies helps perform tasks that are repetitive or hazardous for a human being to perform?

a. CAD b. FMS c. Expert systems d. Moving assembly line

16. Computerization has significantly improved the production process. Which of the following is not an advantage of computerization in the production process?

a. Rise in quality of products b. Reduction in labor costs c. Higher maintenance costs d. Greater efficiency of the production

process

17. Which of the following are among the key objectives of an operations manager?

i. Maximizing customer satisfaction ii. Minimizing inventory iii. Maximizing resource utilization

a. i & ii b. ii & iii c. i & iii d. i, ii & iii

18. Product design is one of the factors that an operations manager must consider while designing a production system. Product design can be based on a customized or a standard production design system. What does a customized product design system primarily focus on?

a. Quality and on-time delivery b. Reducing costs c. Costs and quality d. Mass production

19. Which of the following is not categorized among indirect costs?

a. Administrative costs b. Maintenance costs c. Labor costs d. Rentals

20. Who generally develops corporate objectives that are unique to each organization?

a. Frontline managers b. Top-level managers c. Middle level managers d. Production supervisors

21. What factors must managers consider while formulating corporate objectives?

a. Market conditions b. Political environment c. Economic environment d. All of the above

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22. Rainbow Electronics manufactures a limited number of models of television sets. What kind of product design system does the company have?

a. Customized production design b. Standardized product design c. Stock-to-order d. Assemble-to-order

23. Feasibility studies are part of the new product development process. The feasibility test generally focuses on which of the following aspects?

i. Technical feasibility ii. Marketing feasibility iii. Economic feasibility iv. Production feasibility

a. i & ii b. ii & iii c. i & iii d. iii & iv

24. Large organizations are often divided into separate operating divisions that operate as autonomous business units with independent control. What are such units called?

a. Subsidiary units b. Strategic business units c. Franchise centers d. Sister concerns

25. Nucor, a steel producer, competes successfully with larger integrated steel producers by processing steel scrap rather than producing steel from iron ore. What advantage does the company gain through this kind of production process?

a. Production flexibility b. Better quality c. Lower costs d. Batch process facility

26. Selecting product design, production system, and inventory policy for finished goods fall under which component of operations strategy?

a. Designing the production system b. Product/service design and development c. Technology selection and process

development d. Allocation of resources to strategic

alternatives 27. Which among the following products are

generally customized as per user requirements?

i. Industrial boilers ii. Turbines iii. Televisions iv. Ceiling fans

a. i and ii b. ii and iii c. iii and iv d. iv and i

28. Which stage of the product life cycle is characterized by exponential growth of sales volume?

a. Introduction stage b. Growth stage c. Maturity stage d. Decline stage

29. Pick the statement that pertains to the relationship between the role of operations department and the product life cycle.

a. The role of operations department increases as the product moves up the lifecycle

b. The role of operations department decreases as the product moves up the lifecycle

c. There is no change in the role of operations department across the lifecycle

d. The role of operations department increases or decreases as the product moves up the lifecycle

30. What is the basic use of a prototype during the new product development process?

a. A prototype is used to test the technical and economical feasibility

b. A prototype helps test the product performance under standard conditions

c. A prototype is developed as part of test marketing

d. None of the above

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31. Availability of raw materials and nearness to markets are some of the factors that are considered while making decisions regarding plant location. Which component of operations strategy deals with decisions such as plant location?

a. Allocation of resources to strategic alternatives

b. Technology selection and process development

c. Product design and development d. Facility planning

32. Developing an operations strategy is an important function of an operations manager. The operations strategy should basically be in accordance with which of the following?

a. Organization strategy b. Marketing strategy c. Competitor strategy d. Both a and c

33. How is strategic planning different from operations planning?

a. Strategic planning is concerned with long-term planning while operational planning involves short-term day-to-day planning

b. Strategic planning is concerned with short-term day-to-day planning while operational planning involves long-term planning

c. Operational planning involves selection of target markets and distribution channels

d. Both strategic planning and operational planning are long-term in nature

34. Which of the following is not a characteristic of operations strategy?

a. It should be fixed so as to support a product through its entire lifecycle

b. It should accommodate future changes in market demand

c. It should focus on having short-term operational superiority over competitors

d. It should be consistent with strategies in other functional areas such as marketing, finance and human resources

35. HDFC Bank offers deposits, loans, insurance products, mutual funds, trading in stocks, etc, under one roof and positions

itself as a financial supermarket. Which type of competitive advantage strategy does the bank seek to focus on?

a. Quality b. Product variety c. Convenience d. Low cost

(Questions 36 to 39) The given data below shows the initial investment of three projects and their payback periods. Use this data to answer the following four questions.

Project Initial investment

Expected annual income from the

project A Rs.10,00,000 Rs.2,00,000 B Rs.12,00,000 Rs.2,50,000 C Rs.8,00,000 Rs.1,50,000

36. Calculate the payback period for Project A

a. 5 years b. 4 years c. 3 years d. 6 years

37. What is the payback period for Project B?

a. 5.0 years b. 4.8 years c. 3.8 years d. 4.5 years

38. Calculate the payback period for Project C. a. 5.0 years b. 4.8 years c. 5.3 years d. 4.5 years

39. Based on the results for product A, B and C, which is the best investment in terms of faster returns?

a. Project A b. Project B c. Project C d. Either project A or C

40. Allocation of resources to strategic alternatives is a component of operations strategy. What is the main objective of this component?

a. To minimize efficiency b. Optimize the use of resources for best

strategic use

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c. Ensure capacity expansion d. Maintain proximity to resources

41. Demand for a commodity is most likely to depend upon which of the following?

i. The price of the commodity ii. The prices of the available complimentary

goods iii. The customer tastes and preferences iv. Price of substitutes

a. i and ii b. ii and iii c. i, ii, and iii d. i, ii, iii, and iv

42. _________is the ability of an organization to adjust quickly to true changes in the base level of demand.

a. Stability b. Responsiveness c. Repetitiveness d. Controlling

43. The numerical difference between forecast demand and actual demand is called ___________.

a. Standard deviation b. Forecast error c. Forecast variance d. Forecast noise

44. A forecast made by using exponential smoothing was found to be over-optimistic to the most recent trends in demand. Which of the following is the most suitable corrective action possible to make the forecast more realistic?

a. Increase the value of b. Decrease the value of c. Shift to some other forecasting method d. Ensure that remains constant 45. If the demand for a product is stable and is

representative of the future, what should be the value of used to forecast the demand for the product?

a. Low b. High

c. Medium d. Can take any value

46. Organizations generally use demand forecasts to develop which of the following plans?

a. Financial plans b. Facilities plans c. Marketing plans d. All of the above

47. Which of the following methods is judgmental and subjective in nature and based on the estimates and opinions of individuals?

a. Time series methods b. Delphi method c. Exponential smoothing d. Regression analysis

48. Which of the following statements is not true about demand?

a. Dependent demand is forecasted b. If a manufacturer produces tires, the

demand for the tires is a dependent demand

c. MRP systems help determine demand for items with dependent demand

d. Exponential smoothing is used to determine independent demand

49. Which of the following statements about demand forecasting is not true?

a. Forecasts are more accurate for shorter time horizons

b. Regression analysis produces more accurate forecasts than moving average

c. A 6-month moving average forecast is more accurate than a 3-month moving average forecast

d. Forecasts are created using only quantitative data

50. Identify the statistical techniques that use historical data collected over a period of time to predict future demand.

a. Time-series methods b. Qualitative methods c. Nonparametric methods d. Causal methods

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51. Which of the following is not considered by operations managers before selecting a method for forecasting the future demand?

a. Cost and accuracy b. Data availability c. Projected time span d. Plant capacity

52. Which of the following measures provide information on the extent of forecast error in relative terms?

a. Mean absolute deviation b. Mean square error c. Mean forecast error d. Mean absolute percentage error

53. Which of the following decisions undertaken by operations managers does not generally require long-range forecast?

a. Capacity planning b. New product development c. Spare parts inventory d. Capital funds

54. Demand for a product is influenced by many factors. Which of the following is not a factor that influences product demand?

a. Price of the product b. Price of the substitutes c. Income levels of the consumers d. Extent of accuracy of demand forecasts

55. Which of the following is not a consequence of underestimation of demand?

a. Increase in supply lead time b. Increase in loss of orders c. Increase in customer switching d. Increased locking up of working capital as

inventory

56. Which of the following demand estimates are very detailed and used to plan and schedule production operations?

a. Short-term demand b. Medium-term demand c. Long-term demand d. All of the above

57. Raw materials demand forecast is derived from which of the following type of forecast?

a. Short-term demand forecast b. Aggregate product demand forecast c. Labor demand forecast d. All of the above

58. Forecasting demand has a direct impact on which of the following two functions of management.

a. Planning and organizing b. Directing and control c. Organizing and staffing d. Planning and controlling

59. In Delphi method, independent opinions and predictions are made by a panel of experts and summarized by a competent mediator. The success of this method is not dependent on which of the following?

a. The presence of a socially dominant individual

b. The geographical distance between the experts

c. Tendency towards groupthink d. Competency of coordinator

60. The demand for generator sets for twelve consecutive months from January to December is given as 78, 80, 85, 82, 84, 85, 87, 88, 86, 89, 86, 87. Calculate the approximate demand for January of the next year using the simple moving averages method. Assume the time period to be a six month moving average.

a. 82 b. 83 c. 86 d. 87

61. The sum of weights used in weighted moving average method should be equal to _________.

a. 1 b. 10 c. 100 d. Zero

62. How are weights in the weighted moving average method calculated?

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a. Simple moving average method b. Future forecast c. Trial & error d. Exponential smoothing

63. Which of the following forecasting methods are used when the demand for a product is influenced by seasonal tendencies?

a. Delphi method b. Simple moving average method c. Exponential smoothing d. All of the above

64. Which of the following is not a benefit that an operations manager gains when using the exponential smoothing method?

a. Easy availability of standard software packages

b. Less computational requirements c. Larger data storage space d. Greater accuracy in forecasts

65. Maximum weightage is given in the exponential smoothing method for demand values in which of the following time periods?

a. Latest time period b. Earliest time period c. Average of latest and oldest time periods d. Sum of latest and oldest time periods

66. What is the formula for calculating the weighted moving average?

a. WMAt = =

n

1ttt AC

b. WMAt+1 = =

n

1ttt AC

c. WMAt+1 = +=

1n

1ttt AC

d. WMAt-1 = =

1-n

1ttt AC

67. Why is the constant used in exponential smoothing method?

i. To show effects of past demand ii. To smooth out the effects of any noise iii. To predict future trends in demand

a. Only i b. Only ii c. i and ii d. i, ii, and iii

68. In the equation Y = a + bX, what is a termed as?

a. Value of the dependent variable b. Value of the independent variable c. Slope of the line d. Y intercept or constant value

69. What is the relation between the slope of the line and the trend line in regression analysis?

a. If the slope is positive, then the trend line increases positively

b. If the slope is positive, then the trend line decreases negatively

c. There is no relationship between the slope and the trend line

d. If the slope is negative, then the trend line increases positively

70. If the sales of a refrigerator model rose from 15000 units to 20000 units between two consecutive time periods due to 5% increase in advertising expenditure. What is the value of the slope?

a. 33.33 b. 6.67 c. 3.33 d. 250

71. Short-range decisions vary from purchasing, job scheduling, and project assignment to machine scheduling. Which of the following forecasting methods can be used for such decisions?

a. Exponential smoothing b. Linear regression analysis c. Multiple regression analysis d. Delphi method

72. Identify the forecasting method that can be used when data collection proves very expensive.

a. Moving averages method b. Delphi method

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c. Regression analysis d. Exponential smoothing

73. Which of the following forecasting methods give 100% accurate forecasts?

a. Qualitative methods b. Time series methods c. Causal methods d. None of the above

74. Identify the relationship between cost of forecasting and accuracy of forecasting.

a. Cost is directly proportional to extent of accuracy

b. Cost is indirectly proportional to extent of accuracy

c. Accuracy is independent of costs d. Cost is inversely proportional to extent of

accuracy

(Questions 75 to 79) Use the data given in the table below to answer the following five questions related to forecast errors.

Demand Forecast Actual Demand

500 510

510 510

520 515

540 550

550 545

75. Calculate the Mean Absolute Deviation (MAD).

a. 5 b. 6 c. 30 d. 20

76. The Mean Square Error (MSE) for the given data is ______________.

a. 250 b. 100 c. 50 d. 75

77. Calculate the mean forecast error. a. 2 b. 10

c. 7 d. 5

78. Mean Absolute Percentage Error (MAPE) for the given data is __________.

a. 5.72 b. 3.14 c. 1.14 d. 2.56

79. Calculate the Tracking Signal (TS). a. 1.67 b. 2.67 c. 3.67 d. 4.67

80. For forecasting purposes, firms need to take into consideration various factors or components. Which of the following is associated with average sales over a given period of time?

a. Trend component b. Seasonal component c. Cyclical component d. Base demand

81. The demand for luxury products may be linked with the business cycle, as sales usually increase during the boom phase and slow-down during recession. What component of forecasting is described here?

a. Trend component b. Seasonal component c. Cyclical component d. Base demand

82. When LG increased the advertising budget by 40%, the sales of its televisions doubled. On this basis, LG prepared an aggressive demand forecast for the next year. What component of demand did LG consider as part of its forecast?

a. Cyclical component b. Promotional component c. Trend component d. Irregular component

83. Which of the following is an example of the trend component of forecast?

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a. The demand for gold has reduced as the price of gold has increased

b. The promotional expenditure of Airtels GSM service was hiked based on demand forecast

c. The demand for camera mobile phones in India has increased steeply since 2001

d. The demand for wrist watches has been fluctuating for quite some time

84. Identify the correct sequence of steps taken as part of the demand forecasting process.

a. Identify influencing factors understand objectives identify customer segments select forecasting technique

b. Identify influencing factors identify customer segments understand objectives select forecasting technique

c. Identify customer segments understand objectives identify influencing factors select forecasting technique

d. Understand objectives identify influencing factors identify customer segments select forecasting technique

85. Which of the following demand forecasting techniques is divided into static and adaptive methods?

a. Qualitative methods b. Time series methods c. Causal methods d. All of the above

86. Trend and seasonal components play an important role in demand forecasting. In which of the following forecasting methods are estimates of trend and seasonal components assumed to not vary from year to year?

a. Exponential smoothing b. Static forecasting method c. Regression analysis d. Simple moving average

87. Constrained optimization models are useful techniques enabling operations managers to compute the amount of resources to be allocated to each strategic alternative. Which of the following is not a benefit of using a constrained optimization model?

a. Feasible solutions are reduced to manageable numbers

b. Provides optimal solution for the whole organization

c. Enables decision-makers to perform what-if analysis

d. Provides optimal solutions that are always practical

88. Constrained optimization models consist of three major components. Which of the following is not a component of these models?

a. Decision variables b. Nature of demand c. Objective functions d. Constraints

89. Linear programming is a mathematical constrained optimization model used to maximize or minimize the linear functions of a large number of variables, subject to certain constraints. Linear programming cannot help obtain solutions for which of the following?

a. Profitability b. Cost effectiveness c. Motivation d. Productivity

90. Identify the term that describes the solution satisfying all the restrictions of a linear programming problem.

a. Initial solution b. Basic solution c. Feasible solution d. Final solution

91. In linear programming, a statement such as the number of labor hours available is 600 is identified as a ___________.

a. Constraint b. Slack variable c. Objective function d. Decision variable

92. Identify the mathematical technique used to determine the optimal utilization of resources in an organization.

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a. Exponential smoothing b. Regression analysis c. Linear programming d. Decision tree analysis

93. When arriving at production plan decisions by using linear programming, which of the following is not considered a constraint?

a. Market b. Capacity c. Destination requirements d. Inventory space

(Questions 94 to 98) Atul Tele-Products manufactures two telephone models using two different raw material grades. One (x) is of superior quality and the other (y) inferior (second grade). The profit per unit for the model using superior quality raw material is Rs.200 and that of the other is Rs150. The maximum demand for both telephones is 600 units. Production should not exceed demand and total machine time available for both types of telephones together is 650 hours. Besides, one superior quality telephone can be produced in two hours while one unit of inferior quality telephone can be produced every hour. Answer the following five questions using the information given above.

94. If Atul Tele-Products wants to maximize profits, what should be the objective function?

a. Maximize Z = 2x + 4y b. Maximize Z = 200x + 150y c. Maximize Z = 600x + 650y d. Maximize Z = 2x + y

95. What is the constraint on machine hours? a. 2x + y 650 b. x + 2y 650 c. 2x + y 600 d. x + 2y 600

96. What is the constraint on demand?

a. 2x + y 600 b. x + 2y 600 c. x + y 650 d. x + y 600

97. If the number of superior quality telephones produced in a month is 200 and inferior quality telephones is 200, then what is the maximum profit (in rupees) that the company gets?

a. Rs. 75000 b. Rs. 70000 c. Rs. 76500 d. Rs. 78500

98. What is the appropriate production combination for the two models to gain maximum profits?

a. x = 300, y = 300 b. x = 600, y = 0 c. x = 250, y = 100 d. x = 200, y = 200

99. While constructing a linear programming problem, certain assumptions are made. Which of these is not such an assumption?

a. Proportionality b. Optimality c. Divisibility d. Additivity

100. If the objective function is a maximizing function, which of the following can be considered for it?

a. Profits b. Inventory c. Advertising expenditure d. Production costs

(Questions 101 to 104) The diagram represents the solution for a linear programming problem where ABCS is the feasible region. Use the diagram to answer the following four questions.

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101. Identify the constraint represented by the line passing through the coordinates (40, 0) and (0,60).

a. x + y = 40 b. 2x +3y = 120 c. 3x + 2y = 120 d. x + y = 60

102. Identify the corner points of the feasible region from the above diagram.

a. (0,0), (80,0), (60,0), (40,0) b. (40,0), (80,0), (60,80), (60,0) c. (40,0), (80,0), (80,60), (60,0) d. (0,60), (40,0), (80,0), (80,60)

103. What is the equation of the line passing through (80,0)?

a. x = 80 b. y = 80 c. x + y = 80 d. x - y = 80

104. Find the minimum value of the objective function where minimize Z = 20x + 35y.

a. 2100 b. 1600 c. 800 d. 3700

105. Which of the following statements is not characteristic of linear programming?

a. The linear programming problem should have a well-defined single objective to achieve

b. The objective function and constraints of the linear programming problem must be linear functions

c. Decision variables of the linear programming problem should be continuous in nature

d. The resources considered in the linear programming problem should have unlimited supply

106. Identify the correct sequence of steps to formulate a linear programming problem.

i. Identify the objective function ii. Identify decision variables iii. Identify constraints

a. ii, i, and iii b. i, ii, and iii c. iii, ii, and i d. ii, iii, and i

107. Where does the optimum solution lie on the graph in the graphical method of solving a linear programming problem?

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a. On the X axis b. On the Y axis c. In the feasible region d. Outside the feasible region

108. In the simplex method of solving a linear programming problem, the lesser than or equal to inequality is converted into equality by ___________ to the left hand side of the inequality.

a. Adding a slack variable b. Subtracting a slack variable c. Adding a function d. Subtracting a function

109. The sequence of steps in moving from one basic solution to another in a simplex method is known as ____________.

a. Integration b. Iteration c. Allocation d. Summation

110. Identify the typical objective function of a transportation problem.

a. To minimize the sum of all quantities transported

b. To minimize the sum of all production costs

c. To minimize the sum of all transportation costs

d. All of the above

111. Which among the following is not a method used in developing an initial feasible solution for a transportation problem?

a. North-West corner method b. Least cost method c. Vogels approximation method d. Stepping stone method

112. Of all the methods used to determine the initial feasible solution in transportation problems, which is said to be most effective?

a. North-West corner method b. Lest cost method c. Vogels approximation method d. Both a & b

113. The concept of linear programming does not consider any synergetic effects among decision variables while calculating their total value for the objective function or the constraints they are associated with. This is part of which assumption of linear programming?

a. Proportionality b. Additivity c. Divisibility d. Certainty

114. Onio Designs provides industrial designing services to various automobile companies in India. This is an example of ___________.

a. Job shop production b. Batch manufacturing c. Standardized service d. Customized service

115. In the emerging business scenario, it has become essential for operations managers to manage the structure of their organizations, not merely their operations. What does the term structure include?

a. Number of plants and their individual capacities

b. Choices in equipment and process technology

c. Production control and workforce management

d. All of the above

116. Keeping other things constant, when the price of a commodity decreases, the demand for the commodity __________.

a. Does not change b. Increases continuously c. Increases to a certain level d. Decreases

117. To attain its objective of profit maximization, L&T decided to acquire a mine in Australia thereby owning sources of raw material supplies. What is this process of expanding ownership called?

a. Horizontal integration b. Forward integration c. Backward integration d. Diagonal integration

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118. The factor that is not considered by operations managers while making their decisions on backward integration.

a. Level of training for distributor employees b. Capabilities to consume and market the

products c. Anticipate changes in net return on assets d. Availability of funds

119. What are the basic objectives of process planning and design?

i. To produce products with desired quality ii. To produce products at the right time iii. To produce products in required quantities iv. To produce products below competitor

prices

a. i and ii b. i and iii c. ii, iii, and iv d. i, ii, and iii

120. Organizations must be flexible to increase or maintain their market share. The ability of the production system to shift quickly from producing one product to another is called _____________.

a. Product flexibility b. Demand flexibility c. Volume flexibility d. Customer flexibility

121. In an assembly chart, the process of inspection is generally represented by a __________.

a. Square b. Circle c. Triangle d. Pentagon

122. Which of the following is not an advantage of process-focused production?

a. Small work-in-process inventory b. Less manufacturing cycle time c. Low initial investment d. Better product mix available to meet

customer demand

123. Which of the following is not an advantage of the product focused production system?

a. Lower unit costs b. Lower initial investments c. Ease of planning d. Reduced worker training

124. ABC Corp. to match the diversity in customer orders wants to produce products in small batches. Which type of process design would be economically feasible for ABC?

a. Assembly line b. Continuous processing c. Discrete unit processing d. Job shop process

125. Which of the following forms the basis for designing factory buildings and facility layouts?

a. Operations strategy b. Production planning c. Process planning d. Product design

126. When Hindustan Smelters Ltd. decided to manufacture lead ingots, the management decided to develop a process plan for the same. Which of the following factors should the operations manager at Hindustan Smelters Ltd. keep in mind when developing a process plan?

a. Nature of demand b. Degree of vertical integration c. Employee skill level requirements d. Quality level and degree of customer

contact

127. Demand for Pepsi cola is seasonal. It has a very high demand during summer and minimal demand during winter season. Which of the following assumptions is false with respect to the seasonality of demand of Pepsi cola?

a. As demand is seasonal Pepsi cola should not be produced in winter season

b. Pepsi cola should be produced throughout the year but with varying outputs

c. Finished goods inventory must be stocked to meet high demand during summer

d. All the above statements are false.

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128. Which of the following is not a factor affecting backward integration?

a. Cost of producing components versus cost of buying them

b. Investments necessary to produce components in-house

c. Anticipated changes in net return on assets, if production of components is undertaken

d. Ability of the organization to market its products

129. Identify which of the following is not an advantage of vertical integration.

a. It reduces the over-dependency on the purchasing function

b. It helps decentralize the overheads c. It helps in pooling the R&D and design

efforts d. It helps in achieving economies of scale

130. Assume that Eastside, a readymade garment retailer, acquired a textile mill to produce different fabrics. What kind of integration strategy has the retailer adopted?

a. Forward integration b. Backward integration c. Horizontal integration d. Lateral integration

131. There are various types of process designs that are generally used by organizations. In which type of process design, products or services tend to flow along linear paths without backtracking or sidetracking?

a. Product-focused systems b. Process-focused systems c. Group technology d. All the above

132. Steel and Chemical industries generally implement which type of process design?

a. Discreet unit manufacturing b. Process manufacturing c. Job shop process d. Both a & c

133. Which of the following process design systems entail high initial investment?

a. Product-focused systems b. Process-focused systems c. Group technology d. All of the above

134. What are the characteristics of process focused systems?

i. Operations are grouped according to the type of processes

ii. Production is performed on products on a start and stop basis

iii. Products move from department to department in batches

iv. Products are produced irrespective of diversity in customer orders

a. i and ii b. iii and iv c. i, ii, and iii d. ii, iii, and iv

135. Coding of parts in a manufacturing plant is done to ensure the identification of each part and its characteristics. What is the difficulty in adopting this approach?

a. It provides a clear picture of the steps involved in producing the part

b. It results in standardization of part design c. It leads to grouping of the parts into

families d. It requires high employee skills

136. Which of the following is not an advantage of cellular manufacturing?

a. Lesser machine changeover time b. Lower cost of training c. Reduction in material handling costs d. Increase in the in-process inventory

137. Which of the following types of charts indicate operations by circles and inspections by squares?

a. Assembly charts b. Gantt charts c. Flow charts d. None of the above

138. Which type of production systems has high diversity in product design and small batch size?

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a. Job shop production systems b. Cellular manufacturing systems c. Batch production systems d. Product focused systems

139. Which of the following is not true about a product-focused system?

a. Presence of initial fixed costs b. Presence of low variable costs c. The total cost of production increases as

the output volume increases d. Low variations in products

140. In what way is a typical product-focused system distinct when compared to a process focused system?

a. Lower fixed costs and higher variable costs

b. Higher fixed costs and lower variable costs

c. Higher fixed costs and higher variable costs

d. Lower fixed costs and lower variable costs

141. Which of the following reasons persuade companies to set up facilities in export promotion zones, technology parks and industrial estates?

i. Tax holidays and exemption from import-export barriers

ii. Availability of infrastructure iii. Low loan interest rates iv. Low cost of manpower

a. i and iv b. ii, iii, iv c. i, ii, iii d. ii and iv

142. Which of the following is a major factor in selection of a location for an aluminum factory?

a. Proximity to final consumer b. Proximity to input sources c. Proximity to sea port d. All of the above

143. For which of the following industries is proximity to markets a must?

a. Telecom industry b. Textile industry

c. Healthcare industry d. Call center

144. What do you understand by the term facility layout?

a. A list of facilities provided by the organization to the consumers

b. The physical distribution of various departments for ease in production

c. The location of employees inside the organization

d. Layout of safety equipment in an organization

145. Layouts are differentiated by the types of workflow they entail. Workflow in turn is dictated by the nature of the product. Which of the following statements is true about product layout?

a. Equipment is dedicated to the manufacture of a narrow product line

b. Equipment is flexible to produce a wide range of products

c. Material handling cost increases significantly

d. It is used for manufacturing customized products

146. Which of the following involves the use of layout planning tools like templates and two-dimensional cut-outs of equipment drawn to scale?

a. Graphic and schematic analysis b. Load distance model c. Computer models d. CRAFT model

147. Cotton yarn manufacturing units are generally concentrated in select areas of the country as yarn production requires certain ideal levels of humidity. What factor influences selection of plant location in this case?

a. Site cost b. Conducive politico-economic situation c. Suitability of climate d. Availability of amenities

148. Which of the following is not a primary objective of facility location and layout decisions?

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a. To set up a plant of the right size and right design

b. To serve the customer better c. To optimize production cost d. To use best available technology

149. Which of the following is not an advantage of selecting an optimum location for a plant?

a. Reduction of transportation costs of raw material and finished goods

b. Competitive advantage due to proximity to market

c. Low labor-cost d. Cost of technology

150. Which of the following types of layout is used when the product manufactured is bulky, heavy or fragile?

a. Product layout b. Process layout c. Fixed position layout d. Group technology layout

151. Which of the following techniques is not associated with taking suitable location decisions?

a. Cost-profit-volume analysis b. Factor analysis c. Linear programming d. CRAFT analysis

152. Which of the following organizations selects a particular location from a market-oriented approach?

a. A retailer b. A manufacturer c. A software development center d. A content development center

153. Which of the following is not a type of facility layout?

a. Process layout b. Product layout c. Employee layout d. Hybrid layout

154. It is also called the cellular manufacturing layout. Identify the layout from the following.

a. Process layout b. Grouping technology layout

c. Fixed position layout d. Hybrid layout

155. In which of the following situations is there no need for selecting a facility location?

a. When a business has just started b. When expansion of the existing plant is

possible c. When a business wants to establish new

branches/plants d. When government regulations mandate

that the business has to shift its location

156. Firms conduct facility location analysis where they evaluate different locations and finally choose an optimum location to start operations. Arrange the following activities related to facility location planning in a logical sequence.

i. Design layout ii. Select location iii. Search for a location iv. Revise layout

a. i, ii, iii, iv b. ii, iii, i, iv c. iii, ii, i, iv d. iv, iii, ii, i

157. Rahul wanted to set up a small scale printing press to print books for individuals interested in publishing their work for a small audience. Which is the right location for Rahul to establish a printing press to cater to this kind of market?

a. Near paper mills b. In a town/city c. In a village where cost of labor is cheap d. Near the manufacturer of printing

machines

158. There are many factors affecting the selection of a facility location. Which of the following factors would deter a firm from setting up operations in a particular location?

a. Low labor costs b. High transportation costs c. Availability of public utility services d. Benefit of tax holidays

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159. The basic raw material for a cement manufacturing unit is limestone and the major consumers are the government, real estate and individual consumers. Which is the best possible location to build a cement plant?

a. Close to sea port b. Close to cities where consumption is high c. Close to the raw material source d. Within special economic zones or export

processing zones 160. Process layouts are also known as ______. a. Functional layouts b. Fixed position layout c. Flow-shop layouts d. Straight-line layouts

161. Many auto-ancillary units have set up facilities close to facilities of auto majors like Hyundai and Ford near Chennai. Which of the following factors would have primarily led to this decision?

a. Site cost b. Proximity to markets c. Need for safety requirements d. Availability of services like electricity,

drainage, and waste disposal

162. Which of the following is not considered a benefit derived by companies setting up operations in special export zones (SEZ)?

a. Good infrastructure support b. Tax holidays

c. Low interest loans d. Availability of prime real estate

163. Companies can follow certain guidelines when trying to analyze possible locations and identify an optimal one since it is expensive and time-consuming. What is the correct sequence of guidelines a company can follow when evaluating locations?

a. Define location objectives relate objectives to criteria Identify relevant decision criteria evaluate alternative locations select the best location

b. Identify relevant decision criteria define location objectives relate objectives to criteria evaluate alternative locations select the best location

c. Define location objectives identify relevant decision criteria relate objectives to the criteria evaluate alternative locations select the best location

d. Define location objectives identify relevant decision criteria evaluate alternative locations relate objectives to criteria select the best location

164. Though there is no standard procedure, certain guidelines can be used for making a location decision. The first guideline is to define location objectives. Whose views and requirements are not considered when defining them?

Cost Volume Relationships of Two Locations

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a. Owners and promoters b. Employees c. Customers d. Competitors

(Questions 165 & 166) The above figure presents cost-volume-profit analysis. Based on the figure, answer the following two questions.

165. Which of the following is similar for the two locations?

a. Revenue b. Fixed cost c. Variable cost d. Total cost

166. If fixed cost at a location is Rs.500,000, variable cost per unit Rs.30, and price per unit Rs.50. Calculate the number of units a firm should produce to break even?

a. 20,000 b. 10,000 c. 25,000 d. 15,000

(Questions 167 to 169) The table below gives details about fixed costs and variable costs for three different locations. Answer the following three questions using information given in the table.

Location Fixed cost /Yr Variable cost / Unit

Chandigarh Rs. 4,00,000 300 Gurgaon Rs. 4,50,000 285 Delhi Rs. 5,00,000 275

167. Which of the following locations would have the highest total cost per year if annual output of a firm located there is 1000 units?

a. Chandigarh b. Gurgaon c. Delhi d. Both Delhi and Gurgaon

168. Which of the following locations would have the highest annual profit if the annual production is 1000 units and selling price per unit is Rs.1000?

a. Chandigarh b. Gurgaon c. Delhi d. Both Chandigarh and Gurgaon

169. Which plant location would you select if you were the authority to make the final decision?

a. Chandigarh b. Gurgaon c. Delhi d. Any of the above

170. Which of the following is not an advantage of a good layout?

a. It reduces material handling costs b. It reduces congestion in the plant c. It reduces space utilization d. It increases machine utilization

171. Under which type of layout are similar machines and equipment grouped to carry out the production process.

a. Process layout b. Product layout c. Fixed position layout d. Hybrid layout

172. What type of machine is used in a process layout?

a. Specially designed machines b. General purpose machines c. Machines that help manufacture

standardized products d. All of the above

173. Which of the following is an advantage of process layouts?

a. Increased production time b. Increased work-in-progress c. Increased accumulation of work d. Increased utilization of men and material

174. Which type of layout is designed to produce standardized products?

a. Process layout b. Product layout c. Fixed position layout d. Hybrid layout

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175. Which of the following manufacturing processes requires using a fixed position layout?

a. Petroleum distillation b. Beer manufacturing c. Ship-building d. Cement manufacturing

176. In a fabrication and assembly plant, fabrication is done on __________ layout while assembly is done on ______________ layout.

a. Product, process b. Process, product c. Product, fixed position d. Fixed position, product

177. Managers can use various models like mathematical models, computer models, and physical models to develop a process layout. Which among the following helps find the best process layout by evaluating thousands of alternative layouts very quickly?

a. Graphic and schematic analysis b. CRAFT model c. Load distance model d. Line balancing

178. Different types of products are manufactured using a process layout. As workflow differs from product to product, managers focus on minimizing the movement of materials as it can hike material movement costs. Which of the following models aims at minimizing these costs?

a. Graphic and schematic analysis b. CRAFT model c. Load distance model d. Line balancing

179. In which of the following countries were compact production layouts developed due to space constraints?

a. USA b. Japan c. India d. China

180. Match the following models used to develop layouts with their respective features.

i. CRAFT model ii. Load distance model iii. Line balancing iv. Graphic & schematic analysis

p. Used for studying workflow in an assembly line

q. Evaluates thousands of alternative layouts in a short period

r. Analyses and minimizes material movements costs in a plant

s. Two dimensional drawings are used to determine the best layout

a. i/p, ii/q, iii/r, iv/s b. i/q, ii/p, iii/r, iv/s c. i/r, ii/q, iii/p, iv/s d. i/q, ii/r, iii/p, iv/s

181. Different types of layout of service facilities exist based on degrees of customer contact. In which of the following layouts is internal work of employees given secondary importance?

a. Layouts focusing on customer receiving and servicing

b. Layouts focusing on technology c. Layouts focusing on physical materials

processing d. Layouts focusing on production efficiency

182. Which of the following service providers uses both customer focus layouts and process focus layouts as part of its service facility layout?

a. Banks b. Hospitals c. Restaurants d. Call center

183. The following table gives the volume of quantities to be shipped to four markets. The X and Y coordinate values of the location that would help minimize transportation costs are also given. Use the center of gravity method to identify coordinates for the optimal location to set up a warehouse to service the four markets with minimal transportation costs.

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Distribution Center

X Y VOLUME (000)

A 4 4 60 B 12 6 90 C 10 14 110 D 5 13 100

a. 10.75, 9.06 b. 10.05, 8.11 c. 9.06. 10.75 d. 8.11, 10.06

184. Which of the following is not a location evaluation method?

a. Point rate method b. Center of gravity method c. Analytic Delphi method d. Historical analogy method

185. Analytic Delphi Method helps managers take complex multi-location decisions. Give the correct sequence of steps to be taken as part of such location decisions.

a. Form panels - Identify trends and opportunities - Determine directions and strategic goals of the organization - Develop alternatives - Prioritize alternatives

b. Identify trends and opportunities - Determine directions and strategic goals of the organization - Form panels - Develop alternatives - Prioritize alternatives

c. Identify trends and opportunities - Form panels - Determine directions and strategic goals of organization - Prioritize alternatives - Develop alternatives

d. Form panels - Determine directions and strategic goals of the organization - Prioritize alternatives - Develop alternatives - Identify trends and opportunities

186. Linear Decision Rules (LDRs) are a set of equations for calculating the optimal workforce, aggregate output rate and inventory level for each time period in a planning horizon. Which of the following is not true about LDRs?

a. They provide optimum solutions for the problems

b. They eliminate trial and error computations

c. They consider non linear cost relationships d. They can be generalized to all

organizations

187. ________ is the basis for job analysis, job description and job specification.

a. Job rotation b. Job design c. Job enrichment d. Job enlargement

188. ________ describes the tasks, duties and responsibilities of a job.

a. Job analysis b. Job enrichment c. Job description d. Empowerment

189. ___________ investigates job content, the physical conditions in which the job is carried out, and qualifications necessary to carry out job responsibilities.

a. Job description b. Job analysis c. Job profile d. Job specification

190. What does an effective job design ensure? a. Employees are paid above expectations b. Jobs are consistent with organizational

goals c. Proper measurement of work done by each

employee d. All the above

191. The Job Characteristics Model developed by Richard Hackman and Greg Oldham includes five characteristics. They are skill variety, task identity, task significance, autonomy and feedback. Match the following terms with their respective description.

i. Skill variety ii. Task significance iii. Autonomy iv. Feedback

p. Influence of job on individuals inside & outside the organization

q. Flexibility, independence, and discretion in the job

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r. Skill sets and abilities needed for the job s. Extent of information given to employees

on their performance

a. i/q, ii/p, iii/s, iv/r b. i/p, ii/q, iii/r, iv/s c. i/r, ii/q, iii/p, iv/s d. i/r, ii/p, iii/q, iv/s

192. Which of the following is not a consequence of a good job design?

a. Improved efficiency b. Improved productivity c. Increase in worker inputs d. Increase in motivation

193. The job design developed should be feasible for employees as well as the organization. Feasibility is required in which of the following areas?

i. Technical feasibility ii. Economic feasibility iii. Political feasibility iv. Behavioral feasibility

a. i, ii, iv b. i, iii, iv c. i, ii, iii d. ii, iii, iv

194. What do you understand by the term job content?

a. It gives the detailed set of activities to be performed on the job

b. It describes the physical conditions in which the job is done and qualifications for the job.

c. It describes the duties and responsibilities of a job.

d. All of the above

195. Job content is the key to job design as it influences other aspects of human resource management. Job content helps clarify which of the following aspects?

i. Qualifications ii. Skill sets iii. Nature of training programs iv Level of motivation

a. i and ii b. iii and iv c. i, ii, and iii d. i, ii, iii, iv

196. Job specialization at work has many advantages for the organization. Which of the following is not an advantage resulting from this?

a. Ease in recruiting new workers because fewer skills are required

b. Lower production time and higher productivity levels

c. Lower flexibility in job rotation d. Larger scope for mechanization or

automation of processes

197. Which of the following is an advantage of work specialization for a manager?

a. Lower work satisfaction b. Ease of supervision and training workers c. Reduced scope for improvement because

of limited perspective of workers d. Hidden costs of worker dissatisfaction

resulting from absenteeism and high employee turnover

198. Which of the following types of compensation is a basic need and is not a tool used for employee motivation?

i. Fixed salary ii. Promotion iii. Health insurance iv. Bonus

a. Only i b. ii, iii and iv c. i, iii and iv d. i, ii, iii, iv

199. Which of the following is a form of monetary benefit given to employees in an organization?

a. Rewards b. Titles c. Promotions d. Low interest loans

200. Identify the correct sequence of activities to be performed by the human resource manager.

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i. Job analysis ii. Job description iii. Job design

a. i, ii, iii b. ii, iii, i c. i, iii, ii d. iii, i, ii

201. The different techniques used in work measurement are time study, historical analysis, standard data, work sampling, and predetermined motion time data systems. Each has a different way of measuring time. How is it done in time study?

a. Using standard table b. Using past record c. Using stop watch d. Using formula

202. Which of the following are benefits of setting work standards?

i. It helps improve machine utilization by reducing idle time

ii. It helps compare efficiency of different work methods

iii. It helps a manager delegate work to all employees

iv. It provides benchmarks for evaluating workers performance

a. i and ii b. i and iii c. i, ii and iv d. i, ii, and iii

203. Which of the following work measurement methods does not use historical or stored data but uses several random observations in the work environment?

a. Standard data technique b. Predetermined motion time study c. Work sampling d. Historical analysis

204. Which of the following is not a technique used for setting work standards?

a. Time study b. Work sampling c. Delphi method d. Predetermined motion time systems

205. Which of the following statements gives an incorrect description of a feature of time study?

a. The average of observations made always represents time required to perform each elemental task

b. Workers behave differently than usual while conducting a time study

c. Observations are recorded repeatedly across several workers to arrive at the standard time

d. Normal time is the product of average cycle time and worker rating

206. Which of the following is not an allowance considered under the time study technique of work measurement?

a. Contingency allowance b. Interference allowance c. Dearness allowance d. Relaxation allowance

(Questions 207 & 208) A time study of a production worker in a component manufacturing plant produced the following results: Cycle time = 3.75 minutes; worker performance rating = 90 percent. Answer the following two questions using this information.

207. Calculate the normal time for the job. a. 3.75 minutes b. 3.375 minutes c. 3.455 minutes d. 3.565 minutes

208. If allowances are 12 per cent of the job time, calculate the standard time required for the job.

a. 3.375 minutes b. 3.775 minutes c. 3.835 minutes d. 3.965 minutes

209. Identify the technique of setting work standards that uses recorded standard time data for each of the basic motions associated with performing a task and summing them up to determine the time required to perform the whole task.

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a. Time study b. Pre-determined Motion Time Study c. Standard data d. Historical analysis

210. Which of the following statements correctly describes the difference between Standard Data Technique and Pre-determined Motion Time Study in work measurement?

a. PMTS has to be measured by taking observations while Standard Data provides standard times for common movements

b. Standard data provides time for basic movements while PMTS provides time for job-specific motions

c. PMTS provides time for basic motions while Standard Data provides time for job-specific motions

d. PMTS has to be measured by looking at the standard table while Standard Data technique uses observations

211. ___________ is a technique of analyzing work by making several observations, usually at random, to see the relative frequency with which various elemental activities take place.

a. Time study b. Standard data c. Historical analysis d. Work sampling

212. One of the primary applications of work sampling is to find the percentage of time an employee or equipment was occupied, or left idle. What is the name given to this application of work sampling?

a. Ratio delay b. Performance measurement c. Time standards d. Employee self-timing

213. Which of the following primary applications of work sampling are used to identify the standard time for completion of a task?

a. Ratio delay b. Performance measurement c. Time standards d. None of the above

214. Which of the following are drawbacks of using employee self-timing, a technique of work measurement?

i. Low costs ii. Low accuracy iii. Does not take allowance into consideration iv. Less time consuming

a. i and ii b. ii and iii c. iii and iv d. iv and i

215. Work standards techniques generally find use in which of the following operations?

a. Operations planning b. Operations scheduling c. Operations control d. All of the above

216. Three of the most widely used predetermined motion-time data systems are MTM, MOST and work factors. Expand MOST.

a. Maynard Operations Sequence Technique b. Myers Operations Sequence Technique c. Motion Operations Sequence Technique d. Maynard Operations Scheduling

Technique

217. Which of the following is not a pure planning strategy used for developing aggregate plans?

a. Varying utilization of the workforce b. Varying workforce size in response to

output requirements c. Varying size of inventory d. Varying the compensation method

218. __________ translates the aggregate plan into a detailed plan that specifies the exact timing for production of each unit.

a. Master production schedule b. Total production schedule c. Primary production schedule d. Alternative production schedule

219. Which of the following is not an aggregate planning technique?

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a. Time series analysis b. Graphical method c. Linear programming d. Heuristic methods

220. Which model is based on historical aggregate planning data available with an organization?

a. Heuristic approach b. Computer search c. Linear decision rules d. Linear programming

221. Which of the following is not a pure planning strategy used as part of aggregate planning?

a. Back-order strategy b. Maintaining fixed plant capacity c. Sub-contracting d. Varying workforce utilization

222. Which of the following is not a function under capacity requirement planning?

a. Identifying material requirement b. Defining how resources can be best

employed to meet market demand c. Allocating production among plants d. Determining monthly production

schedules

223. Operations planning activities can be long-range, medium-range or short-range. Aggregate planning typically fall under which category?

a. Long range b. Medium range c. Short range d. Both a & b

224. A production plan does not contain information about which of the following?

a. Production process b. Inventory requirements c. Suppliers d. Customers

(Questions 225 to 228) The aggregate demand for product X for the next four months is given in the following table:

Jun Jul Aug Sept

Demand 2600 2700 2800 2750

Working Days

26 25 25 26

In addition, the following information is given:

Opening stock of inventory = 500 units, Inventory holding cost = Rs.20/unit/month, Worker productivity = 4 units/day, Worker strength = 25, Shortage cost (due to lost sales) = Rs.10/unit

Answer the following four questions based on the above given information

225. What is the change in inventory on hand after meeting demand for Product X for the month of June?

a. 300 units b. 200 units c. 100 units d. 0 units

226. Assume that opening stock for the month of July is 500 units. What is the inventory carrying cost for that month?

a. Rs.6000 b. Rs.3000 c. Rs.4000 d. Rs.2000

227. Calculate the closing inventory for August?


228. What is the shortage cost (due to lost sales) in the month of September if the opening inventory for the month is zero units?

a. Rs.3000 b. Rs.2500 c. Rs.2000 d. Rs.1500

229. What is the basic use of the computer simulation method, a type of optimal model used in aggregate planning?

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a. To develop a master production schedule b. To identify variables for developing the

plan c. To evaluate the performance of a specific

plan d. All of the above

230. A Master Production Schedule (MPS) is based on which of the following?

a. Amount of inventory needed for the end product

b. Estimation of overall demand for the end product

c. Confirmed customer orders for the end product

d. All of the above

231. Identify the false statement from the following about Master Production Schedule and Master Schedule Formation.

a. MPS of make-to-order organizations deals only with final products

b. MPS for assemble-to-order organizations concentrates on scheduling major components assembled to make a product after orders are received

c. Back orders are common in make-to-stock organizations

d. There is no finished goods inventory in make-to-order production

(Questions 232 & 233) The demand forecast for metal rollers used in manufacturing printing machines for the next three months is 60, 55, 65. The number of orders booked at the start of the MPS planning period is 55, 60, 65 respectively. Given, Inventory on hand = 75, Lead time = 1 month, Production lot size = 100 units. Answer the following two questions.

232. What is the projected inventory at the end of the second month?


233. What would be the projected inventory at the end of the third month if orders for the month increase to 80 from 65?


234. What is meant by rolling through time, associated with implementing aggregate plans and master schedules?

a. Development of initial aggregate plans b. Revising and updating aggregate plans c. Development of the initial master

production schedule d. Revising and updating master production

schedule

235. It is important to determine adequate production capacity to meet forecast demand levels and to determine whether or not sub-contracting and/or overtime has to be used. This activity is associated with which of the following?

a. Capacity planning b. Aggregate planning c. Scheduling d. Demand forecasting

236. Which of the following is not associated with capacity planning?

a. Identifying available and required capacity b. Evaluation and summing up of capacities c. Identifying the right layout design for the

desired capacity d. Identifying gaps in capacity and plugging

them with sub-contracting, overtime, etc.

237. Identify the correct sequence of steps associated with capacity planning.

i. Identify current capacity ii. Forecast future capacity iii. Identify and evaluate sources to meet

capacity requirements iv. Select the most appropriate alternative

a. i, ii, iii, iv b. i, iii, ii, iv c. iii, i, ii, iv d. iii, ii, i, iv

238. The capacity utilization rate measures capacity level at which a production process is operating. Identify the correct formula for capacity utilization rate.

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a. 100usedCapacity

availableCapacity raten utilizatioCapacity =

b. 100avaialableCapacity

usedCapacity raten utilizatioCapacity =

c. 100avaialableCapacity

nUtilizatio timeAvailableraten utilizatioCapacity =

d. 100nUtilizatio timeAvailable

availableCapacity raten utilizatioCapacity =

239. Which of the following cannot be a reason

for decrease in per unit cost when volume of production increases?

a. Decrease in fixed costs b. Adoption of efficient processes c. Adoption of automation d. Increased complexity in operations

240. When the scale of production is increased after a certain point, economies of scale can become diseconomies of scale. What can be the possible reasons for diseconomies of scale?

a. Complexities in operations b. High cost of modification & replacement c. Distribution and storage costs d. All of the above

241. Which of the following statements does not correctly represent the characteristics of services?

a. Services cannot be produced in anticipation of demand

b. Services cannot be stored c. A service firm with a single office can

efficiently serve customers in another geographical area

d. Production and consumption of a service go together

242. The two major sources of inputs that influence master production schedule are forecasts and customer orders. Identify the correct combination from the following.

i. Make-to-stock environment : Takes inputs from forecasts in deciding the MPS

ii. Make-to-order environment : Takes inputs from customer demand in deciding the MPS

iii. Make-to-stock environment : Takes inputs from customer demand in deciding the MPS

iv. Make-to-order environment : Takes inputs from forecasts in deciding the MPS

a. Only iii b. Only i c. Both iii & iv d. Both i & ii

243. Operations planning activities can be long-range, medium range or short range in nature. Process planning typically falls under which category?

a. Long-range planning b. Medium-range planning c. Short-range planning d. Both b & c

244. Carrying costs represent cost incurred while inventories are stored in warehouses or stores. Which of the following is not associated with carrying costs?

a. Insurance costs b. Maintenance costs c. Cost of obsolescence d. Material receiving costs

245. Organizations maintain buffer stocks to overcome which of the following conditions?

a. Demand is greater than expected b. Supply is more than expected c. Demand is less than expected d. Supply matches demand

246. On what basis do organizations fix reorder level for raw material under the EOQ model?

a. Recommendations of finance managers b. Estimated demand during lead-time c. Recommendations of suppliers d. Estimated sales for a financial year

247. Which of the following is not an assumption that underlines the EOQ model?

a. The lead-time for material delivery is known with certainty and remains constant

b. The total holding cost of inventory is proportional to the number of inventory items stored

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c. The cost of ordering varies and is dependent on the quantity ordered

d. The price of the inventory item is independent of order quantity

248. Opportunity cost is associated with which basic category of inventory cost?

a. Carrying costs b. Ordering costs c. Purchase costs d. Stock-out costs

249. Which of the following costs are considered by a firm as part of calculating inventory costs?

i. Holding costs ii. Acquisition costs iii. Ordering costs iv. Stock out costs

a. i, ii and iii b. ii, iii and iv c. i, iii and iv d. i, ii, iii, iv

250. What does the EOQ inventory model primarily attempt to minimize?

a. The number of items ordered b. The number of orders placed c. Total inventory costs d. The safety stock

251. Which of the following is not a primary cost involved in maintaining inventories?

a. Carrying cost b. Ordering cost c. Stock-out cost d. Purchase cost

252. Which of the following terms refers to the time lag between the point of order and receiving the material?

a. Lead-time b. Slack time c. Reorder time d. Order time

253. In a level production plant, if opening inventory was 500 units, sales forecast was for 1300 units and closing inventory at the end of the period was 200 units, how many units were produced?


254. Which of the following are correct reasons for organizations to hold raw material inventories?

i. Obtaining raw materials from suppliers exactly when needed for production schedules is not always possible

ii. Products can be shown to customers iii. Quantity discounts can result from larger

purchase quantities iv. Larger shipments can result in reduced

incoming freight costs and material handling costs

a. i and ii b. ii and iii c. i, ii and iv d. i, iii, and iv

255. Which of the following is not an assumption of the EOQ model?

a. Demand for a product or its usage rate is constant over a period of time

b. Supply rate is always greater than or equal to usage rate

c. The lead-time for material delivery is known with certainty and it remains constant

d. The purchase price per unit varies depending upon quantity ordered

256. Suppose a company consumes a particular product at an average of 50 units /week. It costs Rs.200 to order and Rs.0.50 per unit per week to hold the item in inventory. Compute the EOQ.


257. According to which inventory system inventory is continuously checked and a new order placed when the level of inventory reaches the reorder point?

a. Q system b. P system

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c. EOQ system d. Fixed order period system

258. Why do organizations maintain an inventory of finished goods?

a. To avoid bottlenecks in the production process

b. To avoid backlogs in customer order c. To smoothen production flow d. To reduce material handling costs

259. Semi-finished items stored temporarily and used to finish production are termed _________.

a. Raw material inventory b. Work-in-progress inventory c. Finished products inventory d. None of the above

260. Manufacturers maintain buffer stocks of _________to meet unprecedented increase in demand.

a. Raw materials b. Work-in-progress c. Finished products d. None of the above

261. A firm decides on quantity of material ordered to maintain various inventory costs. Which of the following costs does not influence quantities ordered by the firm?

a. Purchase cost b. Carrying cost c. Ordering cost d. Hiring cost

262. Suppliers offer discounts to manufacturers based on which of the following type of costs?

a. Purchase costs b. Carrying costs c. Ordering costs d. Stock-out costs

263. Which of the following does not come under carrying costs?

a. Pilferage b. Spoilage c. Maintenance costs d. Material-receiving costs

264. Match the following inventory costs with their related descriptions.

i. Purchasing costs ii. Carrying costs iii. Ordering costs iv Stock-out costs

p. These costs arise when inventory is damaged

q. Loss of customer goodwill is a consequence of these costs

r. Discounts are given by suppliers

Documents

Operations Management Workbook for Icfai Students