Processes And Technology Test Questions & Answers Ch.6 - Operations Management Canadian 1e Complete Test Bank by Roberta S. Russell. DOCX document preview.
CHAPTER 6
PROCESSES AND TECHNOLOGY
CHAPTER LEARNING OBJECTIVES
1. Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection. Important issues in process design include types of processes, process planning, analysis and innovation, and technology decisions. Process planning determines how a product will be produced or a service provided. It decides which components will be made in-house and which will be purchased from a supplier, selects processes, and develops and documents the specifications for manufacture and delivery. The type of production process selected depends primarily on demand volume and degree of product standardization. Projects are produced one at a time to customer order. Batch production is used to process a variety of low- volume jobs. Mass production produces large volumes of a standard product for a mass market. Continuous production is used for very high-volume commodity products.
Several quantitative techniques are available for selecting a process. One that bases its decision on the cost trade-offs associated with demand volume is break-even analysis. The components of break-even analysis are volume (the level of production), cost (both fixed and variable), revenue (the price at which an item is sold), and profit (the difference between total revenue and total cost).
2. Explain several tools for process analysis, including flowcharts and process maps. Process analysis is the systematic examination of all aspects of a process to improve its operation. The basic tools of process analysis are process flowcharts, diagrams, and maps. The classic process flowchart looks at the manufacture of a product or delivery of a service from a broad perspective. By incorporating non-productive activities as well as productive activities, process flowcharts may be used to analyze the efficiency of a series of processes and to suggest improvements. They also provide a standardized method for documenting the steps in a process and can be used as a training tool. Process maps are so named because they map out the activities performed by various people in the process. They often include a time scale as well.
3. Discuss the steps required to redesign a process to achieve breakthrough improvements. Sometimes a process needs to be completely redesigned, which is referred to as process innovation. These types of projects are typically chartered in response to a breakthrough goal for rapid, dramatic improvement in process performance. The first step in this process is establishing the goals for process performance. After the general concept of redesign is agreed on, a detailed map is prepared for each subprocess or block in the high-level map—blocks are added only if an activity can contribute to the output goal. The detailed map guides decisions on allocation of resources and work methods. When the team is satisfied that the performance objective can be reached with the new design, a pilot study is conducted. After a successful pilot study, full-scale implementation can begin.
4. List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions. Technology is important in both manufacturing and service operations. Technology in manufacturing includes computer-aided design, robots, automated guided vehicles, computer numerically-controlled machines, automated storage and retrieval systems, and flexible manufacturing systems. But technology decisions involve large sums of money and can have a tremendous impact on the cost, speed, quality, and flexibility of operations. When deciding on a capital investment decision, financial analysis sometimes overlooks such important factors as the additional costs that are above the initial investment in equipment (i.e., installation, purchasing other tools required, and training), how much it costs to operate the equipment, the annual savings that can be achieved by implementing the new technology, how the equipment will enhance revenue, what it will cost to replace it when it becomes obsolete, and the risk involved in adopting a new technology.
TRUE-FALSE STATEMENTS
1. A process is a group of unrelated tasks with specific inputs and outputs.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
2. Process design specifies what tasks need to be done and how they are to be coordinated among functions, people, and organizations.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
3. Planning, analyzing, and improving processes is the purpose of operations management.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
4. The organization’s overall approach for producing goods and providing services is its process strategy.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
5. Process strategy defines what tasks need to be done and how they are to be coordinated among functions, people, and organizations.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
6. A firm’s process strategy defines the extent of customer involvement in providing a service.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
7. Process planning determines how a manufactured good is produced or a service is provided.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
8. Companies that control the production of virtually all of the parts that go into a product are said to be horizontally integrated.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
9. Companies that control the production of virtually all of the parts that go into a product are said to be vertically integrated.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
10. Outsourcing occurs when a company cannot or will not make all the parts that go into a product.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
11. Supplier speed is rarely an important consideration in outsourcing decisions.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
12. Supplier reliability is often an important consideration in outsourcing decisions.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
13. One-of-a-kind production of a product based on a customer’s unique specifications is called a project.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
14. Customers are rarely involved in a project that takes an extended period of time to complete.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
15. Subcontracting is rarely a source of human resources for a project.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
16. Producing a high volume of a single product is a characteristic of batch production.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
17. Most of the operations in batch production involve the assembly rather than fabrication.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
18. Batch production is also known as a job shop because it creates more jobs than any of the other process choices.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
19. Mass production is characterized by high volumes of a customized product for a mass market.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
20. Mass production is characterized by high volumes of a standard product for a mass market.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
21. Mass production is often associated with assembly lines.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
22. Mass production is characterized by the use of general equipment and highly skilled labour.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
23. Mass production is characterized by the use of specialized equipment and workers with limited skills.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
24. Continuous production is characterized by very high volumes of commodity products.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
25. Break-even analysis examines the cost tradeoffs associated with demand volume when selecting a process.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
26. Vertical integration is the degree to which a firm produces the parts that go into its products.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
27. The best process strategy is usually found on the diagonal of the product-process matrix.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
28. Process plans are a set of documents that detail the steps in process selection.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
29. A firm’s process strategy rarely defines its capital intensity.
Difficulty: Easy
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
30. Batch production is characterized by small volumes and high product variety.
Difficulty: Easy
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
31. One characteristic of batch production is variable demand.
Difficulty: Easy
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
32. Most of the operations in batch production involve fabrication rather than assembly.
Difficulty: Easy
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
33. A process flowchart is a useful tool for analyzing a process because it often highlights non-productive activities.
Difficulty: Easy
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
34. Process analysis yields a set of documents detailing manufacturing and service delivery specifications.
Difficulty: Medium
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
35. The basic tools of process analysis include process flowcharts, diagrams, and maps.
Difficulty: Medium
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
36. In general, processes should be analyzed for continuous improvement only after a breakthrough improvement.
Difficulty: Medium
Learning Objective: Explain several tools for process analysis, including flowcharts and process maps.
Section Reference: 6.2 Process Analysis
37. Process innovation reflects the total redesign of a process for a breakthrough improvement.
Difficulty: Easy
Learning Objective: Discuss the steps required to redesign a process to achieve breakthrough improvements.
Section Reference: 6.3 Process Innovation
38. Two approaches to process improvement include continuous and breakthrough.
Difficulty: Medium
Learning Objective: Discuss the steps required to redesign a process to achieve breakthrough improvements.
Section Reference: 6.3 Process Innovation
39. Process innovation is most successful in organizations that view their systems as a set of functional areas vying for limited resources.
Difficulty: Medium
Learning Objective: Discuss the steps required to redesign a process to achieve breakthrough improvements.
Section Reference: 6.3 Process Innovation
40. A high-level process map is a useful tool in beginning the redesign of a process.
Difficulty: Medium
Learning Objective: Discuss the steps required to redesign a process to achieve breakthrough improvements.
Section Reference: 6.3 Process Innovation
41. Breakthrough improvement is often implemented when opportunities for continuous improvement have been exhausted.
Difficulty: Medium
Learning Objective: Discuss the steps required to redesign a process to achieve breakthrough improvements.
Section Reference: 6.3 Process Innovation
42. Capital budgeting techniques are often one of the inputs used for technology decisions.
Difficulty: Medium
Learning Objective: List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions.
Section Reference: 6.4 Technology Decisions
43. Technology decisions that involve the outlay of funds are considered a capital investment.
Difficulty: Medium
Learning Objective: List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions.
Section Reference: 6.4 Technology Decisions
44. Technology decisions are often a significant factor in process planning.
Difficulty: Medium
Learning Objective: List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions.
Section Reference: 6.4 Technology Decisions
MULTIPLE CHOICE QUESTIONS
45. A firm’s process strategy defines all of the following except its
a) capital intensity.
b) process flexibility.
c) vertical integration.
d) process selection.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
46. The extent to which the firm will produce the inputs and control the outputs of each stage of the production process is known as
a) vertical integration.
b) process flexibility.
c) process planning.
d) capital intensity.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
47. The ease of adjusting resources in response to changes in demand defines a firm’s
a) vertical integration.
b) process flexibility.
c) customer involvement.
d) capital intensity.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
48. Which of the following is not a potential risk associated with a project?
a) huge swings in resource requirements
b) extensive learning curve benefits
c) limited learning curve benefits
d) small swings in resource requirements
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
49. Variable demand and small to medium quantities produced to order are characteristics usually associated with
a) mass production.
b) continuous production.
c) projects.
d) batch production.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
50. Most of the operations in batch production involve
a) fabrication.
b) assembly.
c) continuous processing.
d) outsourcing.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
51. A print shop is an example of which of the following process choices?
a) project
b) batch production
c) continuous production
d) mass production
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
52. Which of the following is not an advantage of batch production?
a) frequent changes in product mix
b) flexibility
c) customization of output
d) quality reputation
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
53. Disadvantages of batch production include all of the following except
a) high per-unit costs.
b) frequent changes in product mix.
c) flexibility.
d) scheduling problems.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
54. Complex scheduling problems are most likely to occur with which process type?
a) mass production systems
b) batch production systems
c) continuous production systems
d) repetitive manufacturing systems
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
55. Which of the following is not a characteristic of mass production?
a) made-to-stock
b) stable demand
c) high product variety
d) high product volume
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
56. Mass production systems tend to employ
a) specialized equipment and limited labour skills.
b) specialized equipment and specialized labour skills.
c) general purpose equipment and limited labour skills.
d) general purpose equipment and specialized labour skills.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
57. One disadvantage of mass production is its
a) efficiency.
b) speed of production.
c) low per-unit costs.
d) lack of responsiveness.
Difficulty: Easy
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
58. Steel, paper, paints, and chemicals are examples of products that use
a) batch production.
b) repetitive production.
c) continuous production.
d) mass production.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
59. As process selection moves up the diagonal from project to continuous production,
a) demand volume increases.
b) product variety increases.
c) capital intensity decreases.
d) flexibility increases.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
60. A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labour and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm’s break-even volume would be
a) 50,000 units.
b) 5,000 units.
c) 2500 units.
d) 500 units.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
61. If a firm can sell a product for $40.00 each, then what is the volume needed to break-even if the fixed cost of production is $125,000.00 and labour and material costs are $30.00 per item?
a) 125,000
b) 12,500
c) 4,167
d) 3,250
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
62. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives:
Process A | Process B | |
Fixed Cost | $500,000 | $750,000 |
Variable Cost per Unit | $25.00 | $23.00 |
The break-even volume for Process A is
a) 50,000 units.
b) 62,500 units.
c) 30,000 units.
d) 20,000 units.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
63. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives:
Process A | Process B | |
Fixed Cost | $500,000 | $750,000 |
Variable Cost per Unit | $25.00 | $23.00 |
The break-even volume for Process B is
a) 50,000 units.
b) 62,500 units.
c) 30,000 units.
d) 20,000 units.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
64. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives:
Process A | Process B | |
Fixed Cost | $500,000 | $750,000 |
Variable Cost per Unit | $25.00 | $23.00 |
If total demand (volume) is 120,000 units, then the company should
a) select Process A with a profit of $940,000 to maximize profit.
b) select Process B with a profit of $450,000 to maximize profit.
c) select Process A with a profit of $700,000 to maximize profit.
d) select Process B with a profit of $690,000 to maximize profit.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
65. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives:
Process A | Process B | |
Fixed Cost | $500,000 | $750,000 |
Variable Cost per Unit | $25.00 | $23.00 |
If total demand (volume) is 150,000 units, then the company should
a) select Process A with a profit of $1,300,000 to maximize profit.
b) select Process B with a profit of $750,000 to maximize profit.
c) select Process A with a profit of $1,000,000 to maximize profit.
d) select Process B with a profit of $1,050,000 to maximize profit.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
66. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives:
Process A | Process B | |
Fixed Cost | $500,000 | $750,000 |
Variable Cost per Unit | $25.00 | $23.00 |
For what level of volume (output) would the firm prefer Process A to Process B?
a) for all volume levels greater than 75,000
b) for all volume levels greater than 97,500
c) for all volume levels greater than 117,500
d) for all volume levels greater than 125,000
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
67. A company is considering producing an item that can be sold for $37.50 per unit. If the fixed costs for setting up production are $225,000 and the variable cost per unit for the item is $35.00 then the break-even volume for this item is
a) 6,000 units.
b) 6,429 units.
c) 72,500 units.
d) 90,000 units.
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
68. All the following are factors influencing the outsourcing decision except
a) capacity.
b) expertise.
c) quality.
d) product variety.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
69. The product-process matrix includes all the following process types except
a) mass production.
b) stable production.
c) continuous production.
d) batch production.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
70. Which of the following is not associated with the sourcing continuum?
a) joint venture
b) in-house production
c) strategic alliance
d) single contract
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
71. Technology decisions typical in operations management include all the following areas except
a) information technology.
b) product technology.
c) process technology.
d) communication technology.
Difficulty: Hard
Learning Objective: List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions.
Section Reference: 6.4 Technology Decisions
SHORT-ANSWER ESSAY QUESTIONS
72. What is a process strategy and how does it affect the firm?
Difficulty: Hard
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
73. List some non-economic factors that can influence a firm’s outsourcing decision.
Difficulty: Medium
Learning Objective: Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.
Section Reference: 6.1 Process Planning
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Operations Management Canadian 1e Complete Test Bank
By Roberta S. Russell