Business Essentials 9th Edition by Ebert Test Bank

Business Essentials  9th Edition by Ebert  Test Bank
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Business Essentials, 9e (Ebert/Griffin)
Chapter 7 Operations Management and Quality

1) Firms that make only tangible products are engaged in goods production.
Answer: TRUE
Explanation: Goods are tangible products, while services may be either tangible or intangible.
Page Ref: 166
Difficulty: Easy
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

2) In a low-contact system, the customer must be a part of the system to receive the service.
Answer: FALSE
Explanation: An example of a low-contact system is mail delivery, where the customer need not be present to receive the service.
Page Ref: 170
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

3) A firms capacity depends on both how many people it employs and the number and size of its facilities.
Answer: TRUE
Explanation: Capacity is the amount of a product that a company can produce under normal conditions.
Page Ref: 173
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

4) If parts A, B, and C must be produced this week, a detailed schedule will indicate the sequence of work.
Answer: TRUE
Explanation: Detailed schedules show day-to-day activities that will occur in production.
Page Ref: 177
Difficulty: Easy
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

5) Quality improvement teams are groups of employees from various work areas who define, analyze, and solve common production problems.
Answer: TRUE
Explanation: Quality improvement teams seek to improve both their own work methods and the products they make.
Page Ref: 184
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
6) ISO 9000 is a certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance.
Answer: FALSE
Explanation: This is a description of ISO 14000.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

7) Each stage in the supply chain adds value for the final customer.
Answer: TRUE
Explanation: The supply chain starts with raw-materials suppliers and continues until the product reaches the end customer.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

8) By turning raw materials into finished goods, production creates form utility.
Answer: TRUE
Explanation: Form utility is created when raw materials and human skills are converted into finished goods and services.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

9) When a company turns out ornaments in time for Christmas, it creates time utility.
Answer: TRUE
Explanation: Time utility is created when products are made available for consumers when they want them.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the major components of effective distribution
Skill: Concept

10) Services are more tangible, more customized, and more storable than most products.
Answer: FALSE
Explanation: Services are less tangible and less storable than goods.
Page Ref: 168
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the major components of effective distribution
Skill: Concept
11) Getting a haircut and having your lawn mowed are both examples of low-contact services.
Answer: FALSE
Explanation: Getting a haircut is a high-contact service.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

12) A company typically selects the kind of production used by most of its competitors.
Answer: FALSE
Explanation: A company picks the one that best achieves its larger business strategy.
Page Ref: 170
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

13) In a same-steps layout, equipment and people are set up to produce one type of good in a fixed sequence of steps and are arranged according to its production requirements.
Answer: TRUE
Explanation: A same-steps layout allows for the efficient use of an assembly line, where production operations are set up along a product-flow line.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

14) An assembly line is an example of a custom-products layout.
Answer: FALSE
Explanation: An assembly line is a same-steps layout.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

15) A process flowchart identifies the sequence of production activities, movements of materials, and work performed at each stage of the process.
Answer: TRUE
Explanation: A process flowchart can be analyzed to isolate wasteful activities, sources of delay, and other inefficiencies.
Page Ref: 176
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
16) Staff schedules identify which products will be produced and when.
Answer: FALSE
Explanation: Staff schedules, in general, specify assigned working times in upcoming daysperhaps for as many as 30 days or morefor each employee on each work shift.
Page Ref: 177
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

17) Materials management involves the flow of materials inside of the production facility, while distribution management involves the flow of finished goods.
Answer: FALSE
Explanation: Materials management is the process by which managers plan, organize, and control the flow of materials from design through distribution of finished goods.
Page Ref: 180
Difficulty: Difficult
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

18) Just-in-time (JIT) production systems normally require large amounts of safety stock to be maintained in a firms warehouse.
Answer: FALSE
Explanation: JIT production reduces inventory levels by bringing needed materials together only at the precise time they are needed for production and/or shipment to the customer.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

19) Japanese companies adapted the concept of quality circles from quality improvement teams used by U.S. companies.
Answer: FALSE
Explanation: Quality improvement teams are patterned after the Japanese concept of quality circles.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

20) ISO 9000 is a certification program attesting that a factory, laboratory, or office has met the rigorous requirements set by the International Organization for Standardization.
Answer: TRUE
Explanation: More than 160 countries have adopted ISO 9000 as a national standard.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
21) The goal of supply chain management is better overall flow in the system.
Answer: TRUE
Explanation: After several companies work to improve the flow of materials through the system, the ultimate reward is better value for customers.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

22) Successful companies, such as 3M and FedEx, use the same operations strategy.
Answer: FALSE
Explanation: Companies adopt the kind of production that achieves their larger business strategy.
Page Ref: 171
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

23) Operations capability is a special ability that production does especially well to outperform the competition.
Answer: TRUE
Explanation: The chosen operations capability should be compatible with the overall business strategy.
Page Ref: 170
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

24) Even excellent firms focus on one competence at a time.
Answer: FALSE
Explanation: Excellent firms learn, over time, how to achieve more than just one competence.
Page Ref: 172
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

25) According to the text, to ensure that truckloads of merchandise flow quickly to stores, Wal-Mart distribution centers are located near the hundreds of stores that they supply, not near the companies that supply them.
Answer: TRUE
Explanation: At Wal-Mart, managers of the companys huge distribution centers regard Wal-Mart outlets as their customers.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Describe the major components of effective distribution
Skill: Concept

26) A detailed schedule will indicate how many employees will be working on a given shift.
Answer: FALSE
Explanation: A detailed schedule shows day-to-day activities that will occur in production. A staff schedule identifies how many employees will be working.
Page Ref: 177
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

27) Operations control includes materials management and quality control.
Answer: TRUE
Explanation: Both activities are a part of operations control and ensure that schedules are met and products delivered, both in quantity and in quality.
Page Ref: 179
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

28) For manufacturing firms, typical materials costs make up 50 to 75 percent of total product costs.
Answer: TRUE
Explanation: Materials stakes are high for service firms as well.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss strategies for setting and adjusting prices
Skill: Concept

29) The biggest challenge of TQM is motivating employees throughout the company to achieve quality goals.
Answer: TRUE
Explanation: The backbone of TQM is motivating employees throughout the company to achieve quality goals. Leaders of the quality movement use various methods and resources to foster a quality focus; when those efforts succeed, employees will ultimately accept quality ownership.
Page Ref: 183
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept

30) Managers of a restaurant eat at a competing restaurant in order to identify desirable improvements in their own operations; this illustrates quality control.
Answer: FALSE
Explanation: Competitive product analysis is a process by which a company analyzes a competitors products to identify desirable improvements.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept
31) Value-added analysis might focus on both the elimination of waste and cost minimization.
Answer: TRUE
Explanation: Value-added analysis refers to the evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers; it often reveals wasteful or unnecessary activities that can be eliminated without jeopardizing customer service.
Page Ref: 183
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept

32) The sales department relies on the engineering department to send samples and quotes to prospective customers on a timely basis; the sales department may be considered the engineering departments internal customer.
Answer: TRUE
Explanation: Customers are both internal and external.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

33) ISO 14000 may result in a recycling program at a company.
Answer: TRUE
Explanation: ISO 14000 certifies improvements in environmental performance, extending the ISO approach into the arena of environmental protection and hazardous waste management.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

34) A value chain includes an entire network of firms, beginning with suppliers and ending when production is complete.
Answer: FALSE
Explanation: A value chain, also known as a supply chain, includes the flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the operations process until the product reaches the end customer.
Page Ref: 185
Difficulty: Difficult
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
35) Because supply chain strategy is based on the collective effort of a number of firms, no one firm in the chain gains a competitive advantage.
Answer: FALSE
Explanation: Supply chain strategy is based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

36) Which term refers to all the activities involved in making productsgoods and servicesfor customers?
A) operations
B) processes
C) planning
D) scheduling
E) performance
Answer: A
Explanation: A) Operations and production refer to the same activities.
Page Ref: 166
Difficulty: Easy
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

37) Which of the following is the ability of a product to satisfy a human want or need?
A) utility
B) relative advantage
C) content
D) satisfaction
E) capacity
Answer: A
Explanation: A) Production adds customer value by providing utility.
Page Ref: 166
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
38) Which type of utility is created when a company makes products available where consumers want them?
A) time
B) place
C) possession
D) form
E) operations
Answer: B
Explanation: B) An example of place utility is a theater showing a wide selection of movies in a popular shopping mall.
Page Ref: 167
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

39) Which term refers to a set of methods and technologies used to produce a good or service?
A) contingency plan
B) production episode
C) reduction
D) methods plan
E) operations process
Answer: E
Explanation: E) Banks use document shredding and data encryption to protect confidential information. Both are examples of operations processes.
Page Ref: 169
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

40) In which of the following is the customer part of the system during service delivery?
A) a high-contact system
B) a low-contact system
C) a customer system
D) a quality system
E) a utility system
Answer: A
Explanation: A) A manicure is an example of a high-contact system.
Page Ref: 170
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
41) What term describes a special ability that production does especially well to outperform the competition?
A) supply chain management
B) total quality management
C) process engineering
D) operations capability
E) value-added analysis
Answer: D
Explanation: D) A company chooses an operation capability that is compatible with its overall business strategy.
Page Ref: 170
Difficulty: Easy
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

42) Which of the following is the amount of a product that a company can produce under normal working conditions ?
A) capacity
B) output
C) efficiency
D) burden
E) performance
Answer: A
Explanation: A) A firms capacity depends on how many people it employs and the number and size of its facilities.
Page Ref: 173
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

43) Equipment and people are grouped according to function in which type of production layout?
A) cellular
B) same-steps
C) custom-products
D) supply-chain
E) service
Answer: C
Explanation: C) A custom-products layout is well suited to make-to-order shops.
Page Ref: 174
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
44) Thousands of empty jugs move down a conveyor belt at Colgate-Palmolive before stopping to be filled and moving on to be labeled. What type of layout is utilized?
A) supply-chain
B) custom-products
C) hybrid
D) fixed-position
E) same-steps
Answer: E
Explanation: E) An assembly line is a same-steps layout.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

45) Which term refers to how well a product does what it is supposed to do?
A) capacity
B) consistency
C) reliability
D) performance
E) quality control
Answer: D
Explanation: D) The performance of a fast-food meal might be judged by whether it tastes good and is reasonably filling.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

46) The sameness of product quality from unit to unit is referred to by which term?
A) utility
B) reliability
C) performance
D) consistency
E) quality control
Answer: D
Explanation: D) High consistency at its many locations has made Courtyard by Marriott a leader in the lodging industry.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
47) Which of the following is a scheduling tool that breaks down large projects into steps to be performed and specifies the time required to perform each one?
A) Myers graphic
B) critical path chart
C) Gantt chart
D) process analysis graph
E) master schedule
Answer: C
Explanation: C) A project manager uses a Gantt chart to keep the project moving on schedule.
Page Ref: 178
Difficulty: Easy
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

48) Which type of system is designed for smooth production flow to avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes?
A) quality system
B) lean system
C) managed system
D) production system
E) flexible system
Answer: B
Explanation: B) Lean production systems were pioneered by Toyota.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

49) Which of the following is NOT a major objective of JIT production?
A) increasing stop-and-go production
B) reducing goods in process
C) complying with schedules
D) eliminating disruptions by continuous improvement
E) reducing inventory levels
Answer: A
Explanation: A) JIT production replaces stop-and-go production with smooth movement.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Critical Thinking
50) Which term refers to the acquisition of the raw materials a company needs to produce its products?
A) development
B) purchasing
C) goods control
D) quality control
E) wholesaling
Answer: B
Explanation: B) Most large firms have purchasing departments to buy proper services and materials in the amounts needed.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

51) Which of the following refers to the receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods?
A) materials handling
B) inventory control
C) quality control
D) wholesaling
E) distribution control
Answer: B
Explanation: B) Inventory control ensures that enough materials inventories are available to meet production schedules, while at the same time avoiding expensive excess inventories.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

52) Which of the following terms refers to all activities involved in getting quality products into the marketplace?
A) quality control
B) quality reliability
C) total quality management
D) performance quality
E) quality overview
Answer: C
Explanation: C) TQM must consider all aspects of a business, including customers, suppliers, and employees.
Page Ref: 181
Difficulty: Easy
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept
53) Which term describes the idea that quality belongs to each person who creates it while performing a job?
A) quality control
B) quality ownership
C) quality circles
D) total quality management
E) quality improvement teams
Answer: B
Explanation: B) A goal of total quality management is to motivate employees to accept quality ownership.
Page Ref: 182
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept

54) What name is given to the process by which a company analyzes another companys product to identify desirable improvements in its own product?
A) quality reliability analysis
B) benchmarking
C) performance quality analysis
D) competitive product analysis
E) quality outsourcing
Answer: D
Explanation: D) Using competitive analysis, for example, Toshiba might take apart a Xerox copier and test each component.
Page Ref: 182
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

55) Which of the following is patterned after the successful Japanese concept of quality circles?
A) supply chain management
B) quality improvement team
C) total quality management
D) quality ownership
E) value-added analysis
Answer: B
Explanation: B) Quality improvement teams organize their own work, select leaders, and address problems in the workplace.
Page Ref: 184
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

56) Which term refers to the flow of information, materials, and services from raw-materials suppliers through stages in the operations process until the product reaches the end customer?
A) distribution chain
B) supply chain
C) service channel
D) distribution channel
E) performance channel
Answer: B
Explanation: B) The term supply chain refers to the group of companies and stream of activities that work together to create a product.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

57) Which of the following is another term for the supply chain?
A) the distribution chain
B) the distribution network
C) the value chain
D) the supply network
E) the wholesale network
Answer: C
Explanation: C) Each stage in the value chain adds value for the final customer.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

58) Which term refers to the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services?
A) outsourcing
B) reengineering
C) controlling
D) scheduling
E) warehousing
Answer: A
Explanation: A) The decision to outsource expands supply chains.
Page Ref: 186
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
59) When a company turns out costumes in time for Halloween, it creates which type of utility?
A) ownership
B) time
C) form
D) place
E) value
Answer: B
Explanation: B) Time utility is created when products are made available when customers want them.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Application

60) When a company makes products available where they are convenient for consumers, it creates which type of utility?
A) time
B) form
C) place
D) possession
E) leisure
Answer: C
Explanation: C) A fast-food restaurant located in a college union is an example of place utility.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

61) In a business, whose job is it to draw up plans to transform resources into products and bring together basic resources, such as knowledge, physical materials, equipment, and labor?
A) CEO
B) operations manager
C) quality manager
D) floor foreman
E) supply manager
Answer: B
Explanation: B) Operations managers are responsible for ensuring that operations processes create value and provide benefits to customers.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the skills and functions of management
Skill: Concept
62) Which term describes services which cannot be produced ahead of time?
A) transformed
B) low-contact
C) unstorable
D) intangible
E) consistent
Answer: C
Explanation: C) Unstorable services cannot be used at a later time.
Page Ref: 169
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

63) Which of the following would be considered a low-contact service?
A) surgery
B) haircut
C) massage
D) electric power
E) piano lesson
Answer: D
Explanation: D) All of the other choices are considered high-contact services in which the consumer must be present during the service transaction.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

64) The check-processing operations at your bank would be considered to be which type of system?
A) high-contact
B) low-contact
C) conversion
D) synthetic
E) performance
Answer: B
Explanation: B) Check-processing operations can be completed without the consumer being present.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
65) Which of the following would be considered a high-contact system?
A) gas company
B) electric company
C) lawn care company
D) barber shop
E) postal delivery
Answer: D
Explanation: D) A barbers services require that the consumer be present during the service transaction.
Page Ref: 170
Difficulty: Moderate
AACSB: Analytic skills
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Critical Thinking

66) Save-A-Lot grocery stores use which type of strategy for attracting customers?
A) flexibility
B) quality
C) low-cost
D) dependability
E) consistency
Answer: C
Explanation: C) Save-A-Lot offers items at savings up to 40 percent less than conventional food chains.
Page Ref: 171
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

67) 3M uses which strategy for attracting customers?
A) quality
B) low-cost
C) dependability
D) flexibility
E) consistency
Answer: D
Explanation: D) The flexibility strategy at 3M emphasizes new product development.
Page Ref: 171
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
68) Machine, woodworking, and dry cleaning shops typically use which type of layout?
A) product
B) custom-products
C) same-steps
D) hybrid
E) make-to-stock
Answer: B
Explanation: B) In a custom-products layout, machines and people are grouped by function in the production facility; custom-products layouts allow for greater flexibility and are well suited to make-to-order shops.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

69) Which type of layout is designed to move resources through a smooth, fixed sequence of steps?
A) same-steps
B) location
C) custom-products
D) quality
E) make-to-order
Answer: A
Explanation: A) A same-steps layout is set up to make one type of product in a fixed sequence and is arranged according to its production requirements.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

70) Automobile, food-processing, and television assembly plants use which type of layout?
A) make-to-order
B) location
C) custom-products
D) quality
E) same-steps
Answer: E
Explanation: E) These production processes require a fixed sequence that is arranged according to production requirements.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
71) Which term is defined as the combination of characteristics of a product or service that bear on its ability to satisfy stated or implied needs?
A) quality
B) production
C) quantity
D) clarification
E) capacity
Answer: A
Explanation: A) Such characteristics can include a reasonable price.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

72) Performance refers to which of the following?
A) the principle that quality belongs to each person who creates it while performing a job
B) the consistency of product quality from unit to unit
C) how well the product does what it is supposed to do
D) the process by which a company analyzes a competitors products to identify desirable improvement
E) providing value by making products available when customers want them
Answer: C
Explanation: C) Planning for quality begins when products are being designed. Early in the process, goals are established for both performance and consistency.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

73) Consistency refers to which of the following?
A) the principle that quality belongs to each person who creates it while performing a job
B) the sameness of product quality from unit to unit
C) the sum of all activities involved in getting high-quality products into the marketplace
D) the process by which a company analyzes a competitors products to identify desirable improvements
E) providing value by making products available where customers want them
Answer: B
Explanation: B) This consistency is achieved by controlling for consistent raw materials, encouraging conscientious work, and maintaining equipment.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
74) Managers can work to reduce waste, inefficiency, and poor performance by examining procedures on a step-by-step basis. Which term describes this process?
A) advance planning
B) materials management
C) methods improvement
D) quality planning
E) quality ownership
Answer: C
Explanation: C) A process flowchart is sometimes used to assist in methods improvement.
Page Ref: 176
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Describe the skills and functions of management
Skill: Concept

75) Logan Aluminum makes coils of aluminum that it supplies to customer companies that use it to make beverage cans. Logan uses a schedule that specifies how many tons of each type of coil will be produced each week. What is this schedule called?
A) master production schedule
B) detailed schedule
C) Gantt chart
D) staff schedule
E) PERT chart
Answer: A
Explanation: A) The master production schedule shows which products will be produced, and when, in upcoming time periods.
Page Ref: 177
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Describe the skills and functions of management
Skill: Application

76) In operations control, production managers monitor production performance by which method?
A) comparing results with detailed plans and schedules
B) checking on each worker on the production floor
C) observing activities from a platform above the workers
D) constantly talking with employees involved
E) performing spot checks of worker performance
Answer: A
Explanation: A) If schedules or quality standards arent met, managers can take corrective action.
Page Ref: 179
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Describe the skills and functions of management
Skill: Concept
77) Which of the following is NOT one of the areas of materials management?
A) transportation
B) warehousing
C) purchasing
D) supplier selection
E) customer service
Answer: E
Explanation: E) Materials management includes supplier selection, purchasing, transportation, warehousing, and inventory control.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Describe the skills and functions of management
Skill: Concept

78) What is the name for a production system in which all the needed materials and parts arrive at the precise moment they are required for each production stage?
A) quality control system
B) process control system
C) just-in-time production
D) standardized production
E) custom-products production
Answer: C
Explanation: C) JIT production brings together all needed materials at the precise moment they are required for each production stage, not before, creating efficient responses to customer orders.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

79) Which of the following is greatly reduced in a just-in-time production system?
A) number of workers needed on the line
B) number of goods in process
C) number of shifts necessary at the plant
D) number of separate operations on the assembly line
E) number of forepersons needed at the plant
Answer: B
Explanation: B) As a result, JIT production minimizes inventory costs and saves money by replacing stop-and-go production with smooth movement.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
80) Which of the following is a component of materials management?
A) promotion
B) distribution
C) marketing
D) warehousing
E) sales
Answer: D
Explanation: D) Materials management includes supplier selection, purchasing, transportation, warehousing, and inventory control.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Describe the skills and functions of management
Skill: Concept

81) Which of the following best describes total quality management?
A) the principle that quality belongs to each person who creates it while performing a job
B) the consistency of a products quality from unit to unit
C) the sum of all activities involved in getting high-quality products into the marketplace
D) the process by which a company analyzes a competitors products to identify desirable improvements
E) a certification program attesting that an operations process has met rigorous requirements
Answer: C
Explanation: C) TQM begins with leadership and a desire for continuously improving both processes and products; it must consider all aspects of a business, including customers, suppliers, and employees.
Page Ref: 181
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept

82) Which of the following best describes quality ownership?
A) an emphasis on intangible factors in customer satisfaction
B) the consistency of a products quality from unit to unit
C) the sum of all activities involved in getting high-quality products into the marketplace
D) the process by which a company analyzes a competitors products to identify desirable improvements
E) the principle that quality belongs to each person who creates it while performing a job
Answer: E
Explanation: E) Quality-focused leaders use various methods to foster a quality focus among the workforce; when these efforts succeed, employees will ultimately accept quality ownership.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept

83) Which of the following best describes competitive product analysis?
A) the principle that quality belongs to each person who creates it while performing a job
B) the consistency of a products quality from unit to unit
C) the process by which a company analyzes a different companys products to identify desirable improvements
D) the sum of all activities involved in getting a high-quality product into the marketplace.
E) examining a product to improve its form utility
Answer: C
Explanation: C) This analysis helps managers decide which product features are satisfactory, which features should be upgraded, and which operations processes need improvement, for example.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

84) When a worker at Toshiba takes apart a Xerox copier and tests each component, it is engaging in what activity?
A) competitive product analysis
B) benchmarking
C) total quality management
D) quality reliability analysis
E) value-added analysis
Answer: A
Explanation: A) Competitive product analysis is the process by which a company analyzes a competitors products to identify desirable improvements.
Page Ref: 182
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

85) Which of the following best describes value-added analysis?
A) a TQM tool in which groups of employees work together to improve quality
B) the process of evaluating all work activities, materials flows, and paperwork to determine the value that they create for customers
C) the process by which a company implements the best practices from its own past performance and those of other companies to improve its own products
D) the process by which a company analyzes a product to identify possible improvements
E) a total company commitment to quality management at every stage of the process
Answer: B
Explanation: B) Value-added analysis often reveals wasteful or unnecessary activities that can be eliminated without jeopardizing customer service.
Page Ref: 183
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
86) Tootsie Roll Industrys corporate principle, We run a trim operation and continually strive to eliminate waste, minimize costs, and implement performance improvements, is an example of which of the following?
A) just-in-time production
B) benchmarking
C) a quality circle
D) competitive product analysis
E) value-added analysis
Answer: E
Explanation: E) Tootsie Roll Industry evaluates all work activities, material flows, and paperwork to determine the value that they add for customers.
Page Ref: 183
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

87) Which term refers to collaborative groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems?
A) quality improvement teams
B) quality assurance teams
C) quality control teams
D) TQM teams
E) quality review teams
Answer: A
Explanation: A) Quality improvement teams organize their own work, select leaders, and address problems in the workplace.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

88) Which of the following best describes ISO 9000?
A) the concept that all employees are valuable contributors to a firms business, and should be entrusted with decisions regarding their work
B) the redesigning of business processes to improve performance, quality, and productivity
C) a program certifying that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization
D) a certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance
E) the process of evaluating all work activities to determine the value they add for customers
Answer: C
Explanation: C) ISO 9000 certifies that a factory, laboratory, or office has met the quality management standards of ISO; these standards are now regarded as a national standard for more than 160 countries.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

89) Which program certifies improvements in environmental performance?
A) ISO 9000
B) ISO 9000:2000
C) ISO 14000
D) TQM 2001
E) TQM 2012
Answer: C
Explanation: C) Extending the ISO approach into the arena of environmental protection and hazardous waste management, ISO 14000 requires a firm to develop an environmental management system.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

90) Which of the following best describes ISO 14000?
A) the concept that all employees are valuable contributors to a firms business and should be entrusted with decisions regarding their work
B) a certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance
C) a certification program attesting to the fact that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization
D) a standardized method of evaluating a companys greenhouse gas emissions
E) a certification program attesting to the fact that a factory, laboratory, or office is operating under free-trade principles
Answer: B
Explanation: B) ISO 14000 requires a firm to develop an environmental management system, documenting how the company has acted to improve its performance in using resources and in managing pollution.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept

91) Receiving and storing materials, billing patients for treatment, and filling customer orders from Internet sales are examples of which activity?
A) function
B) technique
C) process
D) benchmark
E) quality ownership
Answer: C
Explanation: C) Every business consists of processes, which are activities that are performed regularly and routinely in conducting business.
Page Ref: 185
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
92) Which term refers to the fundamental rethinking and radical redesign of a business activity to achieve dramatic improvements in performance?
A) supply chain management
B) business process reengineering
C) total quality management
D) quality ownership
E) quality control
Answer: B
Explanation: B) Rethinking the production steps by starting from scratch has allowed dramatic improvements in cost, quality, service, and speed.
Page Ref: 185
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

93) Which of the following best describes business process reengineering?
A) the redesigning of business activities to improve performance, quality, and productivity
B) a program certifying that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization
C) the principle of looking at the supply chain as a whole in order to improve the overall flow through the system
D) a program certifying that a factory, laboratory, or office has developed pollution-control standards
E) the process by which a company analyzes a different companys products to identify desirable improvements
Answer: A
Explanation: A) Business process reengineering focuses on improving a business process, rethinking each of its steps from start to finish.
Page Ref: 185
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

94) Which of the following best describes supply chain management?
A) the principle of improving the supply chain by focusing on the slowest step in the chain
B) a limitation on the number of suppliers allowed to supply a particular company
C) complete movement of raw materials throughout a manufacturing or service facility
D) a cost-reduction program in which wholesalers and retailers are eliminated in an effort to entice consumers to purchase directly from manufacturers
E) the principle of looking at the supply chain as a whole in order to improve the overall flow through the system
Answer: E
Explanation: E) In addition, because customers ultimately get better value, supply chain management gains competitive advantage for each supply chain member.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Describe the skills and functions of management
Skill: Concept

95) When Dell Inc. shares information to improve the overall flow through a system composed of companies working together, it is engaging in which of the following?
A) distribution chain management
B) total quality management
C) supply chain management
D) service channel analysis
E) supplier selection analysis
Answer: C
Explanation: C) Michael Dells vision involves the concept of improving performance by sharing information among supply chain members; long-term production plans and up-to-the-minute sales data are available to suppliers via the Internet.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Describe the skills and functions of management
Skill: Application

96) When Ford assembles parts into a Ford Explorer, it creates which type of utility?
A) time
B) form
C) possession
D) place
E) ownership
Answer: B
Explanation: B) Form utility is created when raw materials are converted into finished products.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

97) Which operations competence has Toyota given greatest credit for winning orders in the marketplace?
A) quality
B) low cost
C) flexibility
D) dependability
E) exclusivity
Answer: A
Explanation: A) Toyota has focused on creating reliable cars with an appealing fit and finish, and assuring that customer expectations are met or exceeded in order to build the companys quality competence.
Page Ref: 171
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
98) Which operations competence has FedEx given greatest credit for winning orders (business) in the marketplace?
A) quality
B) low cost
C) flexibility
D) dependability
E) accessibility
Answer: D
Explanation: D) FedEx wants to assure that every delivery is fast and on time, as promised.
Page Ref: 171
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application

99) Examining step-by-step procedures to reduce inefficiency most centrally involves which approach?
A) operations scheduling
B) performance analysis
C) value-added analysis
D) methods improvement
E) quality ownership
Answer: D
Explanation: D) Methods improvement has been used to streamline the traditional checkout method at hotels.
Page Ref: 176
Difficulty: Difficult
Objective: 7.4
Learning Outcome: Describe the skills and functions of management
Skill: Concept

100) Which scheduling tool shows the necessary sequence of activities in a project and identifies the critical path?
A) Gantt chart
B) process flowchart
C) detailed schedule
D) master production schedule
E) PERT chart
Answer: E
Explanation: E) The critical path is the most time-consuming set of activities in a project.
Page Ref: 177
Difficulty: Difficult
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

101) When Hewlett-Packard simplified its contracts and reduced them from 20 pages to as few as 2, it was engaging in which activity?
A) value-added analysis
B) benchmarking
C) getting closer to the customer
D) supply chain management
E) follow-up
Answer: A
Explanation: A) Value-added analysis refers to the evaluation of all work activities, materials flows, and paperwork to determine the value that they add for customers.
Page Ref: 183
Difficulty: Difficult
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Application

102) Define the term production or operations.
Answer: The term operations (or production) refers to all the activities involved in making productsgoods and servicesfor customers.
Explanation: A key difference between goods and services operations is the customers involvement in the latter.
Page Ref: 166
Difficulty: Moderate
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

103) What is an operations capability?
Answer: Operations capability refers to the activity or process that production does especially well. Each companys operations capability matches up with its business strategy so that the firms activities, from top to bottom, are focused in a particular direction.
Explanation: For example, the operations capability of FedEx is dependability.
Page Ref: 170
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

104) Explain competitive product analysis.
Answer: Competitive product analysis is a process by which a company analyzes a competitors products to identify desirable improvements in its own products.
Explanation: For example, a small business owner might study a competitors Web site to find ways to improve her own site.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
105) Differentiate between goods production and service operations.
Answer: Goods production involves tangible products, such as radios, newspapers, buses, and textbooks. Through service operations, firms produce tangible and intangible service products such as entertainment, transportation, and education.
Explanation: General Electric is a company that produces goods and provides services.
Page Ref: 166
Difficulty: Moderate
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

106) Differentiate between high- and low-contact processes. Give an example of each.
Answer: Processes may be classified according to the extent of customer contact as either high- or low-contact processes. In a high-contact process, the customer must be a part of the system. Examples of high-contact processes include public transportation, medical services, and most legal services. With a low-contact process, customers need not be a part of the system to receive the service. Examples include check-processing operations at the bank and lawn-care services.
Explanation: The manager of a high-contact process must be more concerned with the customer experience.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

107) What is a Gantt chart?
Answer: A Gantt chart is a production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step.
Explanation: The project manager checks the progress against the time scale and may need to add workers if the project falls behind schedule.
Page Ref: 178
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

108) What is quality ownership?
Answer: Quality ownership is the principle of total quality management that holds that quality belongs to each person who creates it while performing a job.
Explanation: A goal of total quality management is motivating employees to accept quality ownership.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept
109) Explain what is meant by the term utility. What type of utility is created when a pharmacy changes its evening schedule to remain open for an extra hour?
Answer: Utility is a products ability to satisfy a human want or need. The pharmacy creates time utility by being open at a convenient time for customers.
Explanation: The three types of utility are form utility, place utility, and time utility.
Page Ref: 166
Difficulty: Difficult
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Application

110) Why does each companys operations capability match up with its business strategy?
Answer: Each companys operations capability matches up with its business strategy so that the firms activities , from top to bottom, are focused in a particular direction. Aligning operations capability with business strategy helps to improve profitability.
Explanation: For example, FedEx focuses on dependability which has made it a leader with business customers.
Page Ref: 170-171
Difficulty: Difficult
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

111) Describe two alternatives for production facility layouts.
Answer: In a custom-products layout, equipment and people are grouped according to function; in a same-steps layout, equipment and people are set up to produce one type of product in a fixed sequence of steps and are arranged according to production requirements.
Explanation: A custom-products layout is well suited for make-to-order shops while a same-steps layout is efficient for make-to-stock operations.
Page Ref: 174-175
Difficulty: Difficult
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept

112) Explain how JIT production and lean manufacturing are related.
Answer: Lean manufacturing is designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes. Just-in-time (JIT) production, a type of lean system, brings together all needed materials at the precise moment they are required for each production stage.
Explanation: With JIT production, disruptions are more visible and are resolved more quickly.
Page Ref: 180
Difficulty: Difficult
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
113) In a TQM environment, what are some steps that companies use to emphasize the importance of quality?
Answer: To ensure high-quality goods and services, many firms assign responsibility for some aspects of TQM to specific departments or positions. More broadly, leaders of the quality movement use various methods and resources to foster a quality focustraining, verbal encouragement, teamwork, and tying compensation to work quality.
Explanation: Total quality management (TQM) includes all the activities necessary for getting high-quality goods and services into the marketplace.
Page Ref: 183
Difficulty: Difficult
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept

114) What is a supply chain? How can supply chain management create competitive advantage?
Answer: A supply chain is the flow of information, materials, and services that starts with raw materials suppliers and continues through other steps in the operations process until the product reaches the end consumer. Supply chain management creates better value for the customer to produce a competitive advantage for the members of the chain.
Explanation: Dell, Inc. has used an innovative supply chain strategy to help lower prices and speed delivery of its PCs.
Page Ref: 185-186
Difficulty: Difficult
Objective: 7.8
Learning Outcome: Describe the skills and functions of management
Skill: Concept

115) How does outsourcing affect global supply chain management?
Answer: Outsourcing is the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services. Arrangements for cross-border materials flows require compliance with each countrys commerce regulations. Production and global transportation scheduling are coordinated with U.S. market demand so that outsourced products arrive in the correct amount and on time without harming the manufacturers image.
Explanation: Outsourcing has been a growing trend in American business. Outsourcers have a greater need of operations skills for integration among dispersed facilities.
Page Ref: 186-187
Difficulty: Difficult
AACSB: Dynamics of the global economy
Objective: 7.8
Learning Outcome: Explain the benefits and challenges of engaging in inter

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