Deck 6: Processes and Technology

Question 1

Discuss outsourcing decision factors, provide examples of process plans, and use break-even analysis for process selection.

Answer 1

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).

Question 2

A process is a group of unrelated tasks with specific inputs and outputs.

Answer 2

False

Question 3

Outsourcing occurs when a company cannot or will not make all the parts that go into a product.

Answer 3

True

Question 4

Explain several tools for process analysis, including flowcharts and process maps.

Question 5

Customers are rarely involved in a project that takes an extended period of time to complete.

Question 6

Producing a high volume of a single product is a characteristic of batch production.

Question 7

Companies that control the production of virtually all of the parts that go into a product are said to be horizontally integrated.

Question 8

Discuss the steps required to redesign a process to achieve breakthrough improvements.

Question 9

Planning, analyzing, and improving processes is the purpose of operations management.

Question 10

The organization's overall approach for producing goods and providing services is its process strategy.

Question 11

One-of-a-kind production of a product based on a customer's unique specifications is called a project.

Question 12

Subcontracting is rarely a source of human resources for a project.

Question 13

Process design specifies what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

Question 14

List recent technological advances in manufacturing systems and explain factors often overlooked in the financial analysis of technology decisions.

Question 15

Process strategy defines what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

Question 16

Process planning determines how a manufactured good is produced or a service is provided.

Question 17

Supplier speed is rarely an important consideration in outsourcing decisions.

Question 18

A firm's process strategy defines the extent of customer involvement in providing a service.

Question 19

Supplier reliability is often an important consideration in outsourcing decisions.

Question 20

Companies that control the production of virtually all of the parts that go into a product are said to be vertically integrated.

Question 21

Mass production is characterized by high volumes of a standard product for a mass market.

Question 22

The basic tools of process analysis include process flowcharts, diagrams, and maps.

Question 23

Continuous production is characterized by very high volumes of commodity products.

Question 24

A process flowchart is a useful tool for analyzing a process because it often highlights non-productive activities.

Question 25

Mass production is characterized by high volumes of a customized product for a mass market.

Question 26

Mass production is characterized by the use of general equipment and highly skilled labour.

Question 27

Process analysis yields a set of documents detailing manufacturing and service delivery specifications.

Question 28

One characteristic of batch production is variable demand.

Question 29

Batch production is also known as a job shop because it creates more jobs than any of the other process choices.

Question 30

Most of the operations in batch production involve assembly rather than fabrication.

Question 31

Batch production is characterized by small volumes and high product variety.

Question 32

A firm's process strategy rarely defines its capital intensity.

Question 33

The best process strategy is usually found on the diagonal of the product-process matrix.

Question 34

Process plans are a set of documents that detail the steps in process selection.

Question 35

Mass production is often associated with assembly lines.

Question 36

Most of the operations in batch production involve fabrication rather than assembly.

Question 37

Mass production is characterized by the use of specialized equipment and workers with limited skills.

Question 38

Break-even analysis examines the cost tradeoffs associated with demand volume when selecting a process.

Question 39

In general, processes should be analyzed for continuous improvement only after a breakthrough improvement.

Question 40

Vertical integration is the degree to which a firm produces the parts that go into its products.

Question 41

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

Question 42

Process innovation reflects the total redesign of a process for a breakthrough improvement.

Question 43

Process innovation is most successful in organizations that view their systems as a set of functional areas vying for limited resources.

Question 44

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.

Question 45

A print shop is an example of which of the following process choices?

A) project
B) batch production
C) continuous production
D) mass production

Question 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.

Question 47

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

Question 48

Technology decisions are often a significant factor in process planning.

Question 49

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

Question 50

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.

Question 51

A firm's process strategy defines all of the following except its

A) capital intensity.
B) process flexibility.
C) vertical integration.
D) process selection.

Question 52

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.

Question 53

Two approaches to process improvement include continuous and breakthrough.

Question 54

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

Question 55

Breakthrough improvement is often implemented when opportunities for continuous improvement have been exhausted.

Question 56

Capital budgeting techniques are often one of the inputs used for technology decisions.

Question 57

Most of the operations in batch production involve

A) fabrication.
B) assembly.
C) continuous processing.
D) outsourcing.

Question 58

Technology decisions that involve the outlay of funds are considered a capital investment.

Question 59

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.

Question 60

A high-level process map is a useful tool in beginning the redesign of a process.

Question 61

List some non-economic factors that can influence a firm's outsourcing decision.

Question 62

One disadvantage of mass production is its

A) efficiency.
B) speed of production.
C) low per-unit costs.
D) lack of responsiveness.

Question 63

Which of the following is not a factor in the financial analysis of?

A) operating and purchase costs
B) annual savings
C) replacement analysis
D) annual ordering and holding cost

Question 64

The following are techniques for generating innovative ideas except for

A) changing your perspective.
B) trying inverse brainstorming.
C) chaining backward as far as possible.
D) using attribute brainstorming.

Question 65

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.

Question 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: The break-even volume for Process B is

A) 50,000 units.
B) 62,500 units.
C) 30,000 units.
D) 20,000 units.

Question 67

Which of the following is not associated with the sourcing continuum?

A) joint venture
B) in-house production
C) strategic alliance
D) single contract

Question 68

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: The break-even volume for Process A is

A) 50,000 units.
B) 62,500 units.
C) 30,000 units.
D) 20,000 units.

Question 69

Process analysis is the systematic examination of all aspects of a process to improve its operation. It includes all of the following except to make it

A) faster,
B) more efficient
C) less effective
D) more responsive

Question 70

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.

Question 71

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: 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.

Question 72

Steel, paper, paints, and chemicals are examples of products that use

A) batch production.
B) repetitive production.
C) continuous production.
D) mass production.

Question 73

All the following are factors influencing the outsourcing decision except

A) capacity.
B) expertise.
C) quality.
D) product variety.

Question 74

What is a process strategy and how does it affect the firm?

Question 75

Technology decisions typical in operations management include all the following areas except

A) information technology.
B) product technology.
C) process technology.
D) communication technology.

Question 76

The product-process matrix includes all the following process types except

A) mass production.
B) stable production.
C) continuous production.
D) batch production.

Question 77

If a firm can sell a product for $40 each, then what is the volume needed to break-even if the fixed cost of production is $125,000 and labour and material costs are $30 per item?

A) 125,000
B) 12,500
C) 4,167
D) 3,250

Question 78

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: 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.

Question 79

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.

Question 80

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: 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