Deck 6: Process Design and Facility Layout

Question 1

Vertical integration is:

A) Increasing the number of customers
B) The extent to which an organisation owns the network of which it is part
C) The purchase of competitor businesses
D) Reducing the number of direct suppliers

Answer 1

The extent to which an organisation owns the network of which it is part

Question 2

The only reason that causes organisations to make location decisions is a change in demand for
goods and services.

Answer 2

False

Question 3

An advantage of a capacity-lagging strategy is that:

A) There is no ability to exploit short-term increases in demand
B) Utilisation of the plants is always relatively low
C) Over-capacity problems are minimised if forecasts are optimistic
D) There is always sufficient capacity to meet demand

Answer 3

Over-capacity problems are minimised if forecasts are optimistic

Question 4

If a retailer were to buy a wholesaler this is a form of:

A) Upstream integration
B) Downstream integration

Question 5

Capital spending on the plants is delayed.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 6

An organisation's vertical integration strategy does NOT include:

A) The investment in distribution warehouses
B) The balance among the integrated stages
C) The directions of any expansion
D) Upstream or downstream expansion
E) The extent of the process span required

Question 7

There is always sufficient capacity to meet demand, therefore revenue is maximised and customers are satisfied.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 8

Any critical start-up problems with new plants are less likely to affect supply to customers.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 9

Determine whether the stated disadvantage is created by a capacity-leading strategy or a capacity-lagging strategy: Capital spending on plant early.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 10

If a car assembly operation were to buy a wholesaler this is a form of:

A) Upstream integration
B) Downstream integration

Question 11

If a wholesaler were to buy an assembly operation this is a form of:

A) Upstream integration
B) Downstream integration

Question 12

Of the supply-side influences community factors include all, bar one, of the following considerations:

A) History of labour relations
B) Image of the location
C) Language
D) Local amenities
E) Government financial assistance

Question 13

Supply-side influences on the design of operations would NOT include:

A) Labour skills
B) Transportation factors
C) Energy costs
D) Land costs
E) Labour costs

Question 14

If a car assembly operation were to buy a component maker this is a form of:

A) Upstream integration
B) Downstream integration

Question 15

Second-tier suppliers in Company A network are:

A) Suppliers of 'non-core' goods directly to Company A
B) Stand by suppliers of goods to Company A
C) Suppliers of goods directly to Company A
D) Suppliers of goods/services to companies that, in turn, supply Company A

Question 16

If a component maker were to buy a raw materials supplier this is a form of:

A) Upstream integration
B) Downstream integration

Question 17

Which of the following was NOT a key driver of the heavy Japanese investment in the UK in the 1990s?

A) Generous government funded financial support.
B) Language compatibility with the USA.
C) A keen and willing workforce.
D) Common cultural traditions.
E) A critical mass of Japanese companies and supporting infrastructure.

Question 18

The centre-of-gravity method to find a location for a factory works by:

A) Locating near to the main customer
B) Locating near to the main supplier
C) Locating near to a cluster of suppliers
D) Locating in a place that minimises total transport costs to and from the location

Question 19

According to Lord Sieff of Marks and Spencer what are the three most important things in retailing?

A) Customers, staff and quality goods.
B) Quality suppliers, quality shops and quality staff.
C) Location, location, location.
D) Quality goods, keen prices and helpful staff.

Question 20

Over-capacity problems are minimised if forecasts are optimistic.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 21

Which of the following is NOT a supply side element of the Britvic National Distribution Centre?

A) Bottling plant
B) Local distribution depots
C) Drinks' manufacturers
D) Inbound logistics

Question 22

The location decision is determined by the relative strength of supply-side and demand-side factors. Are Convenience for customers supply-side or demand-side.

A) Supply-side factor
B) Demand-side factor

Question 23

Network design decisions start with setting the maximum cost an organisation is willing to pay its
suppliers for goods or services.

Question 24

The centre-of-gravity method is used to find a location that minimises transportation costs.

Question 25

Determine whether the stated disadvantage is created by a capacity-leading strategy or a capacity-lagging strategy: Utilisation of the plants is always relatively low, therefore costs will be
High.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 26

Determine whether the stated disadvantage is created by a capacity-leading strategy or a capacity-lagging strategy: Under-supply position even worse if there are start-up problems with
The new plants.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 27

Determine whether the stated disadvantage is created by a capacity-leading strategy or a capacity-lagging strategy: No ability to exploit short-term increase in demand.

A) Capacity-leading strategy
B) Capacity-lagging strategy

Question 28

The weighted-score method to find a location is based on calculating the weight of goods to be
transported to give an indication of relative costs.

Question 29

No operation exists in isolation.

Question 30

Strategic network design decisions help to:

A) All of the below
B) Determine how an operation should manage its overall capacity within the network
C) Influence the overall shape of an operation's network
D) Influence the location of each operation

Question 31

Second-tier suppliers may also supply an operation directly, thus missing out a link in the
network.

Question 32

The location decision is determined by the relative strength of supply-side and demand-side factors. Are Energy costs supply side or demand side.

A) Supply-side factor
B) Demand-side factor

Question 33

The location decision is determined by the relative strength of supply-side and demand-side factors. Are Community factors supply-side or demand-side.

A) Supply-side factor
B) Demand-side factor

Question 34

The location decision is determined by the relative strength of supply-side and demand-side factors. Are Labour skills supply-side or demand-side.

A) Supply-side factor
B) Demand-side factor

Question 35

A demand forecast predicts a company's:

A) Output
B) Sales
C) Profitability
D) Capacity requirements
E) Material funding requirements

Question 36

Second-tier customers are the main customer group for an operation.

Question 37

An advantage of a smoothing with inventory strategy is that it reduces the risk of product
deterioration and obsolescence.

Question 38

A supply network perspective means setting an operation in the context of all other operations
with which it interacts.

Question 39

Sales of computers over the last five months were January 34 / February 37 / March 28 / April 37 / May 39. What is the difference between the three-month moving average forecast for May and
The actual sales?

A) 3
B) 4
C) 5
D) 6
E) 7

Question 40

Operations managers are not involved in designing the shape and form of the network in which
their operation is set.

Question 41

All the operations that form the network of suppliers' suppliers and customers' customers are
called the Global Supply Network.

Question 42

For a plastic homewares manufacturer, a chemical company is most likely to be a:

A) Second-tier supplier
B) First-tier supplier
C) First-tier customer

Question 43

The suppliers and customers who have direct contact with an operation are called its 'Immediate
Supply Network'

Question 44

The vertical integration decision is concerned with how much of the network the operation should
own.

Question 45

What term is used to describe the extra costs that are incurred in running an operation as it gets larger?

A) Critical point index
B) Negative returns on investment
C) Diseconomies of scale
D) Downshifting

Question 46

Every link in a supply network contributes equally to the operation's success.

Question 47

Which of the following is a qualitative approach to forecasting?

A) Regression analysis
B) Time series analysis
C) Delphi method
D) Causal models

Question 48

Community factors are those influences on an operation's cost that derive from the social, political
and economic environment of its site.

Question 49

If the company's operations performance is considered superior to that of potential suppliers.

A) Explore keeping this activity in-house
B) Explore outsourcing this activity

Question 50

If the activity is considered to be of strategic importance.

A) Explore outsourcing this activity
B) Explore keeping this activity in-house

Question 51

Upstream vertical integration refers to the strategy of expanding on the supply side of the network.

Question 52

The strategy of expanding on the demand side of the network is sometimes called backward
integration.

Question 53

The suppliers and customers who have direct contact with an operation are called its:

A) Focused Supply Network
B) Immediate Supply Network
C) Directed Supply Network
D) Total Supply Network

Question 54

Capacity management, location and vertical integration decisions all rely on assumptions
regarding future demand.

Question 55

If the company does not have specialised knowledge in the production of the product.

A) Explore outsourcing this activity
B) Explore keeping this activity in-house

Question 56

Late delivery penalties in a supply contract can encourage good delivery performance, but
distance and organisational barriers may inhibit communication.

Question 57

Downstream vertical integration refers to the strategy of expanding on the demand side of the
network.

Question 58

For a shopping mall, a cleaning materials company is most likely to be a:

A) Second-tier customer
B) Second-tier supplier
C) First-tier supplier
D) First-tier customer

Question 59

For a plastic homewares manufacturer, a packaging company is most likely to be a:

A) Second-tier customer
B) First-tier supplier
C) Second-tier supplier
D) First-tier customer