Deck 6: The Voice of the Market

Question 1

Champion Cooling Co. signed an exclusive contract with a scrap metal dealer that is willing to pay 33 cents a pound for scrap copper. If the cost of goods sold reported by Champion amounts to $100,000 and the scrap cost is equal to $20,000 for their 3030 pounds of scrap copper, what is Champion's scrap efficiency?

A) 7.60
B) 5.00
C) 6.26
D) 9.33
E) 3.18

Answer 1

B

Question 2

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the plant and equipment productivity of Firm B.

A) 26.00
B) 2.60
C) 19.20
D) 3.47
E) 34.67

Answer 2

D

Question 3

Make-Do, a national automotive painting service, paints cars for $199. Their work standard for such a job is $20.00 for labor and $30.00 for paint. They consume $10 worth of supplies and $3 of energy during their service. What is their total factor productivity?

A) 3.16
B) 9.95
C) 5.83
D) 13.6
E) 18.24

Answer 3

A

Question 4

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the total factor productivity for Firm B.

A) 14.86
B) 1.35
C) 2.60
D) 34.67
E) 20.28

Question 5

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the total factor productivity for Firm A.

A) 19.20
B) 3.31
C) 1.22
D) 14.77
E) 8.68

Question 6

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the materials productivity of Firm B.

A) 3.47
B) 10.40
C) 19.20
D) 6.80
E) 2.60

Question 7

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the energy productivity of Firm A.

A) 34.67
B) 64.00
C) 19.20
D) 27.43
E) 69.33

Question 8

Return on assets (ROA) and return on investments (ROI) are examples of ________.

A) structural measures
B) market share data
C) productivity ratios
D) quality measures
E) financial ratios

Question 9

________ allows initiator firms to assess their competitive position by comparing products and services with those of target firms.

A) Functional
B) Strategic
C) Product
D) Performance
E) Process

Question 10

Use the following information to answer the question(s) below.
A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Calculate the labor productivity of Firm A.

A) 19.2
B) 24.0
C) 20.8
D) 26.0
E) 9.6

Question 11

What is the formula used to calculate scrap efficiency?

A) scrap/cost of goods sold
B) (cost of goods sold - scrap)/scrap
C) cost of goods sold/scrap
D) (scrap - cost of goods sold) /scrap
E) cost of goods sold × scrap

Question 12

Toyota developed the world-class production system known as ________.

A) business process reengineering
B) just-in-time
C) total quality management
D) benchmarking
E) statistical process control

Question 13

A benchmarking effort that is limited to studying the purchasing department of another firm is referred to as ________ benchmarking.

A) functional
B) performance
C) process
D) strategic
E) product

Question 14

If the cost of goods sold reported by Champion Cooling Co. is equal to $600,000 and the scrap cost amounts to $50,000, what is their scrap efficiency?

A) 8.33
B) 30.0
C) 12.0
D) 18.5
E) 22.8

Question 15

Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $15.00. Their work standard for such a job is $5.00 for labor and $2.00 for cleaning supplies. Since they use the customer's electricity, there are no other inputs in to the cleaning process. What is their labor productivity?

A) 3.00
B) 7.50
C) 20.00
D) 10.0
E) 50.0

Question 16

The goal of ________ benchmarking is to identify and to observe the best practices from one or more benchmark firms.

A) product
B) strategic
C) process
D) financial
E) functional

Question 17

The sharing of information between companies so that both can improve is called ________.

A) reengineering
B) baselining
C) benchmarking
D) interfacing
E) data mining

Question 18

________ benchmarking involves observing how others compete.

A) Strategic
B) Product
C) Performance
D) Functional
E) Process

Question 19

The process of dismantling competitors' products to understand the strengths and weaknesses of their designs is referred to as ________.

A) benchmarking
B) reengineering
C) baselining
D) inverse production
E) reverse engineering

Question 20

Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $20.00. Their work standard for such a job is $5.00 for labor and $2.50 for cleaning supplies. Since they use the customer's electricity, there are no other inputs in to the cleaning process. What is their labor productivity?

A) 20.0
B) 4.00
C) 8.00
D) 2.50
E) 40.0

Question 21

Which of the following steps in Xerox's 10-step process to benchmarking helps companies prioritize which areas are the first candidates for change and improvement?

A) determine the current performance gap
B) plan and conduct the investigation
C) identify whom to benchmark
D) decide what to benchmark
E) develop action plans

Question 22

A benchmark is an organization recognized for its exemplary operational performance.

Question 23

The ________ process involves identifying measures, establishing time frames for future data collection, gathering data, and analyzing data on an ongoing basis to identify performance trends and changes.

A) restructuring
B) baselining
C) reengineering
D) reverse engineering
E) benchmarking

Question 24

________ is defined as the fundamental rethinking and redesign of business processes.

A) Reengineering
B) Benchmarking
C) Baselining
D) Reverse engineering
E) Restructuring

Question 25

Which of the following best defines the depth factor of reengineering?

A) It refers to organizational elements such as responsibilities, measurements, information technology, and skills.
B) It refers to the monitoring of key internal firm performance measures over time to identify trends such as improvement in managerial decision making.
C) It refers to the impact of the reengineering process to the entire organization.
D) It refers to the dismantling of competitors' products to understand the strengths and weaknesses of their designs.
E) It refers to the sharing of information between companies so that both can improve.

Question 26

________ include objectives, policies, and procedures followed by a firm.

A) Productivity ratios
B) Quality measures
C) Market share data
D) Structural measures
E) Operating results

Question 27

What is the first step in Xerox's 10-step process to benchmarking?

A) determine the current performance gap
B) identify whom to benchmark
C) decide what to benchmark
D) develop action plans
E) project future performance levels

Question 28

Reject rates, capability information, and performance information are examples of ________.

A) structural measures
B) market share data
C) productivity ratios
D) financial ratios
E) quality measures

Question 29

________ requires the monitoring of key internal firm performance measures over time to identify trends such as improvement to inform managerial decision making.

A) Baselining
B) Benchmarking
C) Reengineering
D) Reverse engineering
E) Restructuring

Question 30

The ________ process of business process benchmarking results in outputs that are eventually sold to customers.

A) transformation
B) conversion
C) control
D) reconstruction
E) reengineering

Question 31

________ are useful in measuring the extent to which a firm effectively uses the scarce resources that are available to the firm.

A) Quality measures
B) Financial ratios
C) Productivity ratios
D) Market share data
E) Structural measures

Question 32

In the ________ process of business process benchmarking, the inputs are aligned together to form the product or service.

A) reconstruction
B) control
C) reengineering
D) transformation
E) conversion

Question 33

________ is based on the concept of 5w2h.

A) Business process benchmarking
B) Statistical process control
C) Total quality management
D) Business process reengineering
E) Reverse engineering

Question 34

Which of the following best defines the breadth factor of reengineering?

A) It refers to organizational elements such as responsibilities, measurements, information technology, and skills.
B) It refers to the monitoring of key internal firm performance measures over time to identify trends such as improvement in managerial decision making.
C) It refers to the impact of the reengineering process to the entire organization.
D) It refers to the dismantling of competitors' products to understand the strengths and weaknesses of their designs.
E) It refers to the sharing of information between companies so that both can improve.

Question 35

________ dictates that decisions are made based on the sound collection and analysis of data.

A) Strategic benchmarking
B) Baselining
C) Business process reengineering
D) Management by fact
E) Reverse engineering

Question 36

________ are important for monitoring and tracking the effectiveness of a company's cycle times, waste-reduction measures, and value-added measures.

A) Customer-related measures
B) Productivity ratios
C) Quality measures
D) Operating results
E) Structural measures

Question 37

The concept of ________ implies that you must have something to offer the target firm in return for sharing information.

A) reciprocity
B) baselining
C) reengineering
D) interfacing
E) restructuring

Question 38

Toyota developed the world-class production system known as business process reengineering.

Question 39

In the conversion process, the feedback loop that involves gathering, analyzing, and using the data to adjust the process is called the ________ process.

A) control
B) reengineering
C) reconstruction
D) development
E) transformation

Question 40

Which of the following steps in Xerox's 10-step process to benchmarking involves predicting whether the performance gap for the benchmarked processes will narrow or widen in the coming years?

A) develop action plans
B) determine the current performance gap
C) plan and conduct the investigation
D) project future performance levels
E) implement specific actions and monitor progress

Question 41

Customer satisfaction measures are poor indicators of financial performance.

Question 42

In a benchmarking relationship, the initiator firm is the firm that is being studied.

Question 43

Openness can create a competitive advantage through creating psychological barriers to competition.

Question 44

Cycle times and waste-reduction measures are examples of operating results of benchmarking data.

Question 45

The cost of goods sold to scrap ratio is a multiple factor ratio.

Question 46

The scrap efficiency formula normalizes the cost of scrap based on the volume of business that a firm does.

Question 47

Strategic benchmarking involves observing how others compete.

Question 48

Total factor productivity is less sensitive to differences in costing conventions and accounting practices.

Question 49

Quality measures include objectives, policies, and procedures followed by a firm.

Question 50

Dismantling competitors' products to understand the strengths and weaknesses of their designs is called reverse engineering.

Question 51

In performance benchmarking, the initiator firm focuses its observation and investigation on business processes.

Question 52

In functional benchmarking, a company focuses its benchmarking efforts on a single function to improve the operation of that function.

Question 53

Financial benchmarking involves direct interaction between the initiator firm and the target firms.

Question 54

The first step a benchmarking firm must take is to document current performance.

Question 55

The conversion process results in outputs that are eventually sold to customers.

Question 56

The 5w2h concept is labeled as such because a business process benchmarking project should result in the answers to five questions.

Question 57

Management by fact dictates that decisions are made based on the sound collection and analysis of data.

Question 58

The scrap efficiency can be calculated by dividing the cost of scrap by the cost of goods sold.

Question 59

Productivity ratios are useful in measuring the extent to which a firm effectively utilizes the scarce resources that are available to the firm.

Question 60

The 5w2h questions should be viewed in the context of a process.

Question 61

Differentiate between financial ratios and productivity ratios of benchmarking data.

Question 62

Because business process reengineering affects multiple levels in a firm, abrupt organizational changes are reflected in baselining results.

Question 63

Breadth refers to the impact of the reengineering process to the entire organization.

Question 64

Determining the current performance gap helps the company prioritize which areas are the first candidates for change and improvement.

Question 65

Explain the importance of using customer-related results as benchmarking data.

Question 66

Restructuring is defined as a fundamental rethinking and redesign of business processes.

Question 67

Differentiate between an initiator firm and a target firm. Are these static roles?

Question 68

To begin the management process, a strategy statement outlining the goals and strategies to be used is developed.

Question 69

How is a scrap efficiency ratio calculated?

Question 70

Outside consultants should not be used to provide training and coaching on benchmarking and other quality-related efforts.

Question 71

The concept of interfacing implies that you must have something to offer the target firm in return for sharing information.

Question 72

The reengineering process involves gathering and analyzing data on an ongoing basis to identify performance trends and changes.

Question 73

Depth refers to organizational elements such as responsibilities, measurements, information technology, and skills.

Question 74

The first step in Xerox's 10-step process to benchmarking is identifying whom to benchmark.

Question 75

Describe the concept of performance benchmarking.

Question 76

Describe the concept of functional benchmarking.

Question 77

Explain the process of benchmarking.

Question 78

Business process maps are used to identify the exact performance measures and metrics needed from the target firm.

Question 79

Baselining requires the monitoring of key internal firm performance measures over time to identify trends such as improvement to inform managerial decision making.

Question 80

In the control process, the inputs are aligned together to form the product or service.