Deck 4: Strategic Management of Costs,quality,and Time

Question 1

Significant differences between the "traditional view" of quality and the emerging "quality-based view" relate to which of the following?

A)quality production,inspections,causes of defects,standards,purchasing,and customer focus.
B)financial,internal business process,learning and growth,customer.
C)total quality,smooth production flow,purchasing quality materials,well trained and flexible workforce,short customer-response times,backlog of orders.
D)prevention costs,appraisal costs,internal failure costs,and external failure costs.

Answer 1

A

Question 2

Which of the following is not an example of performance measures used to measure customer satisfaction with service?

A)Number of customers
B)Amount of purchases per customer
C)Number of customer complaints per 1,000 orders
D)Customer satisfaction surveys

Answer 2

C

Question 3

The ISO 14000 focuses on communicating the financial impact of

A)make versus buy decisions.
B)worker productivity.
C)outsourcing.
D)environmental issues.

Answer 3

D

Question 4

Which of the following statements is true?

A)As quality goes up,scrap and rework fall,raising costs.
B)As quality goes up,scrap and rework increase,reducing costs.
C)As quality goes up,scrap and rework fall,reducing costs.
D)As quality goes up,scrap and rework increase,increasing costs.

Question 5

Which of the following is a measure developed by successful firms to focus on customer requirements and to assess performance based on service,quality,and cost?

A)customer success factors.
B)critical success factors.
C)critical performance factors.
D)customer performance factors.

Question 6

The quality based view states that the firm should

A)always attempt to improve quality and that such attempts will succeed without limit.
B)not wait for inspections of finished products to reveal defects and then rework defective goods.
C)establish quality goals and procedures at the beginning of the process and aim for zero defects.
D)All of the answers are correct.

Question 7

Which of the following statements best describes the traditional view of quality?

A)The traditional view of quality assumes that improving quality always requires increasing costs.
B)The traditional view of quality holds that firms can reduce total costs by producing lower-quality goods
C)The traditional view of quality holds that firms can reduce total costs by tolerating some level of defective goods.
D)All of the answers are correct.

Question 8

The quality based view

A)holds that high quality pays for itself.
B)emphasizes constantly improving systems and processes.
C)focuses on long-run profits
D)All of the answers are correct.

Question 9

Concerning cost,which of the following is/are true?

A)Lowering cost results from the organization's ability to use resources more efficiently to obtain its objectives.
B)Reducing costs is important because of the long-run relation between product cost and price.
C)If two products provide the same quality and services,the customer will choose the product with the lower price.
D)All of the answers are correct.

Question 10

When is a company is engaging in total quality management?

A)When the company has instilled a quality culture into the organization.
B)When the company's products are in conformity with quality specifications.
C)When the company's products meet industry standards.
D)When the company can effectively compete for a distinguished quality award.

Question 11

Many contracts require ISO 9000 certification.The ISO 9000 are international standards for

A)organization management.
B)operations management.
C)quality management.
D)financial management.

Question 12

The new quality-based view includes which of the following?

A)waiting for inspections of finished products.
B)reworking defective goods.
C)establishing quality at the beginning of the process.
D)incurring less than 3 percent defects is a reasonable goal.

Question 13

Which of the following prestigious,internationally renowned awards was created in Japan?

A)The Baldrige Award.
B)The Deming Prize.
C)The ISO 9000 Award.
D)The AMA Prize.

Question 14

The annual award to Japanese companies created in 1950 by the Union of Japanese Scientists and Engineers that focuses on quality improvement is called the

A)Baldrige Award.
B)Deming Prize.
C)ISO 9000 Award.
D)UJSE Prize.

Question 15

Which of the following is the most prominent American award given for total quality management?

A)ISO 9000 certification.
B)The Deming Prize.
C)The Baldrige Award.
D)The AQM Prize.

Question 16

Which of the following was created by Congress in 1987 to recognize U.S.firms with outstanding records of quality improvement and quality management?

A)ISO 9000 certification.
B)Deming Prize.
C)Baldrige Award.
D)CQM Prize.

Question 17

Which of the following is an example of performance measures used to measure customer satisfaction with quality?

A)Number of Customers
B)Customer satisfaction surveys
C)Amount of purchases per customer
D)Number of defective products per 1000 units produced

Question 18

Concerning quality,which of the following is/are true?

A)Quality increases as customer satisfaction increases.
B)Customers expect to get what they pay for.
C)A process that produces high-quality products usually has high efficiency ratings.
D)All of the answers are correct.

Question 19

The international standards that promote the importance of accounting for environmental costs (such as hazardous waste disposal,waste treatment,and periodic environmental inspections),and communicating these costs to management and people outside the organization are

A)ISO 4000.
B)ISO 9000.
C)ISO 14000.
D)ISO 24000.

Question 20

What is the traditional view of quality?

A)There is never a trade-off between the cost of improving quality and maintaining the status quo.
B)It may be cheaper to produce lower quality goods and have a minimum level of defective goods.
C)Quality can and should always be improved.
D)It is generally more costly to produce lower quality goods and have a minimum level of defective goods.

Question 21

Which of the following is not an example of appraisal costs?

A)Inspecting a sample of finished goods to ensure quality
B)Testing products in use at the external site
C)Inspecting production materials upon delivery
D)All of the answers are appraisal costs.

Question 22

Which of the following is not an example of appraisal costs?

A)End-process sampling
B)Field testing
C)Procurement inspection
D)All of the answers are appraisal costs.

Question 23

Costs incurred for detecting nonconforming products and services before delivering them to customers are called

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 24

Which of the following is not an example of prevention costs?

A)Quality training
B)End-process sampling
C)Statistical process control
D)Designing production processes

Question 25

Procurement inspection,processing control (inspection),design,quality training,and machine inspection are all examples of

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 26

Costs incurred for scrapping,reworking,reinspection or retesting are all examples of

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 27

Which of the following is not an example of prevention costs?

A)Procurement inspection
B)Field testing
C)Processing control
D)Designing production processes

Question 28

Which of the following is not one of the three critical success factors that relate to meeting customer quality requirements?

A)Service
B)Quality
C)Throughput
D)Cost

Question 29

Which critical success factor relates to the expectations the customer has about all aspects,both tangible and intangible,of the product's purchase and use?

A)Service
B)Quality
C)Quantity
D)Cost

Question 30

Which is the best stage in the Value Chain to prevent quality problems?

A)Design
B)Production
C)Marketing
D)Research & Development

Question 31

Which critical success factor means giving the customer what the firm promised;it is the degree to which the customer is satisfied?

A)Service
B)Quality
C)Quantity
D)Cost

Question 32

Which of the following statements is true concerning the critical success factors dealing with quality?

A)Quality means giving the customer what the firm promised;it is the degree to which the customer is satisfied.
B)Quality is the price of a product which must cover its costs or the organization will no longer make the product.
C)Quality can be defined as the expectations the customer has about all aspects,both tangible and intangible,of the product purchase and use.
D)None of the answers is correct.

Question 33

Which is the best stage in the Value Chain to identify quality problems?

A)Research & Development
B)Production
C)Marketing
D)Customer Service

Question 34

The critical success factor(s)that relate to meeting customer requirements do not include

A)service.
B)quality.
C)quantity.
D)cost.

Question 35

Which is the best stage in the Value Chain to deal with unhappy customers?

A)Customer Service
B)Marketing
C)Distribution
D)Research & Development

Question 36

Which of the following is an example of internal failure costs?

A)Warranty repairs
B)Reinspection / retesting
C)machine inspection
D)Inspection of incoming materials

Question 37

Which of the following is an example of appraisal costs?

A)Field testing
B)Inspection of incoming materials
C)Warranty repairs
D)Quality engineering

Question 38

Which of the following statements concerning quality is true?

A)Quality can be inspected into a product.
B)Quality should be designed into a product.
C)Quality is continual,once achieved.
D)Quality means meeting management guidelines.

Question 39

Which of the following statements is true concerning the critical success factors dealing with service?

A)Service means giving the customer what the firm promised;it is the degree to which the customer is satisfied.
B)Service is the price of a product which must cover its costs or the organization will no longer make the product.
C)Service can be described as the expectations the customer has about all aspects,both tangible and intangible,of the product's purchase and use.
D)None of the answers is correct.

Question 40

Which of the following are critical success factor(s)that relate to meeting customer requirements?

A)service.
B)quality.
C)cost.
D)All of the answers are correct.

Question 41

Which of the following represent two costs of controlling and improving quality?

A)prevention costs and appraisal costs.
B)internal failure costs and external failure costs.
C)prevention costs and internal failure costs.
D)appraisal costs and external failure costs.

Question 42

Repairing a defect found after a product has been delivered to the customer is an example of which of the following type of cost?

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 43

Which of the following is a cost incurred to detect individual units of products that do not conform to specifications?

A)internal failure costs.
B)external failure costs.
C)prevention costs
D)appraisal costs.

Question 44

Which of the following statements is true?

A)In the long run the price of a product must cover its costs or the organization will no longer make the product.
B)In the long run the price of a product must cover its sunk costs or the organization will no longer make the product.
C)In the long run the price of a product must cover its internal failure costs or the organization will no longer make the product.
D)In the long run the price of a product must cover its external failure costs or the organization will no longer make the product.

Question 45

Which of the following are the two costs of failing to control quality?

A)prevention costs and appraisal costs.
B)appraisal costs and internal failure.
C)internal failure and external failure costs.
D)prevention costs and external failure costs.

Question 46

Which of the following is a cost incurred when the firm discovers nonconforming products and services before delivery to customers?

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 47

Companies that track quality costs and use the information to improve operations tend to see a

A)long-run decline in total costs of quality.
B)short-run decline in total costs of quality.
C)no decline in total costs of quality.
D)short-run decline followed by a long-term increase in total costs of quality.

Question 48

Which of the following costs relate to warranty repairs,product liability costs,marketing costs,and lost sales?

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 49

Which of the following are the two costs of controlling quality?

A)prevention costs and appraisal costs.
B)appraisal costs and internal failure.
C)internal failure and external failure costs.
D)prevention costs and external failure costs.

Question 50

Which statement is true concerning prevention costs?

A)Prevention costs are incurred to prevent defects in the products or services being produced.
B)Prevention costs are incurred to detect individual units of products that do not conform to specifications.
C)Prevention costs are incurred when the firm discovers nonconforming products and services before delivery to customers.
D)Prevention costs are incurred when the customers discover nonconforming products and services at delivery.

Question 51

Which statement is true concerning appraisal costs?

A)Appraisal costs are incurred to prevent defects in the products or services being produced.
B)Appraisal costs are incurred to detect individual units of products that do not conform to specifications.
C)Appraisal costs are incurred when the firm discovers nonconforming products and services before delivery to customers.
D)Appraisal costs are incurred when the customers discover nonconforming products and services at delivery.

Question 52

Which of the following is an example of the costs incurred by a tire company for replacing defective tires?

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 53

Total quality costs include
Prevention Carrying Appraisal

A)Yes Yes Yes
B)No No Yes
C)Yes No No
D)Yes No Yes

Question 54

Which statement is true concerning external failure costs?

A)External failure costs are incurred to prevent defects in the products or services being produced.
B)External failure costs are incurred to detect individual units of products that do not conform to specifications.
C)External failure costs are incurred when the firm discovers nonconforming products and services before delivery to customers.
D)External failure costs are incurred when the customers discover nonconforming products and services at delivery.

Question 55

Trade-offs must be made in and among the prevention,appraisal,internal failure,and external failure costs in order to reduce total costs of quality over time.Over the long-term,what should the targeted level of defective units?

A)Zero
B)Over zero but less than 10 percent
C)Over 10 percent but less than 25 percent
D)Over 25 percent

Question 56

Which of the following is a cost incurred when customers discover nonconforming products and services at delivery?

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 57

Which of the following costs result from failure to control and improve quality?

A)prevention costs and appraisal costs.
B)internal failure costs and external failure costs.
C)prevention costs and internal failure costs.
D)appraisal costs and external failure costs.

Question 58

A quality improvement program attempts to achieve zero defects while minimizing costs.Cost of quality reports do not explicitly report the

A)end-of-process sampling costs.
B)quality training and material inspection costs.
C)opportunity cost of lost business.
D)scrap costs.

Question 59

Costs incurred for detecting nonconforming products and services after delivering them to customers are called

A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.

Question 60

Which statement is true concerning internal failure costs?

A)Internal failure costs are incurred to prevent defects in the products or services being produced.
B)Internal failure costs are incurred to detect individual units of products that do not conform to specifications.
C)Internal failure costs are incurred when the firm discovers nonconforming products and services before delivery to customers.
D)Internal failure costs are incurred when the customers discover nonconforming products and services at delivery.

Question 61

Three Dog Bite Company:

Refer to Three Dog Bite Company.What are the total appraisal costs?

A)$ 375,000
B)$1,550,000
C)$1,275,000
D)$2,025,000

Question 62

Three Dog Bite Company:

Refer to Three Dog Bite Company.What are the total external failure costs?

A)$ 600,000
B)$ 900,000
C)$ 370,000
D)$1,220,000

Question 63

Biloxi Corporation

Refer to Biloxi Company.What are the total prevention costs?

A)$1,000,000
B)$1,500,000
C)$1,850,000
D)$2,000,000

Question 64

A current theme in business today is that "quality is free." Which of the following statements best exemplifies that theme?

A)Cost-benefit analyses is the primary focus in improving quality.
B)Quality is always free in the short-run.
C)Short-run benefits will always outweigh the costs of improving quality.
D)If quality is built into the product,the resulting benefits far outweigh the costs of improving quality.

Question 65

Three Dog Bite Company:

Refer to Three Dog Bite Company.What are the total prevention costs?

A)$ 320,000
B)$1,430,000
C)$ 780,000
D)$2,055,000

Question 66

Management tools that are graphs of skewed statistical distributions which display the number of problems or defects as bars of varying lengths are called

A)Control charts.
B)Cause-and-effect charts.
C)Pareto charts.
D)All of the answers are correct.

Question 67

What does a quality control chart reflect?

A)The manager who is in charge on a particular day.
B)Process variations that need to be analyzed.
C)Which product is controlling the market.
D)Which employee is to engage in strategic cost management techniques.

Question 68

Just-in-time requires the following factor(s)essential for success:

A)Purchasing quality materials
B)Smooth production flow,short customer-response times,and backlog of orders
C)Well-trained,flexible workforce committed to quality
D)All of the answers are correct.

Question 69

Biloxi Corporation

Refer to Biloxi Company.What are the total external failure costs?

A)$250,000
B)$400,000
C)$950,000
D)$650,000

Question 70

Management tools which provide diagnostic signals and identify potential causes of a problem(s)are called

A)control charts.
B)cause-and-effect charts.
C)Pareto charts.
D)All of the answers are correct.

Question 71

Which of the following is a tool in quality control that defines the effect and list events that may be the cause of the problem?

A)cause-and-effect analyses.
B)Pareto charts.
C)control charts.
D)PERT charts.

Question 72

What tools do firms use to identify quality control problems?

A)Control charts
B)Cause-and-effect analyses
C)Pareto charts
D)All of the answers are correct.

Question 73

Management tools that depict variations in a process and its behavior over time,help management distinguish between random or routine variations in quality,and direct attention to variations that management should investigate are called

A)control charts.
B)cause-and-effect analyses.
C)Pareto charts.
D)All of the answers are correct.

Question 74

Vilfredo Pareto,an Italian economist and sociologist observed that approximately

A)1 percent of activities cause 99 percent of the problems.
B)5 percent of activities cause 95 percent of the problems.
C)20 percent of activities cause 80 percent of the problems.
D)35 percent of activities cause 65 percent of the problems.

Question 75

Which of the following is(are)potential causes of defects in cause and effect analysis?

A)human factors.
B)methods and design factors.
C)machine related and materials/components factors.
D)All of the answers are correct.

Question 76

Control charts are management tools that

A)depict variations in a process and its behavior over time.
B)help management distinguish between random or routine variations in quality.
C)direct attention to variations that management should investigate.
D)All of the answers are correct.

Question 77

Which of the following tool for quality control has the four categories: human factors,methods and design factors,machine-related factors,and materials and components factors?

A)Warning signals
B)Control charts
C)Pareto charts
D)Cause and effect analysis

Question 78

Three Dog Bite Company:

Refer to Three Dog Bite Company.What are the total internal failure costs?

A)$ 600,000
B)$ 925,000
C)$ 320,000
D)$1,220,000

Question 79

When is the appropriate time to purchase or produce goods and services in a just-in-time (JIT)environment?

A)when the available inventory equals the economic ordering quantity.
B)when the inventory equals one-half of the next months requirements.
C)when the inventory equals the next months requirements.
D)when the company needs them.

Question 80

Biloxi Corporation

Refer to Biloxi Company.What are the total internal failure costs?

A)$475,000
B)$525,000
C)$300,000
D)$225,000