Deck 22: Production and Control

Question 1

Production is the transformation of organizational resources into products.

Answer 1

True

Question 2

Quality assurance is a continuum of activities that starts when quality standards are set and ends when quality goods and services are delivered to the customer.

Answer 2

True

Question 3

A system is a flow of interrelated events toward a goal, purpose, or end.

Answer 3

False

Question 4

The fixed-position layout is one in which the resources are stationary while the products flow from one resource to another.

Question 5

Layout strategy is a plan of action outlining the means and methods the organization will use to transform resources into goods and services.

Question 6

Effectiveness refers to doing things right whereas efficiency refers to doing the right things.

Question 7

Organizations commonly employ more than one type of manufacturing process at the same time and in the same facility.

Question 8

Pure-breakdown policy involves regular activities such as machine adjustments, lubrication, cleaning, parts replacement, and painting.

Question 9

JIT is based on the management philosophy that products should be manufactured only in the quantities customers require.

Question 10

Productivity is the relationship between the total amounts of goods or services being produced (output) and the organizational resources needed to produce them.

Question 11

A process layout is a layout pattern that groups together similar types of equipments.

Question 12

Cost control relates to all organizational costs and emphasizes activities in all organizational areas.

Question 13

Quality is the degree of excellence on which products or services can be ranked on the basis of selected features or characteristics. The ranking is totally dependent on the industry standards.

Question 14

Quality circle is a process used to determine how many products should be inspected to calculate a probability that the total number of products will meet organizational quality standards.

Question 15

Deming's flow diagram for improving product quality focuses on aspects such as suppliers, materials, and customers rather than the test processes and methods used.

Question 16

Work methods analysis is an operational tool that is performed for new or existing jobs to improve productivity and ensure the safety of workers.

Question 17

Product strategy is an operational plan of action outlining which goods and services an organization will produce and market.

Question 18

Zero-base budgeting is a planning and budgeting process that requires managers to justify their budget by referring to budget amounts established in previous years.

Question 19

Activities such as setting production levels and scheduling production are examples of continual operations management activities.

Question 20

Human effort is often replaced by electromechanical devices in such operations as welding, materials handling, design, and drafting. This is called automation.

Question 21

MSS Technologies Inc., distributes electronic components to the radio frequency (RF), wireless and power conversion, electron device, and display systems markets. James, the production manager of the firm, is in search of innovative ways to improve the quality of the company's products.
Quality assurance is a(n) ________.

A) process used to determine how many products should be inspected to calculate a probability that the total number of products will meet organizational quality standards.
B) process used to determine the number of products to be inspected during a random check
C) standardized system used by organizations to measure employee performance in achieving the desired quality
D) consortium of a small group of workers who meet with management to discuss quality-related problems
E) operations process involving a broad group of activities aimed at achieving the organization's quality objectives.

Question 22

________ refers to the relationship between the total amount of goods or services being produced and the organizational resources needed to produce them.

A) Productivity
B) Zero-base measure
C) Control factor
D) Quality assurance
E) Break even ratio

Question 23

The break-even point is the level of production at which the total revenue of an organization equals its total costs.

Question 24

MSS Technologies Inc., distributes electronic components to the radio frequency (RF), wireless and power conversion, electron device, and display systems markets. James, the production manager of the firm, is in search of innovative ways to improve the quality of the company's products.
James believes that involving all company employees in quality control would help them obtain better ideas on how to solve quality problems. It would also help the firm improve employee morale. Which of the following strategies should he use for this purpose?

A) quality circles
B) Six Sigma
C) flexible manufacturing
D) statistical quality control
E) quality assurance

Question 25

MSS Technologies Inc., distributes electronic components to the radio frequency (RF), wireless and power conversion, electron device, and display systems markets. James, the production manager of the firm, is in search of innovative ways to improve the quality of the company's products.
________ is the process used to determine how many products should be inspected to calculate a probability that the total number of products will meet organizational quality standards.

A) Statistical quality control
B) Quality assurance
C) Six sigma
D) Quality circle
E) Kaizen procedure

Question 26

A control tool is a specific procedure or technique that presents pertinent organizational information in a way that helps managers and workers develop and implement an appropriate control strategy.

Question 27

Which of the following is the best strategy that a company can use to improve organizational productivity?

A) Increase employee salaries and provide additional incentives to the employees.
B) Attempt to increase the bargaining power of the suppliers.
C) Automate the lengthy processes that exist in the value chain.
D) Allocate more budget to the operational activities of the firm.
E) Reduce the number of units produced per day to give more attention to product quality.

Question 28

An organization decides to improve its raw material handling process by buying a material handling crane. This is an example of using ________.

A) artificial intelligence
B) automation
C) robotics
D) flexible manufacturing
E) fixed-position layouts

Question 29

Break-even analysis helps managers understand the relationships between fixed costs, variable costs, total costs, and profit and loss within an organization.

Question 30

Furntech Corporation manufactures and markets traditional and computer-related office products and supplies. The company is looking for ways to improve its productivity to become more competitive. Which of the following actions of the company will be least effective in improving organizational productivity?

A) It makes necessary changes to product design.
B) It provides additional training to its workforce.
C) It automates some of its lengthy processes.
D) It attempts to improve its recruitment procedures.
E) It reduces its level of production to focus on product quality.

Question 31

Which of the following is the most accurate observation of product quality?

A) Quality is more dependent on labor than the other factors of production.
B) It is a measure of how well a product does what it is intended to do.
C) Quality refers to a product's ability to make an impact on the customers.
D) It can be defined as a ratio of the total output to the total inputs.
E) Quality refers to the design attributes that are formed internally.

Question 32

The assets available to managers for production are called ________.

A) managerial structures
B) organizational layouts
C) process structures
D) organizational resources
E) functional layouts

Question 33

Which of the following statements is true about production in organizations?

A) Production is considered a process of conception rather than transformation.
B) The production process does not occur in most service organizations.
C) Organizational assets remain unaffected in the process of production.
D) Production can be considered to be the process of transforming inputs to outputs.
E) The production process is not considered a part of an organization's value chain.

Question 34

Value analysis is a cost control technique rather than a cost reduction technique.

Question 35

According to Deming's flow diagram for improving product quality, which of the following is the next step after the receipt and test of materials?

A) testing of processes, machines, methods, costs
B) production and assembly of raw materials
C) assembly and inspection of raw materials
D) distribution of materials across the organization
E) conducting consumer research on product quality

Question 36

Which of the following terms specifically refers to the ratio of outputs to inputs?

A) effectiveness
B) quality
C) productivity
D) revenue
E) competency

Question 37

Inventory turnover ratio is a profitability ratio used in organizations.

Question 38

MSS Technologies Inc., distributes electronic components to the radio frequency (RF), wireless and power conversion, electron device, and display systems markets. James, the production manager of the firm, is in search of innovative ways to improve the quality of the company's products.
In an attempt to reduce the number of defective products, James decides to select and inspect a sample to ensure that the units produced meet the established quality standards. Which of the following is a specific technique used to determine how many products should be included in the sample?

A) statistical quality control
B) Six Sigma
C) flexible manufacturing
D) quality circles
E) quality assurance

Question 39

The first step in using quality circles is ________.

A) establishing the theme for observation
B) determining the objective of observation
C) implementing a new procedure
D) obtaining necessary data
E) determining the target rate

Question 40

Costs of packaging a product and costs of materials needed to make the product are fixed costs associated with production.

Question 41

Which of the following is an example of a modern capacity strategy?

A) Construct large plants that perform all the value adding activities.
B) Produce more than the actual demand to minimize customer dissatisfaction.
C) Build large specialized plants with the potential for expansion.
D) Construct smaller and more specialized plants that focus on a few tasks.
E) Produce less than the actual demand to reduce the costs of operation.

Question 42

Tom's company repairs machines only after they have malfunctioned. This is an example of ________.

A) quality circle initiative
B) maintenance control policy
C) pure-breakdown policy
D) total productive maintenance
E) quality assurance initiative

Question 43

The process used to manufacture beer is a product-oriented, high-volume, and low-variety process. This can be called a(n) ________ process.

A) cyclical
B) job-shop
C) repetitive
D) assembly-line
E) continuous

Question 44

________ are operational tools used to establish labor standards and are useful for planning, control, productivity improvements, costing and pricing, bidding, compensation, motivation, and financial incentives.

A) Work measurement methods
B) Manpower plans
C) Motion-study techniques
D) Work methods analysis
E) Job design strategies

Question 45

________ layout is a layout pattern that groups together similar types of equipment.

A) Process
B) Fixed position
C) Group technology
D) Product
E) Material

Question 46

________ is a plan of action aimed at providing the organization with the right facilities to produce the needed output at the right time.

A) Location strategy
B) Process strategy
C) Product strategy
D) Layout strategy
E) Capacity strategy

Question 47

Which layout strategy would be most appropriate for an organization with a limited number of different products that require high production volumes, highly specialized equipment, and narrow employee skills?

A) product layout
B) process layout
C) functional layout
D) fixed-position layout
E) equipment layout

Question 48

The ________ process includes the production of one-of-a-kind items as well as unit production.

A) job-shop
B) assembly line
C) serial
D) parallel
E) fixed position

Question 49

________ is a technique for reducing inventories to a minimum by arranging for production components to be delivered to the production facility only when it is about to be used.

A) Flexible manufacturing
B) Just-in-Time control
C) Mass customization
D) Six Sigma production
E) Total preventive maintenance

Question 50

A flow of interrelated events toward a goal, purpose, or end is specifically referred to as a ________.

A) process
B) system
C) strategy
D) scheme
E) structure

Question 51

A budget that automatically indicates an increase in the amount of resources allocated for various organizational activities when production levels go up is called a(n) ________ budget.

A) variable
B) zero-based
C) parallel
D) incremental
E) dependable

Question 52

RFX International, Inc. is a manufacturer of apparels and markets its products in the United States and Canada. The company serves its market from a central manufacturing unit located in California. The company has been facing problems in efficiently managing its operations and controlling the inventory costs. Mark Arthur, the COO, recommends the installation of just-in-time inventory system to streamline the operations of the company. However, the management is skeptical about installing a totally new system. Which of the following information, if true, would support Mark's suggestion?

A) The company offers online personalization and allows customers to customize the products for each order.
B) The apparel industry in the United States is characterized by seasonal demand and companies have to make use of it.
C) The company procures raw materials from four medium sized companies in California.
D) The company procures materials from Altralex, a large scale supplier in the United States.
E) A recent analysis by the operations department revealed that two percent of the raw materials the company receives from its suppliers are defective.

Question 53

Which of the following is the first stage in a cost control program?

A) measuring actual labor costs incurred
B) making changes to reduce actual labor and material costs
C) comparing planned labor and material costs to incurred costs
D) measuring actual material and process costs incurred
E) establishing standard or planned cost amounts

Question 54

Which of the following techniques is best suited to analyze the financial position of an organization?

A) process modeling
B) work modeling
C) value analysis
D) functional analysis
E) ratio analysis

Question 55

________ is an operational plan of action outlining which goods and services an organization will produce and market.

A) Capacity strategy
B) Product strategy
C) Process strategy
D) Layout strategy
E) Location strategy

Question 56

Which of the following is a tool commonly used as both a financial plan and a control technique?

A) income statement
B) balance sheet
C) HR design
D) product layout
E) budget

Question 57

Inventory turnover is an example of a(n) ________ ratio.

A) operations
B) profitability
C) liquidity
D) activity
E) leverage

Question 58

Which of the following process strategies is characteristic of the auto and appliance industries?

A) repetitive process
B) continuous process
C) flexible process
D) job-shop process
E) low-volume process

Question 59

The performance of managerial activities that involve selecting, designing, managing, controlling and updating production systems is called ________.

A) strategic management
B) tactical management
C) operations management
D) input management
E) service management

Question 60

A manufacturing company that produces plastic products creates a plan that outlines the different ways of managing the transformation process. The plan contains detailed information about aspects such as the handling of materials, operation of the assembly line, labor used in production, and the like. This plan of action is called a(n) ________ strategy.

A) process
B) product
C) development
D) layout
E) capacity

Question 61

Identify the algebraic equation to determine the break-even point.

A) BE = VC/(P-FC)
B) BE = P/ (FC-VC)
C) BE = C/R
D) BE = (P-VC)/(FC-VC)
E) BE = FC/(P-VC)

Question 62

Which of the following can be considered annual fixed costs for a publishing company?

A) author royalties
B) salaried labor
C) sales commission
D) cost of binding
E) printing costs

Question 63

Cistero Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories. A recent operational study revealed that a large part of the company's expenses are due to of ineffective inventory management.
The operational study revealed that the company's inventory turnover is slow. This has forced them to maintain high levels of liquidity. Which of the following ratios is best suited to analyze the company's short-term solvency?

A) current ratio
B) return on investment
C) activity ratio
D) equity ratio
E) debt ratio

Question 64

What is productivity and how is it important to organizations?

Question 65

Which of the following is the best example of a shop-floor control activity?

A) designing jobs
B) storing inventory
C) scheduling work
D) purchasing materials
E) controlling inventory

Question 66

Which of the following is a cost control and cost reduction technique that helps managers control operations by focusing primarily on material costs?

A) materials planning
B) decision-tree analysis
C) break-even analysis
D) value analysis
E) process control

Question 67

Cistero Corporation operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories. A recent operational study revealed that a large part of the company's expenses are due to of ineffective inventory management.
Which of the following ratios would be most useful to obtain quantitative information on the company's inventory management processes?

A) activity ratio
B) profitability ratio
C) liquidity ratio
D) leverage ratio
E) solvency ratio

Question 68

________ is a control technique that allows only significant deviations between planned and actual performance to be brought to a manager's attention.

A) Management by exception
B) Disaster management
C) Contingency planning
D) Process control
E) Management by objectives

Question 69

________ is an operations control activity that determines the flow of materials from vendors through an operations system to customers.

A) Materials handling
B) Zero-based control
C) Work scheduling
D) Production planning
E) Materials control

Question 70

David Lamb leads a team of engineers at Alpha technologies, a leading software company. David started his career as a program developer and is widely recognized as a subject matter expert. He is not very involved in the day-to-day management of the team and instead promotes a great deal of autonomy among team members. However, he does help out if the team comes across unanticipated problems associated with atypical tasks. This is an example of ________.

A) management by exception
B) the process control method
C) continuous operational control
D) customary process control
E) management by objectives

Question 71

Which of the following is the best example of a control tool that could be used at all stages of operations?

A) quality inspections
B) value statements
C) labor force planning
D) capacity planning
E) layout strategies

Question 72

The total fixed cost of production in a manufacturing company is $50,000. The company sells its products at $15 and the variable costs associated with each unit sold is $10. Calculate the level of production at which the firm breaks even.

A) 15000 units
B) 10000 units
C) 5000 units
D) 1000 units
E) 20000 units

Question 73

Return on investment is an example of a(n) ________ ratio.

A) operations
B) profitability
C) liquidity
D) leverage
E) activity

Question 74

Which of the following statements is true of the control tools used in organizations?

A) It helps to pinpoint organizational strengths and weaknesses.
B) It is generally used during the product design stage.
C) Control tools are not used for day-to-day operations.
D) Employee control is not possible with the use of these tools.
E) These tools are used by workers more than managers.

Question 75

A company uses current ratio to analyze its financial position. Which of the following information can be obtained from current ratio?

A) efficiency of inventory management
B) productivity of the company's assets
C) information on the short-term solvency
D) information on the total debt of the company
E) information on financial leverage

Question 76

Which of the following is an explicit objective of the inventory control activities?

A) increasing the short-term solvency of the company
B) ensuring continuous availability of purchased materials
C) enhancing the labor force planning activity of the organization
D) increasing the organization's financial leverage
E) making organizational assets more productive

Question 77

The amount of revenue that exceeds the total costs of production is called a firm's ________.

A) total revenue
B) profits
C) marginal revenue
D) marginal costs
E) variable revenue

Question 78

Which of the following terms refers to the expenses that fluctuate with changes in the number of products produced?

A) variable costs
B) depreciation
C) asset purchase costs
D) costs of mechanism
E) inflationary costs

Question 79

Which of the following would be a rational justification for selecting algebraic break-even method instead of graphic break-even method?

A) Algebraic method is a quick yet accurate method of determining break-even point.
B) Graphic break-even method is less accurate when there are multiple relationships.
C) Unlike algebraic method, all critical elements cannot be shown in the graphic method.
D) Algebraic method is better suited to analyze cumulative relationships of break-even point.
E) Information such as potential profit and loss can be better studies using the algebraic method.

Question 80

Which of the following ratios is best suited to analyze how the company finances its projects?

A) inventory turnover
B) debt ratio
C) current ratio
D) acid test ratio
E) return on investment