Business Improvement Methodologies Quiz

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Questions and Answers

What is the goal of Six Sigma?

To achieve a level of quality with 100 defects per million opportunities
To achieve a level of quality with 10 defects per million opportunities
To achieve a level of quality with only 3.4 defects per million opportunities (correct)
To achieve a level of quality with 1000 defects per million opportunities

What is value innovation?

When innovations increase the cost without adding value
When innovations have no impact on the efficiency frontier in an industry
When innovations push out the efficiency frontier in an industry, allowing for greater value to be offered through superior differentiation at a lower cost (correct)
When innovations decrease the value offered in an industry

What are Economies of Scale?

Reductions in unit costs attributed to large output (correct)
Increase in unit costs attributed to large output
Increase in unit costs attributed to small output
Reductions in unit costs attributed to small output

What is one source of scale economies?

<p>Cost reductions gained through mass-producing a standardized output (A)</p> Signup and view all the answers

What is the ideal defect rate targeted by Six Sigma?

<p>3.4 defects per million opportunities (D)</p> Signup and view all the answers

Study Notes

Six Sigma Goals

Aims to improve processes by reducing variation and eliminating defects.
Focuses on achieving measurable and quantifiable financial returns.

Value Innovation

Combines differentiation and low cost to create a leap in value for customers.
Strives to create new market space, making competition irrelevant.

Economies of Scale

Refers to the cost advantages that companies experience when production becomes efficient.
As output increases, the average cost per unit typically decreases.

Source of Scale Economies

Bulk purchasing of materials allows larger companies to negotiate lower prices, reducing overall costs.

Ideal Defect Rate in Six Sigma

Targets a defect rate of no more than 3.4 defects per million opportunities, indicating very high quality.

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Description

Test your knowledge of business improvement methodologies with this quiz. Learn about Six Sigma and value innovation, and understand how they can help improve business processes and drive quality and efficiency.