Operations Management Quiz

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Questions and Answers

What type of system is usually coupled with a DRP system?

MRP

Kan Ban

VMI/Consignment (correct)

JIT

Which of the following is not included in inventory risk cost?

Theft

Obsolescence

Damage

Fuel costs (correct)

What is not an assumption relevant to the EOQ model?

The item purchase price is dependent on the amount ordered

There is always inventory in transit (correct)

The planning horizon is infinite

All inventory parts are independent of each other

Which type of inventory model is most likely to be a pull system?

Kanban Signup and view all the answers

What is the relationship between customer service level and inventory investment?

Positive exponential Signup and view all the answers

How do inventory and GDP growth relate between 1994 and 2010?

They grew by the same amount Signup and view all the answers

What type of stocks are influenced by holidays?

Seasonal stocks Signup and view all the answers

Which department has no impact on inventory?

Corporate governance Signup and view all the answers

What provides managers with the knowledge needed to make effective situational assessments and develop appropriate responses?

Visibility Signup and view all the answers

Which of the 7Rs of logistics is not mentioned?

Quality Signup and view all the answers

Which of the following is not a driver of sustainable supply chain management practice?

Execution Signup and view all the answers

What is a major barrier to the effective use of information technology?

People Signup and view all the answers

What is defined as an information system that automates the flow of information between a firm and its suppliers?

Supply chain information system (SCIS) Signup and view all the answers

What is data synchronization software used for?

Data synchronization tools Signup and view all the answers

What do ERP systems require to be fully functional?

Information elements Signup and view all the answers

What do supply chain software technologies help organizations with?

All of the above Signup and view all the answers

What is the primary system that lean production relies on?

The Toyota production system (TPS) Signup and view all the answers

Which of the following is a reactive capability strategy?

Offshoring Signup and view all the answers

What determines the capacity of an organization?

The maximum amount of work that an organization is capable of completing in a given period of time Signup and view all the answers

What is a key principle of inventory management?

Inventory and production must be managed together Signup and view all the answers

What are materials used in the production process but do not become part of the product?

Maintenance, repair and operating supplies Signup and view all the answers

Which of the following company objectives are in conflict?

Maximum customer service and low inventory cost Signup and view all the answers

What is a cost of carrying inventory?

Capital cost and storage cost Signup and view all the answers

What happens when the order quantity is increased?

The total inventory cost increases Signup and view all the answers

What is the primary driver of the need for supply chain capabilities?

Utility Signup and view all the answers

What is the significance of packaging in logistics?

It is critical to logistics Signup and view all the answers

What is the term for the production strategy that leverages lean manufacturing and real-time intelligence?

Adaptive manufacturing Signup and view all the answers

What type of production involves assembling products to customer orders?

Assemble-to-order Signup and view all the answers

What is the term for the ability of a process to produce a range of products?

Economies of scope Signup and view all the answers

What is a major challenge faced by many established manufacturers?

Expanding product life cycles Signup and view all the answers

What type of supply chain strategy focuses on anticipating demand or producing without knowledge of customer orders?

Push-based strategy Signup and view all the answers

What is the primary focus of a push-based supply chain strategy?

Immediate delivery of off-the-shelf, low-cost, standardized goods Signup and view all the answers

What is not an advantage of pipelines?

Least capable Signup and view all the answers

What is not an advantage of air transport?

Most expensive Signup and view all the answers

Which of the following is not characteristic of a straight bill of lading?

Allow transfer of title to the shipped goods Signup and view all the answers

What does transportation efficiency promote in the supply chain?

Competition Signup and view all the answers

What is not a mode of transportation?

3PL Signup and view all the answers

What is a challenge for the trucking industry?

Oversupply of qualified drivers Signup and view all the answers

What is a characteristic of railroads?

Natural monopolies Signup and view all the answers

What is affected by trade imbalances?

All of the above Signup and view all the answers

Study Notes

Inventory Management

A DRP system is usually coupled with a JIT system to manage the flow and timing of inbound materials and outbound finished goods.
Inventory risk cost includes insurance, damage, theft, and obsolescence.
The EOQ model assumes there is no inventory in transit, the planning horizon is infinite, all inventory parts are independent of each other, and the item purchase price is not dependent on the amount ordered.

Inventory Models

Pull inventory models are most likely to be Kanban.
The relationship between customer service level and inventory investment is inversely proportional.

Inventory and GDP

Inventory and GDP grew by different amounts between 1994 and 2010.

Batching Economies

Batching economies or cycle stocks usually arise from procurement, transportation, and production sources.

WIP Inventories

WIP inventories are associated with manufacturing and are not included on the balance sheet.

Seasonal Stocks

Seasonal stocks are not influenced by EOQ, but by weather, transportation, holidays, and other seasonal factors.

Inventory and Departments

The marketing department has an impact on inventory.

Capital Cost

Capital cost focuses on the cost of capital tied up in inventory and the resulting lost opportunity from investing that capital elsewhere.

Visibility

Visibility of demand, customer orders, delivery status, inventory stock levels, and production schedules provides managers with the knowledge needed to make effective situational assessments and develop appropriate responses.

Logistics

The seven Rs of logistics include: getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, and at the Right cost.

Supply Chain Information System (SCIS)

SCIS is defined as an information system that automates the flow of information between a firm and its suppliers.

Supply Chain Software

Supply chain software includes technologies that address virtually every function and task that occurs in the supply chain, help organizations plan, execute, and control supply chain activities in real-time, and maintain visibility of inventory.

ERP Systems

ERP systems have information elements needed by SCIS applications.

Lean Production

Lean production relies on the Toyota production system (TPS), pull-based systems, and just-in-time systems.

Capacity

Capacity determines the maximum amount of work that an organization is capable of completing in a given period of time.

Inventory Management Objectives

Inventory and production must be managed together.
Maximum customer service and low inventory cost are conflicting company objectives.

Costs of Carrying Inventory

Costs of carrying inventory include capital cost, storage cost, and obsolescence.

Inventory Management Decisions

Relevant costs include storage cost, production control cost, and purchasing cost.

Packaging

Packaging is critical to logistics.

Adaptive Manufacturing

Adaptive manufacturing is a newly launched twenty-first-century addition to production strategy that leverages lean manufacturing strategies, Six Sigma best practices, and real-time actionable intelligence from the factory floor.

Production Strategies

Assemble-to-order production involves combining common components and a limited number of options or accessories made available to the customer.

Process Flexibility

Processes that can produce a range of products are said to have economies of scope.

Supply Chain Challenges

Established manufacturers face challenges such as expanding product life cycles, competition, customer demand, and pressure for efficiency.

Transportation and Logistics

A push-based strategy works well for supply chains that focus on the anticipation of demand or without knowledge of customer orders.
Transportation efficiency promotes competition in the supply chain.
The distances in today's global supply chains produce higher costs, longer transit times, and more disruptions.

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Description

Test your knowledge on operations management concepts, including supply chain management and production strategies.