CH-7 Operations Management and Quality – Business Essentials US Edition : Exam Guide

Chapter 7 Operations Management and Quality 1. Firms that make only tangible products are engaged in goods production. Answer: True Explanation: Goods are tangible products, while services may be either tangible or intangible. 2. In a low-contact system, the customer must be a part of the system to receive the service. Answer: False Explanation: An example of a low-contact system is mail delivery, where the customer need not be present to receive the service. 3. A firm's capacity depends on both how many people it employs and the number and size of its facilities. Answer: True Explanation: Capacity is the amount of a product that a company can produce under normal conditions. 4. If parts A, B, and C must be produced this week, a detailed schedule will indicate the sequence of work. Answer: True Explanation: Detailed schedules show day-to-day activities that will occur in production. 5. Quality improvement teams are groups of employees from various work areas who define, analyze, and solve common production problems. Answer: True Explanation: Quality improvement teams seek to improve both their own work methods and the products they make. 6. ISO 9000 is a certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance. Answer: False Explanation: This is a description of ISO 14000. 7. Each stage in the supply chain adds value for the final customer. Answer: True Explanation: The supply chain starts with raw-materials suppliers and continues until the product reaches the end customer. 8. By turning raw materials into finished goods, production creates form utility. Answer: True Explanation: Form utility is created when raw materials and human skills are converted into finished goods and services. 9. When a company turns out ornaments in time for Christmas, it creates time utility. Answer: True Explanation: Time utility is created when products are made available for consumers when they want them. 10. Services are more tangible, more customized, and more storable than most products. Answer: False Explanation: Services are less tangible and less storable than goods. 11. Getting a haircut and having your lawn mowed are both examples of low-contact services. Answer: False Explanation: Getting a haircut is a high-contact service. 12. A company typically selects the kind of production used by most of its competitors. Answer: False Explanation: A company picks the one that best achieves its larger business strategy. 13. In a same-steps layout, equipment and people are set up to produce one type of good in a fixed sequence of steps and are arranged according to its production requirements. Answer: True Explanation: A same-steps layout allows for the efficient use of an assembly line, where production operations are set up along a product-flow line. 14. An assembly line is an example of a custom-products layout. Answer: False Explanation: An assembly line is a same-steps layout. 15. A process flowchart identifies the sequence of production activities, movements of materials, and work performed at each stage of the process. Answer: True Explanation: A process flowchart can be analyzed to isolate wasteful activities, sources of delay, and other inefficiencies. 16. Staff schedules identify which products will be produced and when. Answer: False Explanation: Staff schedules, in general, specify assigned working times in upcoming days—perhaps for as many as 30 days or more—for each employee on each work shift. 17. Materials management involves the flow of materials inside of the production facility, while distribution management involves the flow of finished goods. Answer: False Explanation: Materials management is the process by which managers plan, organize, and control the flow of materials from design through distribution of finished goods. 18. Just-in-time (JIT) production systems normally require large amounts of "safety stock" to be maintained in a firm's warehouse. Answer: False Explanation: JIT production reduces inventory levels by bringing needed materials together only at the precise time they are needed for production and/or shipment to the customer. 19. Japanese companies adapted the concept of quality circles from quality improvement teams used by U.S. companies. Answer: False Explanation: Quality improvement teams are patterned after the Japanese concept of quality circles. 20. ISO 9000 is a certification program attesting that a factory, laboratory, or office has met the rigorous requirements set by the International Organization for Standardization. Answer: True Explanation: More than 160 countries have adopted ISO 9000 as a national standard. 21. The goal of supply chain management is better overall flow in the system. Answer: True Explanation: After several companies work to improve the flow of materials through the system, the ultimate reward is better value for customers. 22. Successful companies, such as 3M and FedEx, use the same operations strategy. Answer: False Explanation: Companies adopt the kind of production that achieves their larger business strategy. 23. Operations capability is a special ability that production does especially well to outperform the competition. Answer: True Explanation: The chosen operations capability should be compatible with the overall business strategy. 24. Even excellent firms focus on one competence at a time. Answer: False Explanation: Excellent firms learn, over time, how to achieve more than just one competence. 25. According to the text, to ensure that truckloads of merchandise flow quickly to stores, Wal-Mart distribution centers are located near the hundreds of stores that they supply, not near the companies that supply them. Answer: True Explanation: At Wal-Mart, managers of the company's huge distribution centers regard Wal-Mart outlets as their customers. 26. A detailed schedule will indicate how many employees will be working on a given shift. Answer: False Explanation: A detailed schedule shows day-to-day activities that will occur in production. A staff schedule identifies how many employees will be working. 27. Operations control includes materials management and quality control. Answer: True Explanation: Both activities are a part of operations control and ensure that schedules are met and products delivered, both in quantity and in quality. 28. For manufacturing firms, typical materials costs make up 50 to 75 percent of total product costs. Answer: True Explanation: Materials stakes are high for service firms as well. 29. The biggest challenge of TQM is motivating employees throughout the company to achieve quality goals. Answer: True Explanation: The backbone of TQM is motivating employees throughout the company to achieve quality goals. Leaders of the quality movement use various methods and resources to foster a quality focus; when those efforts succeed, employees will ultimately accept quality ownership. 30. Managers of a restaurant eat at a competing restaurant in order to identify desirable improvements in their own operations; this illustrates quality control. Answer: False Explanation: Competitive product analysis is a process by which a company analyzes a competitor's products to identify desirable improvements. 31. Value-added analysis might focus on both the elimination of waste and cost minimization. Answer: True Explanation: Value-added analysis refers to the evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers; it often reveals wasteful or unnecessary activities that can be eliminated without jeopardizing customer service. 32. The sales department relies on the engineering department to send samples and quotes to prospective customers on a timely basis; the sales department may be considered the engineering department's internal customer. Answer: True Explanation: Customers are both internal and external. 33. ISO 14000 may result in a recycling program at a company. Answer: True Explanation: ISO 14000 certifies improvements in environmental performance, extending the ISO approach into the arena of environmental protection and hazardous waste management. 34. A value chain includes an entire network of firms, beginning with suppliers and ending when production is complete. Answer: False Explanation: A value chain, also known as a supply chain, includes the flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the operations process until the product reaches the end customer. 35. Because supply chain strategy is based on the collective effort of a number of firms, no one firm in the chain gains a competitive advantage. Answer: False Explanation: Supply chain strategy is based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit. 36. Which term refers to all the activities involved in making products—goods and services—for customers? A) operations B) processes C) planning D) scheduling E) performance Answer: A Explanation: A) "Operations" and "production" refer to the same activities. 37. Which of the following is the ability of a product to satisfy a human want or need? A) utility B) relative advantage C) content D) satisfaction E) capacity Answer: A Explanation: A) Production adds customer value by providing utility. 38. Which type of utility is created when a company makes products available where consumers want them? A) time B) place C) possession D) form E) operations Answer: B Explanation: B) An example of place utility is a theater showing a wide selection of movies in a popular shopping mall. 39. Which term refers to a set of methods and technologies used to produce a good or service? A) contingency plan B) production episode C) reduction D) methods plan E) operations process Answer: E Explanation: E) Banks use document shredding and data encryption to protect confidential information. Both are examples of operations processes. 40. In which of the following is the customer part of the system during service delivery? A) a high-contact system B) a low-contact system C) a customer system D) a quality system E) a utility system Answer: A Explanation: A) A manicure is an example of a high-contact system. 41. What term describes a special ability that production does especially well to outperform the competition? A) supply chain management B) total quality management C) process engineering D) operations capability E) value-added analysis Answer: D Explanation: D) A company chooses an operation capability that is compatible with its overall business strategy. 42. Which of the following is the amount of a product that a company can produce under normal working conditions ? A) capacity B) output C) efficiency D) burden E) performance Answer: A Explanation: A) A firm's capacity depends on how many people it employs and the number and size of its facilities. 43. Equipment and people are grouped according to function in which type of production layout? A) cellular B) same-steps C) custom-products D) supply-chain E) service Answer: C Explanation: C) A custom-products layout is well suited to make-to-order shops. 44. Thousands of empty jugs move down a conveyor belt at Colgate-Palmolive before stopping to be filled and moving on to be labeled. What type of layout is utilized? A) supply-chain B) custom-products C) hybrid D) fixed-position E) same-steps Answer: E Explanation: E) An assembly line is a same-steps layout. 45. Which term refers to how well a product does what it is supposed to do? A) capacity B) consistency C) reliability D) performance E) quality control Answer: D Explanation: D) The performance of a fast-food meal might be judged by whether it tastes good and is reasonably filling. 46. The sameness of product quality from unit to unit is referred to by which term? A) utility B) reliability C) performance D) consistency E) quality control Answer: D Explanation: D) High consistency at its many locations has made Courtyard by Marriott a leader in the lodging industry. 47. Which of the following is a scheduling tool that breaks down large projects into steps to be performed and specifies the time required to perform each one? A) Myers graphic B) critical path chart C) Gantt chart D) process analysis graph E) master schedule Answer: C Explanation: C) A project manager uses a Gantt chart to keep the project moving on schedule. 48. Which type of system is designed for smooth production flow to avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes? A) quality system B) lean system C) managed system D) production system E) flexible system Answer: B Explanation: B) Lean production systems were pioneered by Toyota. 49. Which of the following is NOT a major objective of JIT production? A) increasing stop-and-go production B) reducing goods in process C) complying with schedules D) eliminating disruptions by continuous improvement E) reducing inventory levels Answer: A Explanation: A) JIT production replaces stop-and-go production with smooth movement. 50. Which term refers to the acquisition of the raw materials a company needs to produce its products? A) development B) purchasing C) goods control D) quality control E) wholesaling Answer: B Explanation: B) Most large firms have purchasing departments to buy proper services and materials in the amounts needed. 51. Which of the following refers to the receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods? A) materials handling B) inventory control C) quality control D) wholesaling E) distribution control Answer: B Explanation: B) Inventory control ensures that enough materials inventories are available to meet production schedules, while at the same time avoiding expensive excess inventories. 52. Which of the following terms refers to all activities involved in getting quality products into the marketplace? A) quality control B) quality reliability C) total quality management D) performance quality E) quality overview Answer: C Explanation: C) TQM must consider all aspects of a business, including customers, suppliers, and employees. 53. Which term describes the idea that quality belongs to each person who creates it while performing a job? A) quality control B) quality ownership C) quality circles D) total quality management E) quality improvement teams Answer: B Explanation: B) A goal of total quality management is to motivate employees to accept quality ownership. 54. What name is given to the process by which a company analyzes another company's product to identify desirable improvements in its own product? A) quality reliability analysis B) benchmarking C) performance quality analysis D) competitive product analysis E) quality outsourcing Answer: D Explanation: D) Using competitive analysis, for example, Toshiba might take apart a Xerox copier and test each component. 55. Which of the following is patterned after the successful Japanese concept of quality circles? A) supply chain management B) quality improvement team C) total quality management D) quality ownership E) value-added analysis Answer: B Explanation: B) Quality improvement teams organize their own work, select leaders, and address problems in the workplace. 56. Which term refers to the flow of information, materials, and services from raw-materials suppliers through stages in the operations process until the product reaches the end customer? A) distribution chain B) supply chain C) service channel D) distribution channel E) performance channel Answer: B Explanation: B) The term supply chain refers to the group of companies and stream of activities that work together to create a product. 57. Which of the following is another term for the supply chain? A) the distribution chain B) the distribution network C) the value chain D) the supply network E) the wholesale network Answer: C Explanation: C) Each stage in the value chain adds value for the final customer. 58. Which term refers to the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services? A) outsourcing B) reengineering C) controlling D) scheduling E) warehousing Answer: A Explanation: A) The decision to outsource expands supply chains. 59. When a company turns out costumes in time for Halloween, it creates which type of utility? A) ownership B) time C) form D) place E) value Answer: B Explanation: B) Time utility is created when products are made available when customers want them. 60. When a company makes products available where they are convenient for consumers, it creates which type of utility? A) time B) form C) place D) possession E) leisure Answer: C Explanation: C) A fast-food restaurant located in a college union is an example of place utility. 61. In a business, whose job is it to draw up plans to transform resources into products and bring together basic resources, such as knowledge, physical materials, equipment, and labor? A) CEO B) operations manager C) quality manager D) floor foreman E) supply manager Answer: B Explanation: B) Operations managers are responsible for ensuring that operations processes create value and provide benefits to customers. 62. Which term describes services which cannot be produced ahead of time? A) transformed B) low-contact C) unstorable D) intangible E) consistent Answer: C Explanation: C) Unstorable services cannot be used at a later time. 63. Which of the following would be considered a low-contact service? A) surgery B) haircut C) massage D) electric power E) piano lesson Answer: D Explanation: D) All of the other choices are considered high-contact services in which the consumer must be present during the service transaction. 64. The check-processing operations at your bank would be considered to be which type of system? A) high-contact B) low-contact C) conversion D) synthetic E) performance Answer: B Explanation: B) Check-processing operations can be completed without the consumer being present. 65. Which of the following would be considered a high-contact system? A) gas company B) electric company C) lawn care company D) barber shop E) postal delivery Answer: D Explanation: D) A barber's services require that the consumer be present during the service transaction. 66. Save-A-Lot grocery stores use which type of strategy for attracting customers? A) flexibility B) quality C) low-cost D) dependability E) consistency Answer: C Explanation: C) Save-A-Lot offers items at savings up to 40 percent less than conventional food chains. 67. 3M uses which strategy for attracting customers? A) quality B) low-cost C) dependability D) flexibility E) consistency Answer: D Explanation: D) The flexibility strategy at 3M emphasizes new product development. 68. Machine, woodworking, and dry cleaning shops typically use which type of layout? A) product B) custom-products C) same-steps D) hybrid E) make-to-stock Answer: B Explanation: B) In a custom-products layout, machines and people are grouped by function in the production facility; custom-products layouts allow for greater flexibility and are well suited to make-to-order shops. 69. Which type of layout is designed to move resources through a smooth, fixed sequence of steps? A) same-steps B) location C) custom-products D) quality E) make-to-order Answer: A Explanation: A) A same-steps layout is set up to make one type of product in a fixed sequence and is arranged according to its production requirements. 70. Automobile, food-processing, and television assembly plants use which type of layout? A) make-to-order B) location C) custom-products D) quality E) same-steps Answer: E Explanation: E) These production processes require a fixed sequence that is arranged according to production requirements. 71. Which term is defined as the combination of "characteristics of a product or service that bear on its ability to satisfy stated or implied needs"? A) quality B) production C) quantity D) clarification E) capacity Answer: A Explanation: A) Such characteristics can include a reasonable price. 72. Performance refers to which of the following? A) the principle that quality belongs to each person who creates it while performing a job B) the consistency of product quality from unit to unit C) how well the product does what it is supposed to do D) the process by which a company analyzes a competitor's products to identify desirable improvement E) providing value by making products available when customers want them Answer: C Explanation: C) Planning for quality begins when products are being designed. Early in the process, goals are established for both performance and consistency. 73. Consistency refers to which of the following? A) the principle that quality belongs to each person who creates it while performing a job B) the sameness of product quality from unit to unit C) the sum of all activities involved in getting high-quality products into the marketplace D) the process by which a company analyzes a competitor's products to identify desirable improvements E) providing value by making products available where customers want them Answer: B Explanation: B) This consistency is achieved by controlling for consistent raw materials, encouraging conscientious work, and maintaining equipment. 74. Managers can work to reduce waste, inefficiency, and poor performance by examining procedures on a step-by-step basis. Which term describes this process? A) advance planning B) materials management C) methods improvement D) quality planning E) quality ownership Answer: C Explanation: C) A process flowchart is sometimes used to assist in methods improvement. 75. Logan Aluminum makes coils of aluminum that it supplies to customer companies that use it to make beverage cans. Logan uses a schedule that specifies how many tons of each type of coil will be produced each week. What is this schedule called? A) master production schedule B) detailed schedule C) Gantt chart D) staff schedule E) PERT chart Answer: A Explanation: A) The master production schedule shows which products will be produced, and when, in upcoming time periods. 76. In operations control, production managers monitor production performance by which method? A) comparing results with detailed plans and schedules B) checking on each worker on the production floor C) observing activities from a platform above the workers D) constantly talking with employees involved E) performing spot checks of worker performance Answer: A Explanation: A) If schedules or quality standards aren't met, managers can take corrective action. 77. Which of the following is NOT one of the areas of materials management? A) transportation B) warehousing C) purchasing D) supplier selection E) customer service Answer: E Explanation: E) Materials management includes supplier selection, purchasing, transportation, warehousing, and inventory control. 78. What is the name for a production system in which all the needed materials and parts arrive at the precise moment they are required for each production stage? A) quality control system B) process control system C) just-in-time production D) standardized production E) custom-products production Answer: C Explanation: C) JIT production brings together all needed materials at the precise moment they are required for each production stage, not before, creating efficient responses to customer orders. 79. Which of the following is greatly reduced in a just-in-time production system? A) number of workers needed on the line B) number of goods in process C) number of shifts necessary at the plant D) number of separate operations on the assembly line E) number of forepersons needed at the plant Answer: B Explanation: B) As a result, JIT production minimizes inventory costs and saves money by replacing stop-and-go production with smooth movement. 80. Which of the following is a component of materials management? A) promotion B) distribution C) marketing D) warehousing E) sales Answer: D Explanation: D) Materials management includes supplier selection, purchasing, transportation, warehousing, and inventory control. 81. Which of the following best describes total quality management? A) the principle that quality belongs to each person who creates it while performing a job B) the consistency of a product's quality from unit to unit C) the sum of all activities involved in getting high-quality products into the marketplace D) the process by which a company analyzes a competitor's products to identify desirable improvements E) a certification program attesting that an operations process has met rigorous requirements Answer: C Explanation: C) TQM begins with leadership and a desire for continuously improving both processes and products; it must consider all aspects of a business, including customers, suppliers, and employees. 82. Which of the following best describes quality ownership? A) an emphasis on intangible factors in customer satisfaction B) the consistency of a product's quality from unit to unit C) the sum of all activities involved in getting high-quality products into the marketplace D) the process by which a company analyzes a competitor's products to identify desirable improvements E) the principle that quality belongs to each person who creates it while performing a job Answer: E Explanation: E) Quality-focused leaders use various methods to foster a quality focus among the workforce; when these efforts succeed, employees will ultimately accept quality ownership. 83. Which of the following best describes competitive product analysis? A) the principle that quality belongs to each person who creates it while performing a job B) the consistency of a product's quality from unit to unit C) the process by which a company analyzes a different company's products to identify desirable improvements D) the sum of all activities involved in getting a high-quality product into the marketplace. E) examining a product to improve its form utility Answer: C Explanation: C) This analysis helps managers decide which product features are satisfactory, which features should be upgraded, and which operations processes need improvement, for example. 84. When a worker at Toshiba takes apart a Xerox copier and tests each component, it is engaging in what activity? A) competitive product analysis B) benchmarking C) total quality management D) quality reliability analysis E) value-added analysis Answer: A Explanation: A) Competitive product analysis is the process by which a company analyzes a competitor's products to identify desirable improvements. 85. Which of the following best describes value-added analysis? A) a TQM tool in which groups of employees work together to improve quality B) the process of evaluating all work activities, materials flows, and paperwork to determine the value that they create for customers C) the process by which a company implements the best practices from its own past performance and those of other companies to improve its own products D) the process by which a company analyzes a product to identify possible improvements E) a total company commitment to quality management at every stage of the process Answer: B Explanation: B) Value-added analysis often reveals wasteful or unnecessary activities that can be eliminated without jeopardizing customer service. 86. Tootsie Roll Industry's corporate principle, "We run a trim operation and continually strive to eliminate waste, minimize costs, and implement performance improvements," is an example of which of the following? A) just-in-time production B) benchmarking C) a quality circle D) competitive product analysis E) value-added analysis Answer: E Explanation: E) Tootsie Roll Industry evaluates all work activities, material flows, and paperwork to determine the value that they add for customers. 87. Which term refers to collaborative groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems? A) quality improvement teams B) quality assurance teams C) quality control teams D) TQM teams E) quality review teams Answer: A Explanation: A) Quality improvement teams organize their own work, select leaders, and address problems in the workplace. 88. Which of the following best describes ISO 9000? A) the concept that all employees are valuable contributors to a firm's business, and should be entrusted with decisions regarding their work B) the redesigning of business processes to improve performance, quality, and productivity C) a program certifying that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization D) a certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance E) the process of evaluating all work activities to determine the value they add for customers Answer: C Explanation: C) ISO 9000 certifies that a factory, laboratory, or office has met the quality management standards of ISO; these standards are now regarded as a national standard for more than 160 countries. 89. Which program certifies improvements in environmental performance? A) ISO 9000 B) ISO 9000:2000 C) ISO 14000 D) TQM 2001 E) TQM 2012 Answer: C Explanation: C) Extending the ISO approach into the arena of environmental protection and hazardous waste management, ISO 14000 requires a firm to develop an environmental management system. 90. Which of the following best describes ISO 14000? A) the concept that all employees are valuable contributors to a firm's business and should be entrusted with decisions regarding their work B) a certification program attesting to the fact that a factory, laboratory, or office has improved environmental performance C) a certification program attesting to the fact that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization D) a standardized method of evaluating a company's greenhouse gas emissions E) a certification program attesting to the fact that a factory, laboratory, or office is operating under free-trade principles Answer: B Explanation: B) ISO 14000 requires a firm to develop an environmental management system, documenting how the company has acted to improve its performance in using resources and in managing pollution. 91. Receiving and storing materials, billing patients for treatment, and filling customer orders from Internet sales are examples of which activity? A) function B) technique C) process D) benchmark E) quality ownership Answer: C Explanation: C) Every business consists of processes, which are activities that are performed regularly and routinely in conducting business. 92. Which term refers to the fundamental rethinking and radical redesign of a business activity to achieve dramatic improvements in performance? A) supply chain management B) business process reengineering C) total quality management D) quality ownership E) quality control Answer: B Explanation: B) Rethinking the production steps by starting from scratch has allowed dramatic improvements in cost, quality, service, and speed. 93. Which of the following best describes business process reengineering? A) the redesigning of business activities to improve performance, quality, and productivity B) a program certifying that a factory, laboratory, or office has met the quality management standards of the International Organization for Standardization C) the principle of looking at the supply chain as a whole in order to improve the overall flow through the system D) a program certifying that a factory, laboratory, or office has developed pollution-control standards E) the process by which a company analyzes a different company's products to identify desirable improvements Answer: A Explanation: A) Business process reengineering focuses on improving a business process, rethinking each of its steps from start to finish. 94. Which of the following best describes supply chain management? A) the principle of improving the supply chain by focusing on the slowest step in the chain B) a limitation on the number of suppliers allowed to supply a particular company C) complete movement of raw materials throughout a manufacturing or service facility D) a cost-reduction program in which wholesalers and retailers are eliminated in an effort to entice consumers to purchase directly from manufacturers E) the principle of looking at the supply chain as a whole in order to improve the overall flow through the system Answer: E Explanation: E) In addition, because customers ultimately get better value, supply chain management gains competitive advantage for each supply chain member. 95. When Dell Inc. shares information to improve the overall flow through a system composed of companies working together, it is engaging in which of the following? A) distribution chain management B) total quality management C) supply chain management D) service channel analysis E) supplier selection analysis Answer: C Explanation: C) Michael Dell's vision involves the concept of improving performance by sharing information among supply chain members; long-term production plans and up-to-the-minute sales data are available to suppliers via the Internet. 96. When Ford assembles parts into a Ford Explorer, it creates which type of utility? A) time B) form C) possession D) place E) ownership Answer: B Explanation: B) Form utility is created when raw materials are converted into finished products. 97. Which operations competence has Toyota given greatest credit for winning orders in the marketplace? A) quality B) low cost C) flexibility D) dependability E) exclusivity Answer: A Explanation: A) Toyota has focused on creating reliable cars with an appealing fit and finish, and assuring that customer expectations are met or exceeded in order to build the company's quality competence. 98. Which operations competence has FedEx given greatest credit for winning orders (business) in the marketplace? A) quality B) low cost C) flexibility D) dependability E) accessibility Answer: D Explanation: D) FedEx wants to assure that every delivery is fast and on time, as promised. 99. Examining step-by-step procedures to reduce inefficiency most centrally involves which approach? A) operations scheduling B) performance analysis C) value-added analysis D) methods improvement E) quality ownership Answer: D Explanation: D) Methods improvement has been used to streamline the traditional checkout method at hotels. 100. Which scheduling tool shows the necessary sequence of activities in a project and identifies the critical path? A) Gantt chart B) process flowchart C) detailed schedule D) master production schedule E) PERT chart Answer: E Explanation: E) The critical path is the most time-consuming set of activities in a project. 101. When Hewlett-Packard simplified its contracts and reduced them from 20 pages to as few as 2, it was engaging in which activity? A) value-added analysis B) benchmarking C) getting closer to the customer D) supply chain management E) follow-up Answer: A Explanation: A) Value-added analysis refers to the evaluation of all work activities, materials flows, and paperwork to determine the value that they add for customers. 102. Define the term production or operations. Answer: The term operations (or production) refers to all the activities involved in making products—goods and services—for customers. Explanation: A key difference between goods and services operations is the customer's involvement in the latter. 103. What is an operations capability? Answer: Operations capability refers to the activity or process that production does especially well. Each company's operations capability matches up with its business strategy so that the firm's activities, from top to bottom, are focused in a particular direction. Explanation: For example, the operations capability of FedEx is dependability. 104. Explain competitive product analysis. Answer: Competitive product analysis is a process by which a company analyzes a competitor's products to identify desirable improvements in its own products. Explanation: For example, a small business owner might study a competitor's Web site to find ways to improve her own site. 105. Differentiate between goods production and service operations. Answer: Goods production involves tangible products, such as radios, newspapers, buses, and textbooks. Through service operations, firms produce tangible and intangible service products such as entertainment, transportation, and education. Explanation: General Electric is a company that produces goods and provides services. 106. Differentiate between high- and low-contact processes. Give an example of each. Answer: Processes may be classified according to the extent of customer contact as either high- or low-contact processes. In a high-contact process, the customer must be a part of the system. Examples of high-contact processes include public transportation, medical services, and most legal services. With a low-contact process, customers need not be a part of the system to receive the service. Examples include check-processing operations at the bank and lawn-care services. Explanation: The manager of a high-contact process must be more concerned with the customer experience. 107. What is a Gantt chart? Answer: A Gantt chart is a production schedule that breaks down large projects into steps to be performed and specifies the time required to perform each step. Explanation: The project manager checks the progress against the time scale and may need to add workers if the project falls behind schedule. 108. What is quality ownership? Answer: Quality ownership is the principle of total quality management that holds that quality belongs to each person who creates it while performing a job. Explanation: A goal of total quality management is motivating employees to accept quality ownership. 109. Explain what is meant by the term utility. What type of utility is created when a pharmacy changes its evening schedule to remain open for an extra hour? Answer: Utility is a product's ability to satisfy a human want or need. The pharmacy creates time utility by being open at a convenient time for customers. Explanation: The three types of utility are form utility, place utility, and time utility. 110. Why does each company's operations capability match up with its business strategy? Answer: Each company's operations capability matches up with its business strategy so that the firm's activities , from top to bottom, are focused in a particular direction. Aligning operations capability with business strategy helps to improve profitability. Explanation: For example, FedEx focuses on dependability which has made it a leader with business customers. 111. Describe two alternatives for production facility layouts. Answer: In a custom-products layout, equipment and people are grouped according to function; in a same-steps layout, equipment and people are set up to produce one type of product in a fixed sequence of steps and are arranged according to production requirements. Explanation: A custom-products layout is well suited for make-to-order shops while a same-steps layout is efficient for make-to-stock operations. 112. Explain how JIT production and lean manufacturing are related. Answer: Lean manufacturing is designed for smooth production flows that avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes. Just-in-time (JIT) production, a type of lean system, brings together all needed materials at the precise moment they are required for each production stage. Explanation: With JIT production, disruptions are more visible and are resolved more quickly. 113. In a TQM environment, what are some steps that companies use to emphasize the importance of quality? Answer: To ensure high-quality goods and services, many firms assign responsibility for some aspects of TQM to specific departments or positions. More broadly, leaders of the quality movement use various methods and resources to foster a quality focus—training, verbal encouragement, teamwork, and tying compensation to work quality. Explanation: Total quality management (TQM) includes all the activities necessary for getting high-quality goods and services into the marketplace. 114. What is a supply chain? How can supply chain management create competitive advantage? Answer: A supply chain is the flow of information, materials, and services that starts with raw materials suppliers and continues through other steps in the operations process until the product reaches the end consumer. Supply chain management creates better value for the customer to produce a competitive advantage for the members of the chain. Explanation: Dell, Inc. has used an innovative supply chain strategy to help lower prices and speed delivery of its PCs. 115. How does outsourcing affect global supply chain management? Answer: Outsourcing is the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services. Arrangements for cross-border materials flows require compliance with each country's commerce regulations. Production and global transportation scheduling are coordinated with U.S. market demand so that outsourced products arrive in the correct amount and on time without harming the manufacturer's image. Explanation: Outsourcing has been a growing trend in American business. Outsourcers have a greater need of operations skills for integration among dispersed facilities. 116. Explain time, place, and form utility. Answer: Time utility is created when a company makes products available when consumers want them. Examples may include seasonal items such as Christmas ornaments, bathing suits, and mosquito repellent. Place utility is created when a company makes a product's location convenient for consumers. An example is the placement of routinely purchased items in convenience stores or conveniently located discount stores. Form utility is created when a company combines materials to create products. Explanation: A business adds customer value by providing utility. 117. The text says that Toyota has focused on quality as its operations capability. Explain how Toyota's operations might have changed if it had focused on low cost instead of quality. Answer: A cost-minimization focus would have been appropriate in this case, giving Toyota's operations an altogether different form. Possible changes include more outsourcing of production, reduced advertising, fewer models, and fewer accessories on the cars. Explanation: Operations capability is the particular ability that production does especially well to outperform the competition. 118. Describe the five most commonly used tools for TQM. Answer: The most commonly used tools for TQM are valued-added analysis, quality improvement teams, getting closer to the customer, the ISO series, and business process reengineering. Value-added analysis refers to the evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers. Quality improvement teams are groups of employees from various work areas who meet regularly to define, analyze, and solve common production problems. Getting closer to the customer involves taking steps to know what customers want in the products they consume. The ISO series pertains to a series of certifications attesting that a factory, laboratory, or office adheres to rigorous quality management requirements set by the International Organization for Standardization. Business process reengineering focuses on improving a business process—rethinking each of the process's steps by starting from scratch; the process yields improvements as measured by cost, quality, speed, and service. Explanation: TQM begins with leadership and a desire for continuously improving both processes and products. It must consider all aspects of a business, including customers, suppliers, and employees. 119. How are General Motors and Chrysler responding to current economic conditions? Answer: Both companies have adopted leaner operations to simplify production. Explanation: In a slow economy, businesses maintain profitability through cutting costs and improving efficiency. 120. How have General Motors and Chrysler implemented leaner operations? Answer: A smaller number of makes, models, and options simplifies product design, production, and distribution. Explanation: GM, Chrysler, and Ford are adopting business strategies that Japanese producers have used to simplify production and capture a greater market share. 121. What changes can be expected in General Motors and Chrysler's distribution networks as a result of leaner operations? Answer: The companies' distribution networks will be simplified as some brands are eliminated. Fewer brands will reduce the number of auto dealerships and lower distribution costs. Explanation: GM has downsized to four core brands and Chrysler's roster includes only three major brands. 122. Describe how a Gantt chart and a PERT chart are similar, and how they are different. Answer: Both are scheduling tools used in project management, and both break down a project into the steps to be performed and show the time needed for each step. The PERT chart shows the necessary sequence of activities and identifies the critical path, which is the most time-consuming set of activities. Thus the PERT chart provides even more information than the Gantt chart. Explanation: Project managers may need to reassign workers and equipment to speed up late activities and stay on schedule. 123. FedEx and the U.S. Postal Service compete for many of the same customers. How are their strategies for attracting customers different? Answer: FedEx emphasizes dependability and a specific delivery time. The U.S. Postal Service doesn't specify a delivery date for first-class mail, but U.S. mail is less expensive. FedEx tends to focus more on business customers than does the postal service. The postal service is more accessible, with daily deliveries to homes. In general, the postal service pursues a lower-cost strategy. Explanation: With products such as priority mail and express mail, the postal service is increasingly emphasizing dependable delivery. 124. Describe three ways that McDonald's restaurants create time utility for customers. Answer: McDonald's serves its food quickly, according to customer wishes. Many outlets serve breakfast during the morning hours. Drive-through windows allow customers to order without having to park and enter the restaurant. Many outlets are open late to serve customers. Explanation: A business creates time utility when it provides products when consumers want them. 125. Suppose that economists are forecasting a short economic recession followed by strong economic growth. How might a large manufacturing company adjust its capacity planning to respond to this forecast? Answer: The company will probably wish to reduce its capacity in the short run, but retain its ability to increase capacity when the economy strengthens. Company executives may decide to reduce worker hours temporarily instead of laying off workers. They may decide to idle some facilities but keep them available to resume operations when economic growth picks up. Explanation: A firm's capacity depends on how many people it employs and the number and size of its facilities. 126. In recent years, some automakers have increased manufacturing operations in the southeastern United States. Suggest two reasons why they have taken this step. Answer: The cost of living tends to be lower in this area, allowing companies to offer lower wages. There is also less union presence than in most other areas of the country. Some state governments have adopted policies, such as tax breaks, to encourage manufacturing in their states. Explanation: Because location affects production costs and flexibility, sound location planning is crucial for factories, offices, and stores. 127. Outsourcing has led to increasingly global supply chains. Describe three ways that a more global supply chain might be risky for a company that outsources. Answer: While outsourcing has usually been profitable, it has some risks. Global supply chains are more vulnerable to natural disasters, such as the earthquake and tsunami in Japan and flooding in Thailand. Political unrest in other countries is also a risk. Some countries have nationalized businesses without warning to the companies. It is possible that U.S. lawmakers could impose laws discouraging outsourcing. Criminal activities and even war could also disrupt supply chains. Explanation: Outsourcing expands supply chains and increases their complexity. Alan Jackson is the founder and owner of Sky Scooters, a small manufacturing company located in San Jose, California. For years, Alan toyed with ideas for a motorized scooter. Seeing the success of the Segway scooter, Alan decided to act. Although his design, the Sky Cruiser, is not as well-known as the Segway, it incorporates many of the same benefits. Adding to its appeal, the Sky Cruiser sells for almost $1,000 less than the Segway. Virtually all Sky Cruisers are sold through direct appeals on the QVC shopping network. Overwhelmed by recent demand, Alan has hired his sister, Colette. Colette, a recent business school graduate, has suggested that Alan consider a just-in-time production system. Alan wonders if this would be in his best interest. 128. Would a make-to-stock or make-to-order operations process be most efficient for the production of Sky Cruisers? Explain. Answer: A make-to-stock operation would allow Sky Scooters to produce scooters with least expense and make them available for immediate shipment. Explanation: Make-to-order operations are generally more time-consuming and more expensive. 129. What advantages could Sky Scooters expect from switching to a just-in-time production system? Answer: Just-in-time systems save money by reducing inventories and replacing stop-and-go production with smooth movement, making disruptions more visible. Finding and eliminating disruptions by continuous improvement of production is a major objective of JIT. Explanation: Just-in-time production is an example of a lean production system. 130. Are there any potential negative consequences of switching to a just-in-time production system? Explain. Answer: JIT production could have negative consequences if not well planned. Since the required materials arrive just as they are needed, poor planning could shut down the whole production line. Similarly, failure by any of the members of the supply chain could erase the benefit of the JIT strategy. Alan should carefully plan the implementation of a JIT production system. Explanation: JIT production reduces costs when implemented properly, but it requires more oversight than a traditional production system. 131. Given the price of the Sky Cruiser, what is a reasonable goal for product quality? Answer: The Sky Cruiser is priced about $1,000 less than its competitor, Segway. The Sky Cruiser should be safe and perform efficiently, but it need not exceed the performance of Segway. A reasonable goal is to perform close to the Segway standard. The Sky Cruiser will probably have few "extras" and its appearance will likely be functional rather than sleek. Explanation: Offering a lower-cost product is one strategy that Sky Scooters will use to attract customers. 132. What are three possible changes that Alan Jackson can make in his company to emphasize quality improvement? Answer: Possible approaches include forming a quality management team, encouraging quality ownership, adopting total quality management, and creating a team to receive and review input from customers and potential customers. Alan Jackson can implement regular employee training, establish a quality management system, and gather continuous customer feedback to emphasize quality improvement. Explanation: In addition to controlling quality, businesses seek to build quality into goods and services. 133. If a JIT production system is implemented at Sky Scooters, how might the firm's supply chain strategy be affected? Answer: Alan and Colette must coordinate Sky Scooters' activities with a network of other firms. They will need to regard these firms as members of a coordinated supply system. A JIT production system will be challenging since timing will be of utmost importance. Sky Scooters will need to communicate quickly and effectively with its partners and may need the latest technologies in order to implement the more challenging JIT system. Explanation: Supply chain strategy is based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit. Although each company looks out for its own interests, it works closely with suppliers and customers throughout the chain. EZTrade is a retail organization that owns specialty stores for a diverse range of product categories, ranging from home furnishings and sporting goods to books and gourmet foods. With more than 50 stores, the firm is now considering entering the very lucrative low-cost market by launching Clothe–a chain of retail stores that offers affordable fashion for men, women, and children. 134. Which of the following, if true, would strengthen the argument for being a low-cost player? A) Customers who believe that they need high levels of customer service are more likely to choose a niche retailer. B) An expected upturn in the economy will increase consumer purchasing power. C) Being the low-cost player requires a company to examine every aspect of its supply chain in order to identify opportunities to improve efficiency. D) EZTrade has a longer history selling clothes for men and women than it has selling clothes for children. E) The retailer's logistics operations are more efficient than the industry norm. Answer: E Explanation: E) Competing on price isn't easy. Not every organization can do it. However, organizations that are already efficient are better suited to try to win as a low-cost player. So Choice E strengthens the argument. Choices A, B, and C weaken the argument by suggesting problems with the low-cost approach. Choice D: The length of activity in different product lines doesn't help resolve the question of whether low-cost is the way to go. Stardust 'n' Clay is a manufacturer and mass marketer of personal care products and nutritional supplements. The company plans to launch a line of organic beauty products that are made entirely from mineral pigments and organic plant extracts. These products, though expensive to process, offer much higher margins than the company's current lines of beauty products. The market for organic beauty products is relatively untapped, with just a handful of players. 135. Which of the following, if true, would strengthen the case for Stardust 'n' Clay to begin developing organic beauty products? A) Retailers report a consumer preference for inexpensive skin-care and beauty products that do a better job than the ones currently available. B) Organic raw materials sourced from economically weak countries provide a source of livelihood for the local population. C) Organic raw materials for such products can be sourced from developing countries at a lower cost. D) The first mover in this industry is witnessing reasonable growth. E) A growing number of women 18-34 consider the health impact of chemicals found in a beauty product when making a cosmetics purchase decision. Answer: E Explanation: E) Stardust 'n' Clay sees many potential advantages in marketing organic beauty products. Are there enough people interested in the product to make the higher production costs worthwhile? Choice E suggests there are, indicating that young women—who comprise a large cosmetics market—care about the chemicals in their beauty products. Choice A does not say much about organic products. Also, organic products are expensive to manufacture and offer higher margins. In other words, they are more expensive than nonorganic beauty products. Choice B explains how a new Stardust 'n' Clay line of organic beauty products might benefit people in economically weak countries, but it tells us nothing about whether the line would benefit Stardust 'n' Clay. Choice C provides general information about raw material sourcing for the proposed line. This is not an absolute advantage for Stardust 'n' Clay, as the same conditions apply to competitors. Choice D only tells us that the first mover in the market has seen "reasonable growth." This first mover might very well be a small niche marketer. Stardust 'n' Clay is a mass marketer, so "reasonable growth" to a smaller company may be insignificant to Stardust 'n' Clay. 136. Which of the following, if true, would weaken the argument for developing organic beauty products? A) Few companies have obtained patents for their organic product innovations. B) Competitors in this segment are quick to copy any new product innovation and mimic product design. C) Organic offerings have a shorter shelf-life compared to synthetic products. D) Customers need to be educated about the relative benefits offered by organic products. E) Financial analysis shows that it would take the company 1.5 years to recover its initial investment. Answer: B Explanation: B) If Stardust doubts whether it can achieve and maintain a competitive advantage in the organic beauty products market, then the company is unlikely to pursue the proposed line. Choice B points to a lack of sustainable competitive advantage, as competitors can be expected to quickly copy Stardust's product and promotions. Choice B weakens the argument. Choice A is a nonissue, as Stardust could use different processes and come up with different products. Choice C doesn't necessarily weaken the argument, as a shorter shelf-life suggests that consumers would need to repurchase the cosmetics more frequently. Choice D indicates a need for increased customer awareness, a promotional challenge that would be true for many innovative products. Alone, this isn't enough. Choice E tells us how long it would take the company to recover its investment, but without a frame of reference we don't know if this strengthens or weakens the argument. If it usually takes two or more years to recover an investment, then this strengthens the argument for developing an organic line. Toys for Pops is a small business that focuses on indoor and outdoor games intended for an adult male clientele. It stocks a range of fantasy action figures and models, low-impact athletic accessories such as Frisbees and croquet sets, and a wide range of video games. The business has grown to the point that a larger location is needed. Recently, a location has come up for rent at a nearby strip mall at a favorable rate. The facility would provide the business with much needed shelf space and more room for employees behind the counter. However, the strip mall is in an area that has also seen a rapid increase in petty crime. The CEO feels that the advantages of the new location support the decision to relocate. 137. Which of the following, if true, would weaken the CEO's position? A) The iffy reputation of the area in which the strip mall is located would make the business's current employees uneasy about their safety at work, which would lead to increased turnover in staff. B) The lower cost of living in the new neighborhood would make it easier to hire employees willing to accept lower salaries. C) Video games sales, after several years of increases, have reached a plateau and are unlikely to show further growth in the next few years. D) The strip mall has no other current vacancies. E) The current staff has been stable for several years and is well versed in details of video games and other specialty items. Answer: A Explanation: A) Two of the key human resource management responsibilities of a small business are maintaining morale and protecting employees' physical conditions. When these issues are neglected, turnover increases, leading to the need to hire and train new staff more often than necessary. Hence Choice A weakens the CEO's position. Conversely, Choice B might strengthen the decision, by showing that labor costs can be controlled through the move. Choice C might be a consideration if the business sold only video games, but in fact this is just one product line the firm handles. Choice D, if anything, strengthens the CEO's position by suggesting that the strip mall is being effectively managed by its owners. Choice E deals with a strength of the company in its existing location, but does not address the wisdom of the move. 138. Which of the following, if true, might justify the relocation as a prudent move from the human resource point of view? A) Developing a Facebook page made the business known to a large group of potential customers living in a much wider regional area. B) Federal crime reports show that the greater metro area has seen an increase in car thefts. C) The new location is located near a major freeway interchange. D) Fantasy action figures are often remaindered for below wholesale cost because their popularity is short-lived. E) Anonymous notes in the firm's suggestion box repeatedly cited cramped conditions and lack of privacy as the most annoying factors in working conditions at the present site. Answer: E Explanation: E) While the potential for crime is troublesome, employees might consider the trade-off acceptable if the move results in a significant improvement in working conditions. So Choice E is the strongest argument in favor of the move. Choice A doesn't address the human resource impact of relocating to a marginal neighborhood. Choices B and D have no relevance to the proposed move. Choice C might support the move by suggesting that the location would be an easier commute for employees, but it's also possible that the interchange area would be a traffic bottleneck. Clean Sweep Corporation is a consumer goods company manufacturing home-care cleaning products. Sales of Sparkle, its flagship disinfectant, and some of its other cleaning products have been sluggish during the last two quarters. Of late, retailers have also shown a lack of confidence in these product lines. The management is looking at different ways to improve the efficiency of its entire supply chain. Some senior executives believe that the company should shift to a just-in-time logistics system. However, this opinion does not have unanimous support. 139. Which of the following, if true, would weaken the argument for the shift to a just-in-time logistics system? A) Carrying too much inventory results in higher-than-necessary inventory-carrying costs. B) Under the new system, the company would have inventory sufficient for fewer days of operations. C) Clean Sweep's most important suppliers prefer a flexible supply schedule. D) Implementing the system would require an extensive overhaul of the existing supply chain. E) Demand for Clean Sweep's products is stable and predictable. Answer: D Explanation: D) Choice D weakens the argument since the benefits of a just-in-time system could be outweighed by the costs of re-engineering the entire supply chain. Choice A: A just-in-time system is designed to lower inventory-carrying costs, so Choice A would strengthen the argument. Choice B describes the system accurately but provides no reason not to adopt it. Choice C would strengthen the argument by suggesting that the transition could be easy. Choice E strengthens the argument by suggesting that it will be possible to operate with lower inventory levels. 140. Which of the following, if true, would strengthen the argument for the shift to a just-in-time inventory system? A) Clean Sweep's storage and handling costs are significant. B) Clean Sweep's suppliers have not adopted just-in-time systems. C) The current system requires higher inventory levels during the summer as compared to the winter. D) Demand for Sparkle varies depending on the promotional strategies of Clean Sweep's retail partners. E) Sparkle comes in many varieties, none of which is more popular than the leading brand. Answer: A Explanation: A) Just-in-time logistics systems can reduce handling and storage costs, which is an advantage when those costs are significant, Choice A. Choice B, if anything, weakens the argument, as the system might be even more effective if others in the supply chain used similar systems. Choice C does not point out a flaw in the current system, as it is reasonable that people would use more cleaning products in warmer weather. Choice D suggests that demand is hard to predict, which would weaken the argument. Choice E: Sparkle's position in the market does not tell which inventory system makes the most sense. 141. Which of the following questions is LEAST relevant to the issue of whether the company should switch to a just-in-time logistics system? A) Is demand for Clean Sweep's products predictable? B) Can suppliers assure fast, frequent, and flexible delivery? C) Is technology available to manage the logistics? D) Do end users currently favor making the transition? E) Does Clean Sweep have access to accurate information about customer demand? Answer: D Explanation: D) All the choices speak to requirement for a just-in-time system except Choice D. A successful just-in-time system would be invisible to most customers. They would simply have access to the product when they wanted it. Also, customers who buy cleaning supplies would not have an informed opinion of the company's supply chain operation, so their initial opinion is not crucial here. 142. A senior executive claims that a move to a "just-in-time" logistics system would be a mistake because even if the system is effective at reducing inventory and handling costs, the change would not be noticed by customers. The executive claims that the change should be rejected as it runs counter to Clean Sweep's goal of being "customer-focused." Which of the following is the best criticism of the senior executive's position? A) It does not prove that focusing on the customer helps an organization become successful. B) It does not suggest an improvement to Clean Sweep's current system. C) It fails to recognize that having a more efficient supply chain will allow Clean Sweep to offer more value to its customers. D) It does not establish that the costs of switching to the new system would outweigh any cost-reduction benefits the system might provide. E) It does not describe the inventory systems used by Clean Sweep's competitors. Answer: C Explanation: C) The senior executive is basically saying that any change would have to be noticed by customers in order for the change to be a good one. But that doesn't make sense. All other things being equal, saving money in production and distribution is a good thing, even if the customers don't notice the changes. Besides, as Choice C points out, having lower costs can allow Clean Sweep to offer more value, for example by lowering prices. Choice A: The value of being customer-focused isn't at issue here. The problem is that the senior executive takes it too far in claiming that every good idea must be perceived by the customer. Choices B, D, and E are accurate in that the argument does not do these things, but there is no reason to believe that they are necessary. A software development company is designing an evaluation plan for its software programmers. The company feels that changes are necessary because it lacks the facts it needs to distinguish outstanding software programmers from those that are only average, or worse. Previously, the company paid software programmers a flat salary and based evaluations on supervisors' opinions. Now, however, the company is considering the following measures for its software programmers: Measurement Strategy Alpha: Software programmers will be evaluated based on the total number of lines of code that they produce. Measurement Strategy Beta: Software programmers will be evaluated based on their ability to produce computer code that is free of errors. Measurement Strategy Gamma: Software programmers will be evaluated based on the market success of the products they produce. 143. Which of the following, if true, would weaken the argument that the company should use Measurement Strategy Alpha? A) Software programmers usually have no direct contact with customers and do not determine product specifications. B) The programming languages used by the company require fewer lines of code to perform a function than the programming languages used by other companies. C) Any software programmer can choose to increase the number of lines of code it takes to perform any function. D) An effective software programming team is essential for the financial success of the company. E) Many of the current software programmers would not receive strong evaluations if the company used Measurement Strategy Alpha. Answer: C Explanation: C) Measurement Strategy Alpha rewards software programmers based on the number of lines of code that they produce. But if Choice C is true then the software programmers can artificially inflate the number of lines it takes to do something. They could abuse this approach by taking thousands of lines of code to do simple things. They would seem productive according to Measurement Strategy Alpha, but they really wouldn't be. Choice A is sort of relevant to Measurement Strategy Gamma, not Alpha. Choice B is a reason why Measurement Strategy Alpha couldn't be used to compare programmers from different companies, but these strategies concern the company's employees only. Choice D suggests that getting this right is important but does not tell us whether Alpha will help the company get it right. Choice E would be a problem if we knew that all of the current software programmers are excellent, but the whole point of the measurement plan is that we don't know who is doing a good job. So the fact that Alpha would be bad for some employees doesn't suggest that there is anything wrong with Alpha. 144. A decision to use Measurement Strategy Beta would assume which of the following? A) Software errors are more common than hardware errors. B) Software errors affect all users equally. C) The impact of software errors has been greater recently. D) When a software error occurs, its effects are always clear to the final user of the product. E) When a software error is discovered, it is possible to determine who is responsible for it. Answer: E Explanation: E) Measurement Strategy Beta punishes people for their errors, but if Choice E isn't true, then you can't tell who made the error. Choice E would have to be true in order for Measurement Strategy Beta to work, and so it must be assumed. Choice A: This is about software, not hardware, so nothing about hardware errors need be assumed. Choice B could be true, and probably isn't, but it doesn't need to be true in order for Beta to work. Choices C and D would strengthen the case for Beta if they were true, but they don't need to be true in order for Beta to work. 145. The choice to use only Measurement Strategy Beta would be vulnerable to criticism because it would give the software programmers an incentive to do what? A) make overly optimistic commitments to customer-facing employees at the company B) spend too much time checking their code in order to eliminate any possibility of error C) develop projects that meet programming requirements but not market requirements D) skip the quality assurance checks that reveal the most damaging software errors E) produce more lines of code than is required to perform a given function Answer: B Explanation: B) Avoiding errors is good, but so is finishing on time. If the focus is only on avoiding errors, then the software programmers will spend way too much time avoiding any chance that there is an error in their code somewhere. Choice B describes this issue. Choices A and C are relevant to Gamma. Choice D would be solved by Beta. Choice E is a problem with Alpha. 146. The choice to use only Measurement Strategy Gamma would be vulnerable to criticism in what way? A) Many factors other than software programming are required for market success. B) It sets up a goal that is unattainable. C) It underestimates the effect that good software programming can have on the customer's experience. D) It would require the company to change its current approach to evaluating software programmers. E) It fails to establish a goal that requires any significant effort to achieve. Answer: A Explanation: A) It makes sense if the programmers are rewarded when the products do well, but if they are evaluated solely on that measure, then the results might wind up being arbitrary. As Choice A points out, even if the programmers do their job well, many things need to happen before the product becomes a success. One principle of motivation is that if you are going to reward people when a goal is achieved, then those people should be able to make that goal happen. Measurement Strategy Gamma ignores this and is vulnerable to the criticism in Choice A. Choices B and E: There is no reason to believe that market success is impossible (Choice B) or too easy (Choice E). Choice C has it backwards. If anything, Gamma overestimates the influence of software programming. Choice D is accurate but is not a problem. The whole point is to change the system. 147. Which of the following would be most similar to a decision to use Measurement Strategy Alpha and Measurement Strategy Beta together? A) Axiom evaluates its sales staff on the number of sales they make and the size of those sales. B) Personal Devices rewards its brand managers more heavily for sales of new products than for sales of previously existing products. C) Stardust 'n' Clay rewards production line workers based on meeting production quotas and avoiding product defects. D) Oak Meteors customer service agents are evaluated based on the quantity of calls they answer and the number of follow-up purchases that those callers make. E) Spa World valet parkers get a yearly bonus based on overall customer performance and supplement their income with tips from customers. Answer: C Explanation: C) Alpha rewards based on output, and Beta rewards based on avoiding errors. Choice C matches this by rewarding based on quantity and avoiding defects. None of the other choices has these components. 148. Management has decided to combine all three Measurement Strategies in order to give the software programmers incentives that match the company's goals. If the products meet their Gamma goals, software programmers who have met either their Alpha goals or their Beta goals will be rewarded, but if the products fail to meet their Gamma goals, software programmers will not be rewarded unless they have met both their Alpha goals and their Beta goals. Under this system, which of the following CANNOT be true? A) A software programmer who has met his or her Alpha goals is not rewarded. B) A software programmer who has not met his or her Beta goals is rewarded. C) A software programmer who has met neither his or her Alpha goals nor his or her Beta goals is not rewarded. D) The company meets its Gamma goals, and a software programmer who meets his or her Alpha goals is not rewarded. E) The company does not meet its Gamma goals, and a software programmer who meets his or her Beta goals is not rewarded. Answer: D Explanation: D) If the company hits its Gamma goals, then the software programmers need to hit just one of Alpha and Beta in order to be rewarded. So Choice D is impossible. Choice A could be true if this person did not meet his or her Alpha goals and the company did not meet its Gamma goals. Choice B could be true if this person met his or her Alpha goals and the company met its Gamma goals. Choice C: Those who fail both goals aren't guaranteed a reward. Choice E could be true if the person did not meet his or her Alpha goals. Test Bank for Business Essentials US Edition Ronald J. Ebert, Ricky W. Griffin 9780133034028, 9780273766599, 9780136070764