DeVry GSCM 520 Final Exam

DeVry GSCM 520 Final Exam
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Final Exam

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Page 1

Question 1. 1. (TCOs 1 and 2) A major competitive dimension that forms a
company’s strategic operational competitive position in their strategic
planning is which of the following?
(Points : 4)
Cost or price
Focus
Automation
Straddling
Activity-system mapping

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Question 2. 2. (TCO 1) One of the package of features that make up a service
is
(Points : 4)
appearance.
facilitating goods.
packaging.
cost.
implied use.

Question 3. 3. (TCO 5) You are using an exponential smoothing model for
forecasting. The running sum of the forecast error statistics (RSFE) are
calculated each time a forecast is generated. You find the last RSFE to be 34.
Originally, the forecasting model used was selected because its relatively low
MAD of 0.4. To determine when it is time to reevaluate the usefulness of the
exponential smoothing model, you compute tracking signals. Which of the
following is the resulting tracking signal? (Points : 4)
85
60
13.6
12.9
8

Question 4. 4. (TCO 5) The way to build in greater flexibility in your workers is
to do which of the following? (Points : 4)
Pay higher wages to motivate a willingness to do a variety to tasks.
Provide a broader range of training.
Provide a wide variety of technology to augment workers skills.
Institute a “pay for skills” program.
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Use part-time employees with specialized skills as needed.

Question 5. 5. (TCO 6) The Malcolm Baldrige National Quality Award is given
to organizations that have done which of the following? (Points : 4)
Instituted a six-sigma approach to total quality control
Demonstrated a high level of product quality
Demonstrated outstanding quality in their products and processes
Have a world-class quality control function
Most significantly improved their product quality levels

Question 6. 6. (TCOs 3 and 7) Which of the following is considered a highcontact service operation?
(Points : 4)
Online brokerage house
Internet sales for a department store
Physician practice
Telephone life insurance sales and service
Automobile repair

Question 7. 7. (TCOs 7 and 8) Which of the following is a dynamic lot-sizing
technique that adds ordering and inventory carrying cost for each trial lot
size and divides by the number of units in each lot size, picking the lot size
with the lowest unit cost?
(Points : 4)
Economic order quantity

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Lot-for-lot
Least total cost
Least unit cost
Inventory item averaging

Question 8. 8. (TCOs 4 and 8) Which of the following is a dynamic lot-sizing
technique that calculates the order quantity by comparing the carrying cost
and the setup (or ordering) costs for various lot sizes and then selects the lot
size in which these are most nearly equal? (Points : 4)
Kanban
Just-in-time system
MRP
Least unit cost
Least total cost

Question 9. 9. (TCO 3) When considering outsourcing, what should firms be
sure to avoid? (Points : 4)
Losing control of noncore activities that don’t distinguish the firm
Allowing outsourcing to develop into a substitute for innovation
Giving the outsourcing partner opportunities to become a strong competitor
Allowing employees transferred to the outsourcing partner to rejoin the firm
Adverse corporate tax implications of asset transfers to the outsourcing
partner

Question 10. 10. (TCO 9) In which of the following situations should we not
use the transportation method of linear programming? (Points : 4)
To find a new site location for a plant
To minimize costs of shipping n units to m destinations
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To maximize profits of shipping n units to m destinations
To determine which corner of a street intersection to locate a retail service
facility
To locate a finished goods distribution warehouse

Page 2

Question 1. 1. (TCO 4) a company has recorded the last 5 days of daily
demand on their only product. Those values are 120, 125, 124, 128, and
133. The time from when an order is placed to when it arrives at the
company from its vendor is 5 days. Assuming the basic fixed-order
quantity inventory model fits this situation and no safety stock is needed,
which of the following is the reorder point (R)?
@See Chapter 11, page 367. Using equation 11.4, average demand is 120
+ 125 + 124 + 128 + 133/5 = 126. Lead time = 5 days so the reorder point
is 126 x 5 = 630. (Points : 10)
120
1

126
2

630
3

950
4

1,200
5

Question 2. 2. (TCO 4) You would like to use the fixed-time period
inventory model to compute the desired order quantity for a company. You
know that vendor lead time is 5 days and the number of days between
reviews is 7. Which of the following is the standard deviation of demand
over the review and lead time if the standard deviation of daily demand is
8?
@See Chapter 11, page 374. Using equation 11.12, the standard deviation
of demand over the 12 days of time between reviews and lead time is the
square root of (12 x 64) = 27.71. (Points : 10)

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About 27.7
1

About 32.8
2

About 35.8
3

About 39.9
4

About 45.0
5

Question 3. 3. (TCOs 3, 4, and 5) If the average aggregate inventory value
is $45,000 and the cost of goods sold is $10,000, which of the following is
weeks of supply?
@See Chapter 13, page 451. Weeks of supply = (Average Aggregate
Inventory/Cost of goods sold) x 52 = (45,000/10,000) x 52 = 4.5 x 52 =
234. Note that Cost of Goods sold is an income statement item and refers
to an annual figure. Average Aggregate Inventory is a balance sheet item.
(Points : 10)
45,000
1

234
2

120
3

23.4
4

4.5
5

Question 4. 4. (TCO 5) If a firm produced a standard item with relatively
stable demand, the smoothing constant alpha (reaction rate to differences)
used in an exponential smoothing forecasting model would tend to be in
which of the following ranges?
@See Chapter 3, page 56. If a firm produced a standard item with
relatively stable demand, the reaction rate to differences between actual
and forecast demand would tend to be small, perhaps just 5 or 10
percentage points. (Points : 10)
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5% to 10%
1

20% to 50%
2

20% to 80%
3

60% to 120%
4

90% to 100%
5

Question 5. 5. (TCO 2) Various financial data for SunPath Manufacturing
for 2012 and 2013 follow.
What is the percentage change in the multifactor labor and raw materials
productivity measure for SunPath between 2012 and 2013?
2012

2013

Output:

Sales:

$300,000

$330,000

Inputs:

Labor:

$40,000

$43,000

Raw Materials:

$45,000

$51,000

Energy:

$10,000

$9,000

Capital Employed:

$250,000

$262,000

Other

$2,000

$6,000

@SeeChapter 2, page 38. The multifactor labor and raw materials
productivity measure for 2012 is $300,000 divided by the sum $40,000 +
$45,000 or 3.53. For 2013, it is $330,000 divided by the sum $51,000 +
$43,000 or 3.51. The percentage change between 2012 and 2013, then is
(3.511 – 3.529)/3.529 or -0.018 divided by 3.529 = -0.53%. (Points : 10)
-9.22
1

2.33
2

-0.53
3

-2.88
4

10.39
5

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Question 6. 6. (TCO 5) A company wants to forecast demand using the
weighted moving average. If the company uses three prior yearly sales
values (i.e., year 2011 = 160, year 2012 = 140, and year 2013 = 170), and
we want to weight year 2011 at 30%, year 2012 at 30%, and year 2013 at
40%, which of the following is the weighted moving average forecast for
year 2014?
@See Chapter 3, page 53. Forecast for 2014 = (160×0.3) + (140×0.3) +
(170×0.4) = 158. (Points : 10)
170
1

168
2

158
3

152
4

146
5

Question 7. 7. (TCO 5) If demand for product “A” were forecast at
1,000,000 units for the coming year and your factory has one machine
capable of producing 75,000 units per month, how much of product “A”
might you plan to acquire through outsourcing?
@See Chapter 4, page 102. The answer is 100,000 units. You can produce
75,000 units times 12 months = 900,000 units. The shortfall is 1,000,000
minus 900,000 or 100,000 units. (Points : 10)
500
1

10,000
2

100,000
3

200,000
4

600
5

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Question 8. 8. (TCO 3) You have been called in as a consultant to set up a
Kanban control system. The first thing to do is to determine the number of
Kanban card sets needed. Your research shows that the expected demand
during lead time for a particular component is 150 per hour. You estimate
the safety stock should be set at 25% of the demand during lead time. The
tote trays used as containers can hold eight units of stock and the lead time
it takes to replenish an order is 2 hours. Which of the following is the
number of Kanban card sets necessary to support this situation?
@SeeChapter 12, page 416. Using equation 12.1: k = 150 x 2 x 1.25/8 =
46.875 = 47. (Points : 10)
42
1

47
2

68
3

89
4

94
5

Question 9. 9. (TCO 7) Using the cut-and-try method for aggregate
operations planning, we can determine the production requirement in units
of product. If the beginning inventory is 100 units, the demand forecast is
1,200, and the necessary safety stock is 20% of the demand forecast,
which of the following is the production requirement?
@See Chapter 8, page 252. Demand = 1,200; 20% of demand = 240;
Inventory = 100; produce 1,200 + 240 – 100 = 1,340. (Points : 10)
1,200
1

1,300
2

1,340
3

1,500
4

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1,540
5

Question 10. 10. (TCO 8) If annual demand is 6,125 units, annual holding
cost is $5 per unit, and setup cost per order is $50, which of the following
is the EOQ lot size?
@See Chapter 9, page 290. From the equation: EOQ = 350 = Square root
of (2 x 6125 x 50/5). (Points : 10)
350
1

247
2

23
3

185
4

78
5

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Page 3

Question 1. 1. (TCOs 1, 2, and 5) Discuss the role of efficiency and
effectiveness in the creation of value. (Points : 30)

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Question 2. 2. (TCOs 3, 5, and 6) Describe the relationship between capacity
utilization and quality in a service operation. (Points : 30)

Question 3. 3. (TCOs 4, 6, and 7) Describe the aggregate sales and
operations planning process. (Points : 30)

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