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Final Exam Name: (Problems 1 and 2.) Consider a medical clinic that operates 24 hours a day with one doctor on duty at all times, who spends an exponentially distributed length of time with each patient, averaging 26.5 minutes. Patients arrive according to a Poisson process, every 30 minutes on the average. 1. If you were to arrive at this clinic at some random time, how many people would you expect to be there, not counting the patient actually being examined by the doctor? (2 points) 2. How long will the average patient wait in the office before seeing the doctor? (2 points) True False: Circle the best answer. True False 3. Inventory carrying costs consist of both implicit (direct) cost elements and explicit (opportunity) cost elements. True False 4. In a basic EOQ setting, if carrying cost were to double, both the EOQ and the number of orders per year would increase. True False 5. In ABC analysis, “C” items are tightly controlled, have accurate records, and receive regular review by major decision makers. True False 6. Carrying cost is a linear function of order size. True False 7. The relationship between average inventory level and order size is inverse True False 8. Productivity is the total value of all inputs into the transformation process divided by the total value of the outputs produced. True False 9. The origins of the scientific management movement are generally credited to Frederick Taylor. True False 10. Continuous improvement attempts to accomplish gains in product or service quality with major breakthroughs. True False 11. The Central Limit Theorem states that, with a large enough sample size, the distribution of sample means from a population with any underlying distribution will be normally distributed. True False 12. Project management differs from the management of more traditional activities due to the limited lifetime of projects. True False 13. Slack is the amount of time an activity can be delayed without delaying the entire project, assuming its preceding activities are completed as early as possible True False 14. Crashing procedures must consider the impact of crashing on all paths in the network. Operations Management 2 Profs. Juran and Pinedo Multiple Choice: Circle the best answer. 15. Which of the following statements about quantity discounts is TRUE? a. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. b. The larger is annual demand, the more enticing a discount schedule will be. c. If carrying costs are expressed as a percent of value, EOQ is smaller at each lower price in the discount schedule. d. All of the above are true e. Only a and b are true. 16. A firm has been ordering a certain item 200 units at a time. Holding cost is $2 per unit per year, and ordering cost is $25 per order The assumptions of the basic EOQ model are thought to apply. For what value of annual demand is their action optimal? a. 800 b. 1600 c. 3200 d. none of the above is correct e. cannot be determined from data provided 17. The basic Economic Order Quantity model is most relevant for which of the following tasks? a. ordering dependent demand items b. determining fixed order quantities c. calculating single-period inventory quantities d. coordinating the purchase of several related items f. calculating safety stock 18. In the most basic Economic Order Quantity model (constant demand, no shortages), if the lead time increases from 2 days to 5, the EOQ will a. increase proportionately b. increase, but not proportionately c. decrease. d. be unchanged e. none of the above 19. Manufacturers may use _____ inventories to offset distribution delays. a. raw material b. work in process c. finished stock d. anticipation stock e. pipeline or in-transit Operations Management 3 Profs. Juran and Pinedo 20. Of the following types of items, which would generally have independent demand? a. subassemblies b. component parts c. finished goods d. all of the these e. none of these Use this information for questions 21 through 24: Main Street Coffee Shop sells Earl Grey tea in sufficient quantity to identify the item as an “A” item and control its inventory carefully. The shop uses 3 pounds of Earl Grey tea weekly, and each pound costs $16. Carrying costs are $5 per pound per month because space is very scarce. It costs MSCS $7 to prepare an order. Assume the basic EOQ model with no shortages applies (naturally — imagine telling customers their glass of tea will be ready in ten days). 21. The cost-minimizing solution for Main Street Coffee Shop is to order ______ pounds at a time? a. about 6 b. about 3 c. about 21 d. about 156 e. cannot be determined from the data provided 22. What is total annual cost (excluding item cost) of managing this item on a costminimizing basis? a. $4687 b. $397 c. $362 d. $2858 e. cannot be determined from the data provided 23. In pursuing lowest annual total cost, how many orders should Main Street Coffee House place annually? a. about 7 b. 1 c. 52 d. about 26 e. 156 Operations Management 4 Profs. Juran and Pinedo 24. How many days will there be between orders (assume 310 operating days) if Main Street practices EOQ behavior? a. about 12 b. about 122 c. 6 d. about 14 e. the number of days between orders is not constant 25. The person most responsible for initiating interchangeable parts in manufacturing was a. Eli Whitney b. Frederick Winslow Taylor c. Henry Ford d. Alfred P. Sloan, Jr. e. Lillian Gilbreth 26. According to the scientific management approach, which of the following is a responsibility of management? a. to develop a science for only the important elements of a man's work b. to let workers choose their own work c. to let workers train themselves d. to cooperate with workers to ensure all work was performed correctly e. to ensure workers do all their work in a timely fashion 27. The purpose of an operating characteristics (OC) curve is to a. show how product quality under different manufacturing conditions. b. show how the probability of accepting a lot varies with the population percent defective. c. show when product specifications don't match process control limits. d. show how operations affects certain characteristics of a product. e. graphically display upper and lower product specifications. 28. Lost goodwill is an example of a. internal failure costs. b. external failure costs c. appraisal costs. d. prevention costs e. none of the above Operations Management 5 Profs. Juran and Pinedo 29. Which if the following statements regarding project management is TRUE? a. The critical path is the shortest of all paths through the network b. The critical path is that set of activities that have zero slack. c. Every network has at least one critical path. d. All of the above are true. e. Only b and c are true. 30. Suppose activity "a" has 1 week of slack in a CPM network. Reducing the time required to complete that activity by 1 week will have the effect of a. reducing the duration of all paths containing that activity by 1 week. b. producing a new critical path. c. reducing the project completion time by 1 week. d. all of the above are effects. e. only a and c are effects. 31. Which of the following statements regarding project management is TRUE? a. Project crashing is an optimizing technique. b. Crashing procedures need not consider the impact of crashing an activity on other paths in the network. c. Shortening the project by reducing resources to one or more of the critical tasks is called "project crashing." d. Project crashing is a PERT technique. e. None of the above is true 32. PERT is different from CPM because a. It does not assume independence among the activities. b. it does not assume precise breaking points between activities. c. it does not focus too much attention on the activities on the critical path. d. it does not assume certainty in activity durations. e. it assumes activity durations are not crashable. 33. Which of the following statements regarding PERT times is TRUE? a. "Most likely time" is calculated by t = (a + 4m + b)/6. b. "Pessimistic time" estimates the minimum time an activity will require. c. "Optimistic time" estimates the maximum time an activity will require. d. "Optimistic time" estimates minimum time an activity will require. e. "Most likely time" estimates the maximum time an activity will require. Operations Management 6 Profs. Juran and Pinedo 34. A project being analyzed has 45 activities, 19 of which are on the critical path. Analysis of the path reveals that the estimated time for the critical path is 120 days with a variance of 100 days. There is a 0.75 probability that the project will be completed before day ______ a. 130 b. 126.7 c. 1133 d. 1275 e. 100 35. An example of a project is a. hand-tailored clothing b. legal defense. c. automobile manufacturing. d. fast-food. e. automobile repair. Below are the activities, precedence information, and activity times for a project. Use this information for questions 36-42. Activity A B C D E F Immediate Predecessor(s) — A B B A C, D, E Duration 5 5 7 10 20 5 36. The total number of paths in this network is ___ a. 1 b. 2 c. 3 d. 4 e. 5 37. The early start time for activity C is ____ a. 0 b. 5 c. 10 d. 15 e. 20 Operations Management 7 Profs. Juran and Pinedo 38. The early finish time for activity D is ____ a. 5 b. 10 c. 15 d. 20 e. 25 39. The late finish time for activity B is ____ a. 5 b. 10 c. 15 d. 20 e. 25 40. Slack time for activity D is ____ a. 0 b. 5 c. 7 d. 8 e. 10 41. The critical path of the network consists of activities a. A-B-C-F. b. A-B-D-F. c. A-B-E-F. d. A-E-F. e. A-B-C-D-E-F. 42. The length of the critical path is a. 20 b. 22 c. 25 d. 30 e. 52 Operations Management 8 Profs. Juran and Pinedo Use the following cost information to answer questions 43 and 44. Process A B C Fixed Cost $300,000 150,000 100,000 Variable Cost (per unit) $2.00 3.00 5.00 Product Revenue (per unit) $10 10 10 43. Which process would you recommend if demand exceeds 150,000 units? a) Process A b) Process B c) Process C d) None of the above 44. At what level of demand would you recommend Process C? a) below 20,000 b) between 20,000 and 25,000 c) between 25,000 and 50,000 d) above 50,000 45. A _____________ is a single waiting line. a) finite population b) queue c) infinite population d) calling population 46. _____________ represent the number of parallel servers. a) channels b) phases c) queue disciplines d) steps in a process 47. A system whose performance characteristics attain a constant average value after a lengthy period of time is said to be a) in transition b) at optimum c) in steady state d) in decline 48. A personal computer with two CPUs is an example of a a) single-channel, single-phase system b) single-channel; multiple-phase system c) multiple-channel, multiple-phase system d) multiple-channel, single phase system 49. The probability distribution most often associated with the arrival rate is a) Normal b) Poisson c) Beta d) Negative exponential Operations Management 9 Profs. Juran and Pinedo 50. The probability distribution most often associated with service times is a) Normal b) Poisson c) Beta d) Negative exponential 51. The probability Po = (1 - / ) represents _______________________________. a) the probability that a customer is in the queuing system. b) the probability that no customers are in the queuing system. c) the probability that a server is busy servicing an arrival. d) none of the above. 52. / represents the ______________________. a) arrival rate b) service rate c) mean service rate d) utilization rate 53. Given an arrival rate of 20 and a mean service rate of 25 customers per hour, what is the probability that a customer will be served without waiting in line? a) 25% b) 80% c) 20% d) 75% Operations Management 10 Profs. Juran and Pinedo