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Exam II
BA 301
Fall 2001
S.K. Norman

Exam II

Fall 2001

3 Points each. Select the BEST answer.


A successful TQM program incorporates all of the following except

a. continuous improvement
b. employment involvement
c. benchmarking
d. centralized decision making authority
e. knowledge of tools


Jars of pickles are sampled and weighed. Sample measures are plotted on control charts.
The ideal weight is 11 oz. Which type of chart(s) would you recommend?
a. x - and R-charts
b. p- harts
c. c-charts
d. x -, but not R-charts
e. both p- and c-charts


A disadvantage of the "few suppliers" strategy is

a. the risk of not being ready for technological change
b. the lack of cost savings for customers and suppliers
c. possible violations of the Sherman Antitrust Act
d. the high cost of changing partners
e. all of the above are disadvantages of the "few suppliers" strategy


The shopper who says to himself Ive waited too long in this line. I dont really need to
buy this product today and leaves the store is an illustration of which element of queue
a. balking
b. reneging
c. random departure
d. random arrival
e. none of the above


Which of the following is a reason for holding inventory?

a. to meet customer demand
b. to protect against shortages
c. to decouple production from distribution
d. to allow for smooth and flexible operations
e. all of the above are motives for holding inventory


Which one of the following is not a benefit of the implementation of JIT?

a. cost reduction
b. work in process reduction
c. quality improvement
d. delay reduction
e. variability increase

Exam II


Fall 2001

Plots of sample ranges on an R-Chart indicate that the most recent value is below
the lower control limit. What course of action would you recommend?

Since there is no obvious pattern in the measurements, variability is in control.

One value outside the control limits is insufficient to warrant any action.
Variation is not in control; investigate what created this condition.
Lower than expected dispersion is a desirable condition; there is no reason to
e. The process is out of control; reject the last units produced.

An airline ticket counter, with one line of customers waiting for one of several agents is an
example of a
a. single channel, single phase system
b. single channel, multi-phase system
c. multi-channel, single phase system
d. multi-channel, multi-phase system
e. none of the above


ABC analysis is based upon the principle that

a. all items in inventory must be monitored very closely
b. an item is critical if its usage is high
c. there are usually a few critical items, and many items which are less critical
d. the safety stock (in terms of volume) should be higher for A items than for C items
e. an item is critical if its unit price is high

10. An inventory decision rule states, "when the inventory level goes down to 14 gearboxes,
100 gearboxes will be ordered." Which of the following statements is true?
a. 100 is the reorder point, and 14 is the order quantity.
b. The number 100 is a function of demand during lead time.
c. 14 is the safety stock, and 100 is the reorder point.
d. 14 is the reorder point, and 100 is the order quantity.
e. None of the above.

Which of the following statements regarding a pull system is true?

a. large lots are pulled from upstream stations.
b. work is pulled to the downstream work stations before it is actually needed.
c. manufacturing cycle time is increased.
d. problems become more obvious.
e. none of the above is true of a pull system

Exam II

Fall 2001


The process of identifying other organizations that are best at some facet of your operations
and then modeling your organization after them is known as
a. continuous improvement
b. employee empowerment
c. benchmarking
d. copycatting
e. industrial espionage


Pareto charts are used to

a. identify inspection points in a process
b. organize errors, problems or defects
c. outline production schedules
d. show an assembly sequence

e. all of the above

14. We compared an efficient supply chain with a responsive supply chain. Which of the
following statements is not true:
a. A goal of an efficient supply chain is to minimize inventories.
b. A goal of a responsive supply chain is to react quickly to market demand.
c. Efficient supply chains may seek their competitive advantage through low cost.
d. Responsive supply chains seek their competitive advantage through high development
e. All of the above are true.


In the article from Business Week entitled Boeing Goes Lean, the suppliers
perform all of the following except:
a. Suppliers spend time on the assembly line with mechanics to figure out more
efficient ways to install their parts
b. Suppliers can check Boeings master schedule
c. Suppliers can check inventory levels and dispatch orders automatically
d. Suppliers deliver parts directly to Boeings storage area
e. All of the above are true.


All of the following are "opportunities" for supply chain management except
a. postponement
b. channel assembly
c. drop shipment
d. blanket orders
e. job enrichment

17. The Wallace, Co. changed its relationships with its customers when it began to implement
the Baldrige criteria. Which of the following was not one of the changes described?
a. They performed channel assembly for their customers
b. They began to ask the customer, What do you want?
c. They inventoried parts some of their customers.
d. They created partnering relationships with some of their customers
e. All of the above are true.

Exam II

Fall 2001


Which of the following is not a typical inspection point?

a. upon receipt of goods from your supplier
b. during the production process
c. before the product is shipped to the customer
d. after a costly process
e. at the supplier's plant while the supplier is producing


Hewlett-Packard withholds customization of its laser printers as long as possible. This is an

example of
a. drop shipping
b. backward integration
c. postponement
d. timely customization
e. standardization


In the modular consortia established by Volkswagen in Resende, VW is responsible for

a. product design
b. quality control
c. assembly line coordination
d. marketing/sales
e. all of the above

The following multiple-choice are worth more than 3 points!!

See each problem for the point values.
It is recommended that you show your work, in case partial credit it given.

(4 pts) A queuing model which follows the M/M/1 assumptions has = 2 and = 3. The
average number in the system is
a. 2/3
b. 1.3
c. 2
d. 1
e. 6


(4 pts) A dental clinic at which only one dentist works is open only two days a week.
During those two days, the traffic is uniformly busy with patients arriving at the rate 2 of
per hour. The doctor serves patients at the rate of one every 15 minutes. What is the
average time a patient spends in the office (wait plus service)?
a. 0.01 hours
b. 0.07 hours
c. 0.13 hours
d. 0.25 hours
e. 0.50 hours

Exam II

Fall 2001


(4 pts) At the order fulfillment center of a major mail-order firm customer orders arrive at
the sorting machines. The orders are already packaged and need to be sorted by address so
that they can be loaded onto the appropriate truck. The arrival rate at the sorting machines
is at the rate of 120 per hour following a Poisson distribution. The machine sorts at the
constant rate of 160 per hour. What is the utilization rate of the system?
a. 0.03
b. 0.50
c. 0.75
d. 1.33
e. 3.00


(6 pts) Whole Grains LLC uses statistical process control to ensure that their healthconscious, low-fat, multi-grain sandwich loaves have the proper weight of 6 oz. Based on a
previously stable and in-control process, the control limits of the x and R charts are: UCL
x = 6.56, LCL x = 5.84, UCLR= 1.141, LCLR= 0. Over the past few days, they have
taken five random samples of four loaves and have found the following.


Net Weight
Loaf #1
Loaf #2
Loaf #3
Loaf #4
The process is in control.
Sample 1 is out of the control limits on the Xbar-chart.
Sample 2 is out of the control limits on the Xbar-chart.
Sample 3 is out of the control limits on the Xbar-chart
Sample 1 is out of the control limits on the R-chart
Sample 2 is out of the control limits on the R-chart
Sample 3 is out of the control limits on the R-chart.

Select the best answer:

a. only s is true
b. only t and x are true
c. only u, v, and y are true
d. only u and x are true
e. only u and w are a true

Exam II

Fall 2001


(6 pts) A hospital-billing auditor has been inspecting patient bills. While almost all bills
contain some errors, the auditor is looking now for large errors (errors in excess of $250).
Among the last 100 bills inspected, the defect rate has been 18%. Calculate the upper and
lower 3 sigma limits.
a. 0.18 0.1153
b. 0.18 0.0084
c. 0.18 0.0715
d. 0.18 1.2728
e. none of the above


(4 pts) In the basic EOQ model, if D=6000 per year, S=$100, H=$10 per unit per month,
the Economic Order Quantity is approximately
a. 6000
b. 60
c. 346
d. 100
e. 35


(4 pts) A product has demand of 1000 units per year. Ordering cost is $20 and holding cost
is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for
this product will cost $_____ per year in total annual inventory costs.
a. $4000
b. $400
c. $200
d. zero; this is a class C item
e. cannot be determined because unit price is not known

Exam II


Fall 2001

(4 pts) Montegut Manufacturing produces a product for which the annual demand is
10,000. Production averages 100 per day, while demand is 40 per day. Holding costs are
$1.00 per unit per year; set-up costs $200.00. Montegut Manufacturing works 250 days per
year. What is the optimal production quantity?

a. 26
b. 258
c. 2582
d. 3,098,387
e. none of the above


4 pts) Daily usage of an assembly is 100 in a facility that operates 300 days of the year.
Setup cost is $5 and annualized carrying cost is $160 per assembly per year. Production of
this assembly occurs at the rate of 400 per day when production of the assembly is
underway. Lead time is 3 days; safety stock is 1/2 days usage. The optimum kanban size is
50 assemblies. What is the optimum number of kanbans?
a. 1
b. 2
c. 5
d. 7
e. None of the above