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)
  1. How long will the average patient wait in the office before seeing the doctor? (2 points)

True False: Circle the best answer.

True / False /
  1. Inventory carrying costs consist of both implicit (direct) cost elements and explicit (opportunity) cost elements.

True / False /
  1. 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 /
  1. In ABC analysis, “C” items are tightly controlled, have accurate records, and receive regular review by major decision makers.

True

/ False /
  1. Carrying cost is a linear function of order size.

True / False /
  1. The relationship between average inventory level and order size is inverse

True / False /
  1. Productivity is the total value of all inputs into the transformation process divided by the total value of the outputs produced.

True

/ False /
  1. The origins of the scientific management movement are generally credited to Frederick Taylor.

True

/ False /
  1. Continuous improvement attempts to accomplish gains in product or service quality with major breakthroughs.

True

/ False /
  1. 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 /
  1. Project management differs from the management of more traditional activities due to the limited lifetime of projects.

True

/ False /
  1. 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 /
  1. Crashing procedures must consider the impact of crashing on all paths in the network.

Multiple Choice: Circle the best answer.

  1. Which of the following statements about quantity discounts is TRUE?
  1. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available.
  2. The larger is annual demand, the more enticing a discount schedule will be.
  3. If carrying costs are expressed as a percent of value, EOQ is smaller at each lower price in the discount schedule.
  4. All of the above are true
  5. Only a and b are true.
  1. 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?
  1. 800
  2. 1600
  3. 3200
  4. none of the above is correct
  5. cannot be determined from data provided
  1. The basic Economic Order Quantity model is most relevant for which of the following tasks?
  1. ordering dependent demand items
  2. determining fixed order quantities
  3. calculating single-period inventory quantities
  4. coordinating the purchase of several related items
  1. calculating safety stock
  1. 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
  1. increase proportionately
  2. increase, but not proportionately
  3. decrease.
  4. be unchanged
  5. none of the above
  1. Manufacturers may use _____ inventories to offset distribution delays.
  1. raw material
  2. work in process
  3. finished stock
  4. anticipation stock
  5. pipeline or in-transit

  1. Of the following types of items, which would generally have independent demand?
  1. subassemblies
  2. component parts
  3. finished goods
  4. all of the these
  5. 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).

  1. The cost-minimizing solution for Main Street Coffee Shop is to order ______pounds at a time?
  1. about 6
  2. about 3
  3. about 21
  4. about 156
  5. cannot be determined from the data provided
  1. What is total annual cost (excluding item cost) of managing this item on a cost-minimizing basis?
  2. $4687
  3. $397
  4. $362
  5. $2858
  6. cannot be determined from the data provided
  7. In pursuing lowest annual total cost, how many orders should Main Street Coffee House place annually?
  8. about 7
  9. 1
  10. 52
  11. about 26
  12. 156

  1. How many days will there be between orders (assume 310 operating days) if Main Street practices EOQ behavior?
  2. about 12
  3. about 122
  4. 6
  5. about 14
  6. the number of days between orders is not constant
  7. The person most responsible for initiating interchangeable parts in manufacturing was
  8. Eli Whitney
  9. Frederick Winslow Taylor
  10. Henry Ford
  11. Alfred P. Sloan, Jr.
  12. Lillian Gilbreth
  13. According to the scientific management approach, which of the following is a responsibility of management?
  14. to develop a science for only the important elements of a man's work
  15. to let workers choose their own work
  16. to let workers train themselves
  17. to cooperate with workers to ensure all work was performed correctly
  18. to ensure workers do all their work in a timely fashion
  19. The purpose of an operating characteristics (OC) curve is to
  20. show how product quality under different manufacturing conditions.
  21. show how the probability of accepting a lot varies with the population percent defective.
  22. show when product specifications don't match process control limits.
  23. show how operations affects certain characteristics of a product.
  24. graphically display upper and lower product specifications.
  25. Lost goodwill is an example of
  26. internal failure costs.
  27. external failure costs
  28. appraisal costs.
  29. prevention costs
  30. none of the above

  1. Which if the following statements regarding project management is TRUE?
  2. The critical path is the shortest of all paths through the network
  3. The critical path is that set of activities that have zero slack.
  4. Every network has at least one critical path.
  5. All of the above are true.
  6. Only b and c are true.
  7. 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
  8. reducing the duration of all paths containing that activity by 1 week.
  9. producing a new critical path.
  10. reducing the project completion time by 1 week.
  11. all of the above are effects.
  12. only a and c are effects.
  13. Which of the following statements regarding project management is TRUE?
  14. Project crashing is an optimizing technique.
  15. Crashing procedures need not consider the impact of crashing an activity on other paths in the network.
  16. Shortening the project by reducing resources to one or more of the critical tasks is called "project crashing."
  17. Project crashing is a PERT technique.
  18. None of the above is true
  19. PERT is different from CPM because
  20. It does not assume independence among the activities.
  21. it does not assume precise breaking points between activities.
  22. it does not focus too much attention on the activities on the critical path.
  23. it does not assume certainty in activity durations.
  24. it assumes activity durations are not crashable.
  25. Which of the following statements regarding PERT times is TRUE?
  26. "Most likely time" is calculated by t = (a + 4m + b)/6.
  27. "Pessimistic time" estimates the minimum time an activity will require.
  28. "Optimistic time" estimates the maximum time an activity will require.
  29. "Optimistic time" estimates minimum time an activity will require.
  30. "Most likely time" estimates the maximum time an activity will require.

  1. 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 ______
  2. 130
  3. 126.7
  4. 1133
  5. 1275
  6. 100
  7. An example of a project is
  8. hand-tailored clothing
  9. legal defense.
  10. automobile manufacturing.
  11. fast-food.
  12. automobile repair.

Below are the activities, precedence information, and activity times for a project. Use this information for questions 36-42.

Activity / Immediate Predecessor(s) / Duration
A / — / 5
B / A / 5
C / B / 7
D / B / 10
E / A / 20
F / C, D, E / 5
  1. The total number of paths in this network is ___
  2. 1
  3. 2
  4. 3
  5. 4
  6. 5
  7. The early start time for activity C is ____
  8. 0
  9. 5
  10. 10
  11. 15
  12. 20

  1. The early finish time for activity D is ____
  2. 5
  3. 10
  4. 15
  5. 20
  6. 25
  7. The late finish time for activity B is ____
  8. 5
  9. 10
  10. 15
  11. 20
  12. 25
  13. Slack time for activity D is ____
  14. 0
  15. 5
  16. 7
  17. 8
  18. 10
  19. The critical path of the network consists of activities
  20. A-B-C-F.
  21. A-B-D-F.
  22. A-B-E-F.
  23. A-E-F.
  24. A-B-C-D-E-F.
  25. The length of the critical path is
  26. 20
  27. 22
  28. 25
  29. 30
  30. 52

Use the following cost information to answer questions 43 and 44.

Process /
Fixed Cost / Variable Cost
(per unit) / Product Revenue
(per unit)
A / $300,000 / $2.00 / $10
B / 150,000 / 3.00 / 10
C / 100,000 / 5.00 / 10
  1. 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

  1. 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

  1. A ______is a single waiting line.

a)finite population

b)queue

c)infinite population

d)calling population

  1. ______represent the number of parallel servers.

a)channels

b)phases

c)queue disciplines

d)steps in a process

  1. 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

  1. 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

  1. The probability distribution most often associated with the arrival rate is

a)Normal

b)Poisson

c)Beta

d)Negative exponential

  1. The probability distribution most often associated with service times is

a)Normal

b)Poisson

c)Beta

d)Negative exponential

  1. 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.

  1.  /  represents the ______.

a)arrival rate

b)service rate

c)mean service rate

d)utilization rate

  1. 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%

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Operations ManagementProfs. Juran and Pinedo