Problems on Economic Order

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Exam II

BA 301

Spring 2003

S.K. Norman

Version 1

Select the best answer. 3 Points each.

1. In the 1980’s, Xerox studied the distribution system of L.L. Bean. Xerox compared the performance of it’s distribution system with L.L. Bean’s and used what it learned to improve its operations. This process is called a. employee empowerment

b. benchmarking
c. copycatting
d. industrial espionage

2. You are auditing account transactions. You develop a p-chart for the percent of accounts transactions that have at least 1 error. You examine 200 transactions every day for 20 days. In total, there are 180 account transactions that have at least 1 error. The value of p-bar used to calculate the upper and lower control limits for the p-chart is: a. 0.045

b. 0.100
c. 0.111
d. 0.900

3. Mr. Johnson from Motorola gave an example of a supplier, Ampenol, producing a part for one of their systems. After producing the part in Mexico, instead of shipping it to Motorola, this company ships the part directly to the customer. This is an example of a. drop shipping

b. backward integration
c. postponement
d. timely customization

4. Statistical process control charts are used
a. to signal when assignable variation is present in a process. b. to determine when it’s time to shut down the process. c. to inspect supplier shipments.
d. to reject bad parts.

5. At the economic order quantity, what is the relationship between total holding cost and total setup cost? a. Holding cost is greater than setup cost
b. Holding cost is equal to setup cost
c. Holding cost is less than setup cost
d. Cannot be determined.

6. Which of the following is NOT an aspect of the relationships that Boeing has with it’s suppliers on the lean manufacturing assembly line in the Business Week article of June 2001 that was discussed in class? a. Suppliers are selected by lowest cost bidder.

b. Suppliers have access to Boeing’s inventory information. c. Suppliers are involved in the engineer design work. d. Suppliers have access to the manufacturing floor.

7. Cause-and-effect diagrams (fish-bone diagrams) are used: a. to graphically display the results from a check sheet b. to benchmark
c. to analyze possible causes of a problem
d. to sort the ‘vital few’ from the ‘trivial many’

8. Which of the following is not an advantage of a virtual company? a. total control over every aspect of the organization
b. low capital investment
c. flexibility
d. speed

9. 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 for some of their customers. d.They created partnering relationships with some of their customers.

10. A fried chicken fast-food chain that acquired feed mills and poultry farms has performed a. horizontal integration
b. vertical integration
c. current transformation
d. job expansion

11. A hotel reservation center has decided to implement statistical process control to monitor the average time for a customer to make a reservation. Over the last 20 days, they have randomly sampled 5 calls and measured the time required to complete the reservation. What is the most appropriate chart(s)? a. p-chart

b. [pic]-chart and R chart
c. z-chart
d. pareto chart

12. Without managing the supply chain and increasing communication along the supply chain, a distortion of orders and inventories...
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