Answer the following multiple-choice question.

In the following questions, there is only one correct alternative (unless otherwise specified).

1. Consider a process that consists of two steps A and B, with capacities x and y units per hour, respectively. The capacity x is larger than the capacity y. Each unit is first processed by step A and then by step B. Consider two separate and different options to change this process:

I. The capacity of step A increases from x to 2x.

II. The capacity of step B increases from y to 2y.

Choose the only alternative that is unambiguously correct.

a) After option I is implemented, the capacity of the process increases to 2x.

b) After option II is implemented, the capacity of the process increases to 2y.

c) After option II is implemented, the capacity of the process increases to x.

d) Option II increases the capacity of the process more than option I.

2. A manufacturer produces shirts in two steps. The first step, cutting fabric, is an automated batch process (which requires no labor) that takes 1 hr per batch, regardless of the size of the batch. The second step is sewing, with a capacity of 50 shirts/hr (10 workers, each taking 12 mins per shirt). The manufacturer is currently using a batch size of 30. Suppose the batch size is increased to 60 shirts. Choose the only correct alternative.

a) The capacity of the overall process is doubled.

b) The capacity of the overall process is 50 shirts/hr.

c) The capacity of the overall process does not change.

d) None of the above.

3. A company that is in the business of producing make-to-order cakes advertises itself as offering the "Quickest Make-to-Order Cakes in NYC". Orders arrive randomly and the company's objective is to fulfill them on the same day. After investigating their operations, an MBA student that hasn't taken Operations Management is astonished about the fact that the utilization of the firm's manufacturing process is only 60%. The student thinks that it does not make sense to have their main asset so highly unutilized. Based on what you learned in the class and on the firm's business strategy (expressed in their ad), the low level of utilization can be explained with which of the following statements.

a) The objective is to maximize the capacity of the bottleneck.

b) The objective is to improve demand forecasting.

c) The objective is to reduce leadtime in the manufacturing process.

d) The objective is to reduce product variety.

4. In the Saintemarie ED case, we saw that reducing the processing time by just a little bit resulted in substantial savings in the average waiting time in the ED. This happened because:

I. Statistical economies of scale.

II. Pooling.

III. The utilization of the ED was close to 1, and the impact of utilization on waiting time is nonlinear.

a) I

b) II

c) III

d) I and II

e) I and III

f) II and III

g) All of the above

5. The purpose of a control chart is to:

a) tell if common causes are present

b) inspect the quality of a product

c) see if the process meets customer specifications

d) measure sample means

e) none of the above

6. Which of the following directly leads to an unambiguous increase in the capability index (Cp) of a process (choose all that apply)?

a) Relaxing customer requirements (i.e. increasing the upper specification limit and reducing the lower specification limit).

b) Reducing variability due to common causes.

c) Eliminating special causes.

d) None of the above.

7. As you may recall from the National Cranberry case, the issues facing Management were overtime and truck wait. Which of the following recommendations does not address the overtime problem (choose all that apply)?

a) Add one dryer.

b) Add a second dryer.

c) Buy a light meter system to improve quality grading.

d) Convert a dry bin to hold wet berries.

8. In the beer game, suppose you manage the retail store and decide to keep track of the inventory position. After some discussions with your teammates, you set the target inventory position for the retail store at 280. Suppose at the beginning of a period, your on-hand inventory is 60 and your total outstanding orders, i.e., orders you have placed but not yet received, is 190. How much should you order?

a. 220

b. 90

c. 30

d. 0

9. Consider the newsvendor model with a normal demand distribution. The following are two separate changes to the demand distribution:

I. The mean of demand doubles.

II. The standard deviation of demand doubles.

Assume that the optimal order quantity is used to maximize the expected profit under each scenario, and that all the other parameters stay unchanged. Which of the following statements is unambiguously correct?

a. The expected profit under II is twice the expected profit under I.

b. The order quantity under I is more than the order quantity under II.

c. The mismatch costs under II is twice the mismatch costs under I.

d. None of the above.

10. Cindy's summer internship takes her to a Southwest Airlines reservation center. A sea of 1,000 telephone service representatives are answering calls concerning flight times, booking of reservations, handling of customer complaints, etc. She have received the following memo from a Southwest Airlines manager requesting a "downsizing" of service representatives at this reservation center.

"Worker utilization is getting too low. Our workers now average about 20% idle time. The average waiting time for our customers is now only 5 seconds. That is, they spend an average of only 5 seconds on hold before a service representative can answer their call. In keeping with our low cost philosophy, I recommend that we cut the work force by 10%. The resulting 10% increase in average customer hold time to 5.5 seconds is a trade-off that I believe is warranted by the cost savings."

Is this analysis appropriate?

(a) Yes.

(b) No.