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1
Copyright © 2016 Pearson Education, Inc.
Operations Management, 11e (Krajewski et al.)
Full chapter download at: https://testbankbell.com/product/operations-management-processes-and-supply-
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Chapter 1: Using Operations to Create Value
1.1 Role of Operations in an Organization
1) Operations management refers to the direction and control of inputs that transform processes into products
and services.
Answer: TRUE
Reference: Role of Operations in an Organization
Difficulty: Easy
Keywords: operations management, inputs, process, transformation
Learning Outcome: Discuss operations and operations management as a competitive advantage for the
organization.
AACSB: Application of Knowledge
2) As a functional area of a business, Operations translates materials and services into outputs. Answer:
TRUE
Difficulty: Easy
Keywords: operations management, inputs, process, transformation
organization.
3) The three main line functions of any business include Operations, Finance and Marketing. Answer:
TRUE
Difficulty: Easy
Keywords: operations, finance, marketing
organization.
4) Support functions in an organization include Accounting, Human Resources and Engineering. Answer:
TRUE
Difficulty: Easy
Keywords: accounting, human resources, engineering
organization.

2
5) Regardless of how departments like Accounting, Engineering, Finance, and Marketing
function in an organization, they are all linked together through:
A) management.
B) processes.
C) customers.
D) stakeholders.
Answer: B
Difficulty: Moderate
Keywords: departments, functions, processes
Learning Outcome: Discuss operations and operations management as a competitive advantage
for the organization.
6) The foundations of modern manufacturing and technological breakthroughs were inspired by
the creation of the mechanical computer by:
A) Charles Babbage.
B) James Watt.
C) Eli Whitney.
D) Frederick Taylor.
Answer: A
Keywords: Charles Babbage
7) Which of these Great Moments in Operations and Supply Chain Management did not occur in
the 20th century?
A) invention of the assembly line
B) publication of the Toyota Production Systems book
C) establishment of railroads
D) strategic planning for achieving product variety
Answer: C
Keywords: history, railroad

3
8) Operations management refers to the systematic design, direction, and control of
that transform into products and services.
Answer: processes, inputs
Keywords: process, input, transform, product, service
9) The three mainline functions of any business are , , and .
Answer: operations, finance, marketing
Keywords: operations, finance, marketing, functions of a firm
10) What are the three key functions of a firm and what is each responsible for?
Answer: The three main functions of a firm are operations, finance, and marketing. The
operations function transforms material and service inputs into product and service outputs. The
finance function generates resources, capital and funds from investors and sales of the firm's
goods and services in the marketplace. The marketing function is responsible for producing sales
revenue of the outputs.
Keywords: manufacturing process, service process
1.2 A Process View
1) A process involves transforming inputs into outputs.
Answer: TRUE
Reference: A Process View
Difficulty: Easy
Keywords: process, inputs, outputs
Learning Outcome: Describe the main types of operations processes and layouts in
manufacturing and in services.

4
2) Every process has a customer.
Answer: TRUE
Difficulty: Easy
Keywords: process, customer relationship
3) A nested process refers to a process within a process.
Answer: TRUE
Difficulty: Easy
Keywords: nested process
4) At the level of the firm, service providers offer just services and manufacturers offer just
products.
Answer: FALSE
Keywords: manufacturing, service, similarity, goods, services
5) At the process level, it is much easier to distinguish whether the process is providing a service
or manufacturing a product.
Answer: TRUE
Keywords: manufacturing process, service process, goods, services
6) Manufacturing processes tend to be capital intensive, while service processes tend to be more
labor intensive.
Answer: TRUE
Difficulty: Easy
Keywords: manufacturing process, service process, capital intensive, labor intensive

5
7) Quality is more easily measured in a service process than in a manufacturing process.
Answer: FALSE
Keywords: manufacturing process, service process, quality
8) Contact with the customer is usually higher in a manufacturing process than in a service
process.
Answer: FALSE
Difficulty: Easy
Keywords: manufacturing process, service process, customer contact
9) At the level of the firm, service providers do no just offer services and manufacturers do not
just offer products.
Answer: TRUE
Difficulty: Easy
10) Which of these statements about processes is NOT true?
A) A process can have its own set of objectives.
B) A process can involve work flow that cuts across departmental boundaries.
C) A process can require resources from several departments.
D) A process can exist without customers.
Answer: D

6
11) Operations management is part of a production system that can be described in the following
manner:
Organization: inputs→processes→outputs.
Which one of the following correctly describes a production system?
A) airline: pilots→planes→transportation
B) bank: tellers→computer equipment→deposits
C) furniture manufacturer: wood→sanding→chair
D) telephone company: satellites→cables→communication
Answer: C
Keywords: production system, input, process, output
Table 1.1
You are the Production Manager for the toy manufacturing process at the ABC Company.
12) Use the information provided in Table 1.1. An example of an internal customer is:
A) the lumber company.
B) the Receiving Department at ABC.
C) the Shipping Department at ABC.
D) the toy store at the mall.
Answer: C
Keywords: internal customer

7
13) Use the information provided in Table 1.1. An example of an internal supplier is:
Answer: B
Keywords: internal supplier
14) Use the information provided in Table 1.1. An example of an external customer is:
Answer: D
Keywords: external customer
15) Use the information provided in Table 1.1. An example of an external supplier is:
Answer: A
Keywords: external supplier

8
16) Which of the following is an example of a nested process?
A) At the start of the new semester, a student first pays tuition and then goes to the bookstore.
B) A customer service representative verifies a caller's account information.
C) A candidate's intent to graduate is checked for financial holds by the Bursar and for degree
requirements by Advising before the diploma mill prints their sheepskin.
D) A stockbroker calls a client and advises her to sell silver short.
Answer: C
Difficulty: Easy
Keywords: nested process
17) Which of the following statements is more of a general characteristic of a manufacturing
organization, as compared to a service organization?
A) Short-term demand tends to be highly variable.
B) Operations are more capital intensive.
C) Outputs are more intangible.
D) Quality is more difficult to measure.
Answer: B
Keywords: manufacturing organization, service organization, capital intensity
18) Which one of the following statements is more of a general characteristic of a service
organization, as compared to a manufacturing organization?
A) Output can be inventoried.
B) The response time is longer.
C) There is less customer contact.
D) The facilities tend to be smaller.
Answer: D
Keywords: manufacturing organization, service organization, facilities

9
19) Manufacturing processes usually have:
A) physical, durable output.
B) high levels of customer contact.
C) output that cannot be inventoried.
D) low levels of capital intensity.
Answer: A
Keywords: manufacturing organization, service organization, physical output
20) Service processes usually have:
A) physical, durable output.
B) low levels of customer contact.
C) output that can be inventoried.
D) low levels of capital intensity.
Answer: D
Keywords: manufacturing organization, service organization, capital intensity
21) A(n) is any activity or group of activities that takes one or more inputs, transforms
and adds value to them, and provides one or more outputs for its customers.
Answer: process
Keywords: process, activity, input, value

10
22) List and briefly describe five differences between services and manufacturing. Provide
examples to illustrate your arguments.
Answer:
Manufactured Goods Services
Physical, durable products Intangible, perishable products
Output can be produced, stored, and
transported
Can't be produced and stored
Low customer contact Customers can be part of the input
and part of the process
Have days to deliver Must be offered within minutes
Regional, national, or international
markets
Local markets
Large facilities Small facilities
Capital intensive Labor intensive
Quality easily measured Quality not easily measured
Examples will vary.
23) Identify a large employer in your hometown. Describe this organization's inputs, processes,
and outputs.
Answer: Answers will vary based on the employer selected.
Keywords: input, process, output
1.3 A Supply Chain View
1) A core process is a set of activities that delivers value to external customers.
Answer: TRUE
Reference: A Supply Chain View
Keywords: core process, supply chain
Learning Outcome: Compare common approaches to supply chain design.

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11
2) The supplier relationship process selects the suppliers of services, materials and information,
while the order fulfillment process facilitates the timely and efficient flow of these items into the
firm.
Answer: FALSE
Keywords: supplier relationship, process, order fulfillment process
3) One distinction between core processes and support processes is that core process can cut
across the organization while support processes do not.
Answer: FALSE
Difficulty: Easy
Keywords: core process, process analysis
4) A set of activities that delivers value to external customers is a:
A) supply chain.
B) core process.
C) support process.
D) system.
Answer: B
Keywords: activity, core process
5) Budgeting, recruiting, and scheduling are examples of a(n):
A) development.
B) core process.
C) support process.
D) system.
Answer: C
Keywords: activity, support process

12
6) The process that facilitates the placement of orders and identifies, attracts, and builds
relationships with external customers is called the:
A) customer relationship process.
B) new service development process.
C) order fulfillment process.
D) supplier relationship process.
Answer: A
7) The process that includes the activities required to produce and deliver the service or product
to the external customer is called the:
A) customer relationship process.
B) new service development process.
C) order fulfillment process.
D) supplier relationship process.
Answer: C
Keywords: process, order fulfillment
8) Which of these business processes typically lies within the realm of operations?
A) complaint handling
B) customer relationship
C) help desks
D) waste management
Answer: B
9) The cumulative work of the processes of a firm is a(n) .
Answer: supply chain
Keywords: processes, supply chain

13
10) provide vital resources and inputs to core processes.
Answer: Support processes
Keywords: support process, core process
1.4 Operations Strategy
1) A firm's core competencies should determine its core processes.
Answer: TRUE
Reference: Operations Strategy
Difficulty: Easy
Keywords: core competency, core process
2) Firm A wants to enter a foreign market and has a skill that is difficult to duplicate. Firm B
desires this skill, so Firm A works with Firm B in an arrangement known as a joint venture.
Answer: FALSE
Keywords: strategic alliance
3) The framework for carrying out all of an organization's functions is:
A) the competitive priority.
B) the corporate strategy.
C) the market analysis.
D) the organizational design.
Answer: B
Keywords: corporate strategy

14
4) In response to social and political moves to discourage cigarette smoking, major cigarette
manufacturers have had to diversify into other products. Identifying the pressures against
smoking is an example of:
A) environmental scanning.
B) market segmentation.
C) flow strategy.
D) mission statement development.
Answer: A
Keywords: environmental scanning, strategy
Learning Outcome: Discuss the role of operations management in corporate social responsibility
and sustainability
5) A company realizes that recent layoffs at its primary customers reflect potential falling
demands for its customers' products, and hence for its own products. The company has engaged
in:
A) flow strategy.
B) market segmentation.
C) mission statement redefinition.
D) environmental scanning.
Answer: D
Keywords: environmental scanning
6) Core competencies are:
A) product or service attributes that represent the needs of a particular market segment.
B) another name for competitive priorities.
C) various flow strategies.
D) the unique resources and strengths that management considers when formulating strategy.
Answer: D
Keywords: core competency, strategy

15
7) Which of the following is an example of a core competency?
A) facilities
B) top quality
C) low-cost operations
D) on-time delivery
Answer: A
Keywords: core competency
8) Price, quality, and the degree of customization are all examples of:
A) volume needs.
B) other needs.
C) product needs.
D) delivery system needs.
Answer: C
Keywords: needs assessment
9) The Gap, Inc. has targeted teenagers and young adults in need of casual clothes, and through
its GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example
of:
A) market segmentation.
B) a collaborative effort between the company and its customers.
C) a needs assessment.
D) a mission statement.
Answer: A
Keywords: market segmentation

16
10) One form of strategic alliance is the , in which two firms agree to cooperate to
produce a product or service together.
Answer: joint alliance
Keywords: joint alliance
11) What are four core processes in a firm and how are they related?
Answer: The customer relationship process identifies, attracts, and builds relationships with
external customers and facilitates the placement of orders. The order fulfillment process includes
activities required to produce and deliver the service or product to the external customer. The
new service/product development process designs and develops new services or products, which
may be to customer specifications. The supplier relationship process selects the suppliers of
services, materials, and information and facilitates the flow of these items into the firm. All of
these processes exist to provide a service or product to the customer.
Keywords: core process, customer relationship, service/product development, order fulfillment,
supplier relationship
1.5 Competitive Priorities and Capabilities
1) Competitive priorities are the means by which operations implements the firm's corporate
strategies.
Answer: FALSE
Reference: Competitive Priorities and Capabilities
Keywords: competitive priority, corporate strategy
2) Flexibility is a possible competitive priority.
Answer: TRUE
Difficulty: Easy
Keywords: flexibility, competitive priority

17
3) A firm once made purchasing decisions based on which supplier had the lowest cost. But once
cash flow was healthy, purchasing decisions were made based on the fastest delivery of goods
and services by firms. In this case, delivery speed is clearly the order qualifier.
Answer: FALSE
Keywords: competitive priority, order qualifier
4) Admission to the prestigious school had become so competitive that a high GPA is no longer
enough to separate one fresh-faced high school student from another. Today's outstanding
candidate must also demonstrate their involvement in a myriad of extracurricular activities in
order to be admitted. It seems that good grades are now:
A) a needs assessment.
B) order qualifiers.
C) order winners.
Answer: B
Difficulty: Easy
Keywords: order qualifier
5) The first three cars I bought all fell apart around 50,000 miles. It was called planned
obsolescence and no one seemed to care until companies entered the market that promised
70,000, then 80,000, and finally 100,000 warranties. What sets a great car apart from a good one
now is not the quality, which is assumed, but performance, safety and fuel economy. A car that
can achieve all three is highly sought after. In the automotive market, performance, safety and
fuel economy are sterling examples of:
A) order winners.
B) a needs assessment.
C) order qualifiers.
Answer: A
Difficulty: Easy
Keywords: order winner

18
6) You are interested in buying a laptop computer. Your list of considerations include the
computer's speed in processing data, its weight, screen size, and price. You consider a number of
different models, and narrow your list based on speed and monitor screen size, then finally select
a model to buy based on its weight and price. In this decision, weight and price are examples of:
A) order qualifiers.
B) a needs assessment.
C) order winners.
Answer: C
Difficulty: Easy
Keywords: order winner
7) Competitive priorities:
A) may change over time.
B) are the cost, quality, time and flexibility dimensions that a process or supply chain actually
possesses and is able to deliver.
C) are used to distinguish between a service that is considered and one that is actually purchased.
D) are developed by a review of internal operations capabilities.
Answer: A
Difficulty: Easy
Keywords: competitive priorities
8) You are interested in buying a laptop computer. Your list of considerations include the
computer's speed in processing data, its weight, screen size and price. You consider a number of
different models, and narrow your list based on its speed and monitor screen size, then finally
select a model to buy based on its weight and price. In this decision, speed and monitor screen
size are examples of:
A) order winners.
B) a mission statement.
C) a needs assessment.
D) order qualifiers.
Answer: D
Difficulty: Easy
Keywords: order qualifier

19
9) Using an airline example for competitive priorities, the process capability of handling service
needs of all market segments and promotional programs would be best described by:
A) top quality.
B) variety.
C) consistent quality.
D) delivery speed.
Answer: B
Difficulty: Easy
Keywords: variety, competitive priorities
10) A company's ability to quickly introduce a new service or product would be best described
as:
A) volume flexibility.
B) variety.
D) development speed.
Answer: D
Difficulty: Easy
Keywords: development speed, competitive priorities
11) A business focusing on increasing the efficiency of its operations is more directly addressing:
B) variety.
D) low-cost.
Answer: D
Difficulty: Easy
Keywords: efficiency, low-cost, competitive priority

20
12) While other suppliers bidding for the contract brought bids with lower per unit costs,
Orchard wanted to take delivery based on the fact that the components they were using were
machined to their exacting specifications 99.99999% of the time. Orchard's competitive priority
was:
A) top quality.
B) consistent quality.
C) on-time delivery.
D) delivery speed.
Answer: B
13) A popular haberdashery could take a customer's measurements in the afternoon and produce
a dandy suit ready for customer pickup by next morning. Their competitive priority was:
A) variety.
B) top quality.
C) delivery speed.
D) on-time delivery.
Answer: C
14) For students not wanting a traditional major in marketing or accounting, for example, the
college decided to create a general business major, which allowed any combination of the easiest
business courses to comprise the program. The competitive priority achieved in this example is:
A) customization.
B) delivery speed.
D) low-cost.
Answer: A
Difficulty: Easy
Keywords: customization, competitive priority

21
15) A company's ability to support varying rates of production is BEST described as:
B) variety.
D) development speed.
Answer: A
Difficulty: Easy
Keywords: volume flexibility, competitive priorities
16) A firm gains competitive advantage by outperforming competitors in terms of competitive
priorities, which fall into four major groups:
Answer: cost, quality, time, flexibility
Difficulty: Easy
, , , and .
Keywords: competitive priorities, cost, quality, time, flexibility
17) is the elapsed time between receiving a customer's order and filling it.
Answer: Lead time
Difficulty: Easy
Keywords: time, delivery speed
18) measures the frequency with which delivery-time promises are met.
Answer: On-time delivery
Difficulty: Easy
Keywords: on-time delivery

22
19) is the ability to accelerate or decelerate the rate of production quickly to handle
large fluctuations in demand.
Answer: Volume flexibility
Difficulty: Easy
Keywords: volume flexibility, demand fluctuations
20) Every sub-contractor knew that their quality had to be excellent to be considered for the
project; it was their ability to deliver on time that would secure the lucrative contract. Quality
was recognized as being an , but on-time delivery was the .
Answer: order qualifier, order winner
Keywords: order qualifier, order winner
21) Explain what an operations strategy is and the importance of competitive priorities. Give an
example from an organization (public or private, manufacturing or service).
Answer: An operations strategy is the means by which operations implements the firm's
corporate strategy. Competitive priorities are the key capabilities that operations must develop to
compete successfully in a market segment. Possible competitive priorities include low-cost
operation, high-performance design, consistent quality, delivery speed, on-time delivery,
development speed, customization, and volume flexibility. Examples will vary.
Keywords: operations strategy competitive priorities
22) Name the two competitive priorities for quality and give an example of each.
Answer: The two competitive priorities are top quality, which is the determination of the level
of operations performance required in making a product or performing a service, and consistent
quality, which measures the frequency with which the product or service meets design
specifications. Examples will vary.
Keywords: competitive priorities, top quality, consistent quality

23
23) Name the three competitive priorities for time and give an example of each.
Answer: The three competitive priorities for time are delivery speed, on-time delivery, and
development speed. Delivery speed refers to the elapsed time between receiving a customer's
order and filling it. On-time delivery measures the frequency with which delivery-time promises
are met. Development speed measures how quickly a new product or service is introduced.
Examples will vary.
Keywords: competitive priorities, delivery speed, on-time delivery, development speed
1.6 Addressing the Trends and Challenges in Operations Management
1) Strategic plans are developed farther into the future than tactical plans.
Answer: TRUE
Reference: Addressing the Trends and Challenges in Operations Management
Difficulty: Easy
Keywords: strategic plans, tactical plans
2) Most products today are composites of global materials and services from throughout the
world.
Answer: TRUE
Keywords: globalization, products
3) The increased global presence of many firms has lessened the burden to behave ethically.
Answer: FALSE
Difficulty: Easy
Keywords: ethics, global presence
Learning Outcome: Discuss the influences of the global competitive environment on operations
management

24
4) Operations managers are involved at both the strategic and tactical levels of corporate
strategy.
Answer: TRUE
Difficulty: Easy
Keywords: strategic level, tactical level
5) In an assembly operation at a furniture factory, six employees assembled an average of 450
custom chairs per 5-day week. What is the labor productivity of this operation?
A) 90 chairs per worker per day
B) 20 chairs per worker per day
C) 15 chairs per worker per day
D) 75 chairs per worker per day
Answer: C
Keywords: labor productivity
AACSB: Analytical Thinking
6) A manufacturing process requires 12 minutes of labor to make 10 units of product. Which of
the following actions will increase productivity?
1. Increase labor per 10 units of production
2. Decrease labor per 10 units of production
3. Increase number of units per 10 minutes of labor
4. Decrease number of units per 12 minutes of labor
A) 1 and 3 only
B) 2 and 4 only
C) 1 and 4 only
D) 2 and 3 only
Answer: D
Difficulty: Easy
Keywords: labor productivity

25
7) The details of weekly output and input for a fabrication process are as follows: output is 400
units, with a standard selling price of $100 per unit. For the week, total labor costs are: 10
workers at 40 hours for the week, are paid $15 per hour. Total material costs for the 400 units are
$5,000. Weekly overhead is charged at the rate of 1.5 times the labor costs. What is the
multifactor productivity for the week?
A) 0.02
B) 0.75
C) 1.50
D) 2.00
Answer: D
Difficulty: Easy
Keywords: multifactor productivity
Table 1.2
The Abco Company manufactures electrical assemblies. The current process uses 10 workers
and produces 200 units per hour. You are considering changing the process with new assembly
methods that increase output to 300 units per hour, but will require 14 workers. Particulars are as
follows:
CURRENT
PROCESS NEW PROCESS
OUTPUT (UNITS / HOUR) 200 300
NUMBER OF WORKERS 10 14
MATERIAL COST /
HOUR $120 $150
Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor
costs. Finished switches sell for $20 / unit.
8) Use the information provided in Table 1.2. What is the multifactor productivity of the current
process?
A) less than or equal to 8.0
B) greater than 8.0 but less than or equal to 10.0
C) greater than 10.0 but less than or equal to 12.0
D) greater than 12.0
Answer: C

26
9) Use the information provided in Table 1.2. What is the multifactor productivity of the new
process?
A) less than or equal to 8.0
D) greater than 12.0
Answer: D
10) Use the information provided in Table 1.2. Based on your productivity calculations, what
decision should you make?
A) implement the new process
B) stay with the current process
C) need more information to make a decision
D) Either process is acceptable (since the multi-factor productivities are the same).
Answer: A
11) It takes the Blacksburg shipyard twenty six weeks with 500 workers to build a small tanker.
Material costs are $32 million and overhead costs are $2 million. Workers cost $40 per hour
including benefits and work 40 hours per week. The ship sells for $75 million. What is the
multifactor productivity ratio?
A) less than 1.0
D) greater than 3.0
Answer: B

27
12) Which of the following would be considered an advantage of global competition?
A) ability to safeguard proprietary technology in working with offshore suppliers
B) a recent climate of low political risk and lessening nationalization
C) high levels of worker skills in foreign countries mean less required training
D) strong global competition and increased worldwide demand
Answer: D
Keywords: global competition
AACSB: Diverse and Multicultural Work Environments
13) With regards to globalized operations and cost advantages, what China is to manufacturing,
India is to:
A) services.
B) human resources.
C) finance.
D) supply chain.
Answer: A
management
14) Companies that do not have operations in China find it difficult to compete based on the
basis of low prices with companies that do. Instead those companies tend to compete based on:
A) quality and social responsibility.
B) speed and small production runs.
C) luxury.
D) quality and small production runs.
Answer: B
management

28
15) Productivity is defined as divided by .
Answer: output, input
Keywords: output, input, productivity
16) Half of the world's greenhouse gases are produced by only nations.
Answer: seven
Keywords: environment, greenhouse gas
Learning Outcome: Discuss the role of operations management in corporate social responsibility
and sustainability
AACSB: Ethical Understanding and Reasoning
17) How has global competition affected productivity? Cite specific examples and reference the
productivity equation to support your thesis.
Answer: Examples will vary; students should argue that the increase in global competition has
increased productivity for those firms that have survived. Firms that fail (or have already failed)
to effectively compete with new competition suffer from reduced sales, so the numerator in the
productivity equation will be lower, perhaps without a commensurate decrease in the
denominator, resulting in reduced productivity. Firms that are effectively competing against
global competition probably have higher levels of productivity. Global operations might include
cheaper or better raw materials and labor, resulting in a smaller denominator and higher
productivity. Global competition might also inject new management techniques and leaner
operations if some services are outsourced to specialist companies.
Keywords: productivity, raw materials, labor
management

29
18) What are some disadvantages of globalization?
Answer: Operations in other countries can have disadvantages. A firm may have to relinquish
proprietary technology if it turns over some of its component manufacturing to offshore suppliers
or if suppliers need the firm's technology to achieve desired quality and cost goals. Political risks
may also be involved. Each nation can exercise its sovereignty over the people and property
within its borders. The extreme case is nationalization, in which a government may take over a
firm's assets without paying compensation. Exxon and other large multinational oil firms are
scaling back operations in Venezuela due to nationalization concerns. Further, a firm may
actually alienate customers back home if jobs are lost to offshore operations. Employee skills
may be lower in foreign countries, requiring additional training time. South Korean firms moved
much of their sports shoe production to low-wage Indonesia and China, but they still
manufacture hiking shoes and in-line roller skates in South Korea because of the greater skills
required. In addition, when a firm's operations are scattered globally, customer response times
can be longer. Coordinating components from a wide array of suppliers can be challenging.
Keywords: globalization
management
19) What are some ethical issues that are prevalent in organizations that have a global operations
presence?
Answer: Some countries are more sensitive than others about conflicts of interest, bribery,
discrimination against minorities and women, minimum-wage levels, and unsafe workplaces.
Managers must decide whether to design and operate processes that do more than just meet local
standards. In addition, technological change brings debates about data protection and customer
privacy. In an electronic world, businesses are geographically far from their customers, so a
reputation of trust is paramount.
Keywords: ethical issues, ethics, globalization

30
20) Barry's Tire Service completed 100 tire changes, six brake jobs, and 16 alignments in an
eight-hour day with his standard crew of six mechanics. A brake specialist costs $16 per hour, a
tire changer costs $8 per hour, and an alignment mechanic costs $14 per hour. The materials cost
for a day was $2000, and overhead cost was $500.
a. What is the shop's labor productivity if the retail price for each respective service is $60, $150,
and $40?
b. What is the multifactor productivity, if the crew consisted of two of each type mechanic?
Answer:
a. = $157/hr
b. = 2.43
Keywords: labor productivity, multifactor productivity

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He knew that a stage left Oakley, connecting with the morning
train going down.
“What’s the shortest way to the railroad?” he demanded. “I’ve got
to get to the city by evening.”
“Well, there’s the morning train down from Ormond,” said the
messenger. “But you can’t make it. It’ll take you ’most all day to get
to Ormond.”
“That’s mebbe the shortest way, but it ain’t nohow the quickest,”
remarked Lynch. “Leastways, if you’ve got a canoe. I reckon
Charlie’s got his pretty near patched up by this time.”
“How do you mean?” Tom demanded.
“Why, paddle down to the foot of Little Coboconk, and then right
down the river, for mebbe fifteen or sixteen miles. You’ve been that
way. You remember where a little creek runs out through a big
swamp and into the river? Well, you land on the side opposite the
creek, and the railway ain’t much more’n five miles straight west,
right across the bush. It’ll be rough traveling, maybe, but you ought
to make it in three or four hours.”
Tom glanced at his watch. It was just after seven o’clock. The
train left Ormond at ten-thirty. He could surely make it. A moment
later Charlie came up for instructions, having finished the repairs to
his canoe.
“Hold on, Charlie! I’m going with you,” Tom exclaimed. “I’ll try it,
Lynch. Are you sure the raft’s safe?”
“Safe as if she was in the sawmill. You can trust her to me. Trust
the boss to us, too. Charlie can go on to Oakley and bring back the
doctor.”
“And mind you telegraph me what he says,” Tom insisted. “Here’s
my Toronto address. But I’ll be back here in three or four days, I
hope.”
It did not occur to Tom to change into his city clothes. He
hastened to get into the canoe, taking the bow paddle while Charlie
sat at the stern; and they started down the lake, almost in the face
of the wind, which still blew strongly.

It was rough, breathless paddling, though they hugged the shelter
of the shore as much as possible. They made slow time on that
stage of the journey, but when they reached the river things went
more easily. The river ran swiftly and was rather shallow now, but
there was always plenty of water for the canoe, and the faster the
current the better. Down the stream they shot, past the old trail to
Uncle Phil’s ranch, around the wide curves bordered by the incessant
green of the spruces, silently and swiftly, with a speed that filled
Tom with renewed hope. He was in fine physical condition; the
hour’s rest had restored him, and the rough and sleepless night
behind him had left only a nervous tension that for the time being
actually stimulated his sinews.
At half-past eight by his watch he felt sure that they must have
come nearly ten miles. He suddenly smelled smoke, and was
alarmed.
“What’s that, Charlie? Fire?” he called over his shoulder.
The Ojibway sniffed.
“Fire—sure. Long piece from here, though,” he answered.
Smoke certainly smelled strong in the air, coming up on the wind,
but no fire was anywhere in sight. The river grew wider and deeper,
running with a strength that almost outstripped the paddles. The
miles reeled off swiftly. Tom was keeping a close watch on the shore,
and it was not much after nine o’clock when he shouted to Charlie
and pointed ashore.
On the left bank a great tamarac swamp came down to the water,
and just opposite them a small creek flowed sluggishly into the river,
oozing through a jungle of evergreen and fern.
“Hold on!” he cried, and the steersman guided the canoe ashore.
He looked at the landmarks more carefully. It must be the place
Lynch had meant. Somewhere about five miles to the west lay the
railway.
“I stop here, Charlie,” he said hurriedly. “You go on to Oakley as
fast as you can paddle, and get the doctor. I’ll be back soon.”
Charlie had already been provided with a note for the doctor,
tucked safely inside his felt hat. He nodded impassively.

“Sure, I go quick, Tom,” he said. “I watch for you come back.”
He put Tom ashore, and went on down the stream with quick
paddle-strokes, not once glancing back. Tom did not stay to watch
him, either. He glanced at the compass on his watch-chain and
struck straight in from the river.
The train was due at half-past ten. He had an hour, and long-
distance running had been his speciality in track athletics. It was
only five miles, and, however rough the country might be, he felt
quite confident of being able to cover the distance in time.
For a little way he had to go slowly, pushing his path through a
dense tangle of spruce and tamarac, but, once well away from the
river, the woods opened out. He went up and down one rolling ridge
after another, splashed through a rock-strewn brook or two, crossed
a strip of level forest, and then had to slow down for a last year’s
burned slash, where the ground was terribly encumbered with dead,
charred logs and jagged spikes of branches and roots.
A smell of smoke seemed to hang about the place still, he fancied,
and then a veering gust brought him a whiff of smoke that was
certainly fresh. He was afraid to swerve from the compass bee-line,
but he felt extremely uneasy. He passed the old “burn” and entered
a region of jack-pine, and presently there was no mistaking the
bluish haze and the odor of ashes and smoke that filled the air. Then
the woods ceased all at once, and he found himself on the edge of a
great ruined slash that fire had made within two or three days, at
the most.
He halted, despairingly. There seemed no end to the burned strip,
north or south, and he could get no clear notion of its width, for the
air was full of smoke and clouds of fine ashes that drove in whirls
before the wind. It might not be very wide, but it looked too
dangerous to cross. Yet he felt sure that he must be near the
railroad; he had surely come three or four miles, and as he stood
irresolute he heard the long blast of a locomotive far away through
the trees.
He thought it was miles up toward Ormond. The railway must be
only a short distance ahead, and he plunged desperately into the

smoky belt.
The fire was really entirely burned out, as he discovered
immediately, but at the first steps he went ankle-deep in ashes, and
felt the heat strike through his boot-soles. The ground was still hot,
and beds of embers smoldered here and there beneath the ashes.
His heart almost failed him again. He might step into a mass of
hot coals that would scorch and cripple him. But there was no way
around; he had to cross this barrier or give up, and he went on
again, moving in long leaps to touch the ground as little as possible.
Wherever he could, he paused on a log to gain breath and lay his
course.
The ground was cumbered with masses of fallen trees, charred,
spiky, a continual chevaux-de-frise of tangled stubs and roots. They
lay at every possible angle, and Tom had to edge his way round
them, climb over, or squeeze through. It was like the “burn” he had
already crossed, but this one was fresh and hot. By sheer good luck
he escaped stepping into any spots of fire, but the ground burned
under his feet, and the ashes rose in smothering clouds as he
plowed through them.
The ground was treacherous under its thick gray covering. It was
mined with holes and strewn with hidden entanglements. Two or
three times Tom tripped and went headlong, almost choked in the
ashes. His eyes grew filled with the fine powder; he could not see
clearly nor make sure of his directions, and he had a terrible feeling
that his strength was failing.
He heard the locomotive whistle again, and much nearer. It spoke
failure, he thought. He could never reach the station now in time for
the train. To his blurred eyes his watch seemed to mark half-past ten
already. He was desperately tired, and burning with thirst. He
thought that he might as well rest a little; he longed more than
anything to sink down in the ashes, anywhere, and sleep.
Still he kept doggedly moving, driven by he hardly knew what
force. The rest of the journey was a kind of nightmare, whose
details he could never quite remember. Hours seemed to pass in the
torment of that suffocating atmosphere—hours of intense heat, of

stumbling, of terrible thirst, and of overwhelming exhaustion. Then
he seemed to see trees ahead. They were charred evergreens, but
the carpet of hot ash ceased, and a little beyond he saw the cool,
blessed green of living spruces.
Stimulated now by the consciousness that he had come through,
he made a last spurt, and in a few minutes he emerged suddenly
upon the railway. He stopped, confusedly; and then perceived, a
hundred yards down the track, a red-painted wooden station and the
smoke of a locomotive.
He rushed toward it. The place was no more than a flag-station
with a log house or two in the background; and this was not a
passenger-train that stood there. It was not even a mixed train; it
was a long freight-train, engaged just then in coupling up a few flat-
cars loaded with fresh-cut ties.
The conductor was standing on the platform, talking leisurely with
the station agent, and they both stared in amazement as Tom
dashed up, blackened, ash-smeared, and wild-eyed.
“Give me a ticket to Toronto!” he exclaimed. “Am I in time? Has
the train—”
“The morning train went down half an hour ago,” said the agent.
“There’s no other till six-fifteen to-night. What’s the matter—
anything happened?”
“What time does that night train reach Toronto?”
“At ten, when she’s on time.”
That would be hours too late. Tom’s heart went down like lead.
He had lost the race after all. He felt discouraged and utterly played
out, but a last resource occurred to him.
“Can’t you fix me up to go down on this freight?” he pleaded.
“It’s against the rules to carry any passengers on freight-trains,”
said the agent. “Can’t be done, I’m afraid. Besides, this freight only
goes to Bala Junction, forty miles down.”
Tom turned away, tears rising irrepressibly in his eyes. This time
he seemed to have reached a barrier which there was no passing.
He saw the agent and the conductor looking curiously after him, as
he walked down to the end of the platform. It occurred to him that

he ought to telegraph at any rate; and he went into the station and
wrote a rather long message for Mr. Armstrong and another to the
manager of the Erie Bank.
The agent came in to take the messages. Tom had money in his
pocket; he paid for them, and went out to the platform again, where
the freight conductor watched the manipulation of his train. It was
going to Bala Junction, and Bala Junction, Tom remembered, was on
the main line north from Toronto. Many trains passed that point
daily. If he could get there, he could surely make a connection for
the city that afternoon. The conductor looked good-natured, and
Tom ventured to approach him.
“Look here, can’t you let me ride as far as Bala Junction?” he
entreated. “It’s an important matter—almost life and death. I’ll pay
fare,—double fare, if you like,—but I’ve got to get to the city by
seven o’clock.”
“My boy,” returned the conductor, not unkindly. “You heard what
the agent said. I’m not allowed to carry any passengers at all—might
get into trouble if I did. But,” he added, “there’s an empty box-car
half-way up the train, and I’d never know whether there was
anybody in it or not. We get to the Junction half an hour before the
south-bound express arrives.”
Tom burst out with a grateful ejaculation, but the conductor
winked at him, and then turned and looked rigidly in the other
direction. The boy rushed down the track alongside the train, found
the open door of the box-car, and swung himself into it. He sat down
on the floor in a corner, and almost instantly lapsed into a sort of
stupor of weariness, from which he was roused by the violent shock
and crash of the train’s getting under way. He saw the station slide
past the open door; the endless line of spruce trunks succeeded it.
The train gathered speed; he was really started for the city at last.
It was not a comfortable ride. The freight-cars jolted and pitched,
crashing together with shattering jolts as the train slackened or
increased speed. Despite this, however, Tom dozed during a good
deal of the forty miles to Bala, arousing fully only at the occasional
halts. No one came near him, and nobody appeared to see him

when he slipped out of his box-car at the Junction, and made haste
to buy his ticket for Toronto on the express.
The express was late, and he filled in the time by endeavoring to
brush and clean himself a little, with imperfect success. He obtained
something to eat at the lunch-counter, and paced up and down the
platform counting the minutes. The express arrived at last, and he
was the only passenger to get aboard. He longed to take a sleeper
berth, but he was so disreputable-looking that he dared not attempt
it. He feared even to enter the first-class coaches, and dropped into
a seat in the smoker.
The hard part of the journey was over. Everything depended now
on the train, and he resigned himself to chance, with a dull fatalism.
He had done all he could, and he was too deadly weary to speculate
any more upon his chances of winning. He slept through most of the
journey, and came out, dazed and confused, upon the platform of
the Union Station, to see the big illuminated face of the clock
indicating eight.
It stung him again to desperate anxiety. He hastened to a
telephone booth in the waiting-room and called Mr. Armstrong’s
office. Central was unable to get any answer. The office must be
closed. He then rang up the lawyer’s house. A woman’s voice
answered.
“Mr. Armstrong is downtown, attending a business meeting at the
King Edward Hotel. Is there any message?”
Tom dropped the receiver into the hook. He knew well what that
business meeting was. They were holding it at the King Edward,
then. Luckily, the hotel was not far from the depot, and a direct
street-car line carried him there in five minutes.
The throng of well-dressed people about the door of the big hotel
stared at the grimed, smoky, ragged young man who burst in, and
the outraged door-porter made an ineffectual grab to stop him. Few
such disreputable figures had ever passed that portal. Tom cast a
rapid glance around the leather chairs of the marble lobby, failed to
spy the face he sought, and hurried up to the desk.
“Mr. Henry Armstrong—the lawyer—is he here?”

“Haven’t seen him,” returned the clerk, eyeing Tom with
indignation, and he beckoned privately to a porter, indicating that
the young man should be removed.
Tom glanced over the lobby again. He would have to wait. He
dropped into one of the big easy-chairs, but the porter laid a hard
hand on his shoulder.
“Come now, you can’t sit here. You’ve got to get out.”
Tom rose, confused and humiliated. He was aware of scores of
curious and amused faces looking at him. The porter was edging him
toward the exit, when somebody touched his arm.
“Bless my soul, Tom Jackson! I saw you come in, but didn’t know
you. What in the world have you been doing to yourself?”
Tom almost gasped with deep relief. It was Mr. Armstrong himself,
who had been in conversation with a small, alert-looking man with a
gray mustache.
“Where’s your father? I got your telegram, but couldn’t make out
what you were driving at,” pursued the lawyer.
“Father’s badly hurt. The meeting—is it over yet?” Tom exclaimed,
choking with excitement.
“The meeting? No, it hasn’t started yet. We’re waiting for one of
the important men. This is Mr. Laforce, of the Erie Bank. He says he
had a telegram from you, too.”
“Of course I wired him!” cried Tom. “You must call the meeting
off. We’re not bankrupt. We’re all right now. We’ve got upward of
fifty thousand feet of good black walnut, worth three hundred dollars
a thousand—as good as cash—”
Mr. Laforce gave Tom a keen glance.
“You have, eh? Your wire sounded mysterious. Something in this,
Armstrong?”
“I think it’s worth looking into,” said Mr. Armstrong, laughing.
“If you’ve got all that, I guess the bank can carry you,” continued
the financier. “Of course we don’t want to push Matt Jackson into
bankruptcy. I guess anyway we’d better call the meeting postponed.”

That meeting was never held. Tom held a long conference with
the lawyer and the banker that evening, going home at last to his
deserted house, to tumble into bed and sleep like one dead till the
middle of the next forenoon. Late that day a telegram arrived from
the north:
Boss waked up and doing good. Doctor says no danger.
Raft safe.
Lynch.
Tom had another long talk over a dinner-table with Armstrong
that evening, finding the lawyer more human than he had ever
considered him before. The next morning he left for the Coboconk
lakes again, accompanied by a representative of the Erie Bank.
They found Mr. Jackson conscious and much recovered, weak
indeed, but eager to be out again. The skull had not been fractured;
he had suffered merely a concussion, and had been half drowned
into the bargain, and when Tom and his companion arrived he
insisted on sitting up and talking business.
The big raft still lay behind its boom in the northern bay, and was
an imposing sight, even after all the damage it had suffered. Nearly
a third of it had broken away in the storm. Some of the cribs had
remained afloat; some had gone ashore; and Lynch had been
energetically picking up everything that could be salvaged. Much of
the walnut had been spilled off the loose cribs, but altogether Lynch
estimated that they still had a good hundred and twenty thousand
feet.
At any rate the sight of the timber so impressed the bank
representative that he willingly agreed to “carry” the business a little
longer. All that remained was to get the timber out. Mr. Jackson had
originally thought of sawing it up at Oakley, but finally decided to
team the logs out from that place and ship it to Toronto, where the
precious wood could be more carefully handled.
They had to wait several days for a north wind to enable the raft
to go down the lake, and during this time, to Tom’s immense

surprise, appeared his cousin Dave. With some embarrassment Dave
explained that the “gold boom” had turned out a disappointment. He
had staked some claims, but there was nothing in them. He looked
over the raft with amazement and some chagrin.
“To think that I spent two years within a mile of all that and never
knew it!” he commented.
“We’ll give you a job as Lynch’s lieutenant—four dollars a day and
board,” Tom suggested, laughing.
Dave declined. He was needed on the farm, but he gladly
accepted the return of the fifteen dollars that Tom had borrowed at
that critical moment in the woods.
The raft went down to Oakley without mishap, a timely rainfall
having swollen the river to a good depth, and it aroused great
excitement at that town. Here they broke it up, and for a long time
the heavy logging teams were busy, slowly hauling the timber out to
the railway.
Two dozen logs or so vanished mysteriously between Oakley and
Toronto, but the rest of the timber was stored safely in Mr. Jackson’s
yards to dry out thoroughly. It was then carefully sawed up. It sold
somewhat slowly but at a high price, and not a scrap of it was
wasted. Altogether, the walnut brought a gross sum of $44,000,
besides several hundred dollars obtained from the rough spruce and
jack-pine of the floats, which was left at Oakley.
Charlie followed the raft down to Oakley and hung about till the
last load was teamed out. Tom looked forward with genuine regret
to saying good-by to this companion who had stood by him through
so many adventures. By way of deadening the farewell, he sent to
Toronto for a magnificent repeating-rifle with a stock of ammunition,
a new canoe, a miscellaneous camp outfit, and a set of traps, and
presented this unexpected wealth to Charlie just before he left.
“If you ever need anything, Charlie,” he said, “if the trapping turns
out bad or you have any trouble, you go to my uncle Phil Jackson.
You know where he lives. He’ll give you anything you want.”
The Ojibway looked over the new outfit, which would make him
the envy of all his tribe, and raised his eyes to Tom’s, full of a deep

glow.
“You good fellow, Tom,” he said. “You come back some time,
mebbe. I watch for you.”
“Sure I’ll come back, Charlie,” Tom promised. “We’ll go trapping
together yet.”
Thus far, however, Tom has not gone back. He reëntered the
university that autumn, with renewed ambition to finish his studies;
and, without altogether neglecting collegiate athletics, he spent most
of his spare time in his father’s office and yards.
The forty-odd thousand dollars was not a fortune, but it carried
the business over a bad time, and was enough to set Mr. Jackson on
his feet again. Though, as he says, the lumber trade is no longer
what it used to be, the Jackson establishment seems to be
prospering. After Tom’s graduation, however, the office stationery
bore the new heading:
MATTHEW JACKSON & SON.
Perhaps the change brought luck.
THE END

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