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2
Copyright © 2016 Pearson Education, Inc.
Reference: Role of Operations in an Organization
Difficulty: Easy
Keywords: accounting, human resources, engineering
Learning Outcome: Discuss operations and operations management as a competitive advantage
for the organization.
AACSB: Application of Knowledge

3
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
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

4
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.

5
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

6
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

7
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

8
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

9
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

10
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

11
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.

12
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

13
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

14
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

15
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

16
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

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