C720 Operations and Supply Chain Management Practice Questions - Set 5 - Part 2

Test your knowledge of Operations and Supply Chain Management concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 21: A strategy that allows companies to store surplus products for potential future demand spikes, often stored externally, is known as:

a) Safety stock

b) Reserve capacity

c) Vendor Managed Inventory (VMI)

d) Continuous flow

Question 22: A company that focuses on enhancing product quality by preventing defects rather than correcting them afterward is applying:

a) Failure costs

b) Appraisal costs

c) Prevention costs

d) Holding costs

Question 23: In which demand scenario must a company adjust production to match variable customer demand by varying the workforce or using overtime?

a) Peak demand

b) Seasonal demand

c) Chase demand

d) Unexpected demand

Question 24: A company developing a new product with no historical demand data decides to rely on expert opinion for sales forecasts. This method is:

a) Exponential smoothing

b) Delphi Technique

c) Moving average

d) Trend analysis

Question 25: The primary goal of Total Quality Management (TQM) in an organization is to:

a) Minimize production time

b) Maximize short-term profits

c) Enhance customer satisfaction through quality

d) Reduce order-to-delivery lead time

Question 26: Which production process is best suited for making products that require little to no variation, such as petrochemicals?

a) Job shop

b) Batch processing

c) Continuous flow

d) Fixed-position layout

Question 27: Analyzing inventory items based on their importance and dollar value to prioritize management efforts is an approach known as:

a) Just-in-time (JIT)

b) ABC analysis

c) Vendor Managed Inventory (VMI)

d) Economic Order Quantity (EOQ)

Question 28: Which inventory system allows for intermittent restocking based on regular reviews rather than continuous monitoring?

a) Perpetual inventory system

b) Just-in-time (JIT)

c) Economic Order Quantity (EOQ)

d) Periodic inventory system

Question 29: A company that values continuous improvement and focuses on error prevention might adopt a technique known as:

a) Statistical Process Control (SPC)

b) Poka-yoke

c) Value stream mapping

d) Kaizen

Question 30: A business that minimizes order sizes and inventory by producing goods only when customer orders are received is following a:

a) Push system

b) Pull system

c) Safety stock system

d) Periodic inventory system

Question 31: When analyzing the sequence of activities in a project, which tool helps identify the longest path that determines the minimum completion time?

a) Fishbone diagram

b) Value stream map

c) Critical Path Method (CPM)

d) Gantt chart

Question 32: Which cost category in quality management involves expenses associated with inspecting products to ensure they meet standards?

a) Appraisal costs

b) Prevention costs

c) Internal failure costs

d) Holding costs

Question 33: In Six Sigma, which phase involves defining the problem, project goals, and customer requirements?

a) Define

b) Measure

c) Analyze

d) Improve

Question 34: When a company analyzes process stability by plotting data points over time within set limits, it is using which tool?

a) Scatter plot

b) Control chart

c) Pareto chart

d) Histogram

Question 35: A manufacturer that produces low-volume, high-variety items customized to individual customer requirements would benefit from which layout?

a) Product-oriented layout

b) Fixed-position layout

c) Job shop layout

d) Continuous flow layout

Question 36: Which inventory control approach involves reducing stock levels to the bare minimum required for immediate use, often triggered by actual demand?

a) Push system

b) Perpetual inventory system

c) Just-in-time (JIT)

d) ABC analysis

Question 37: Which forecasting model uses a weighted average of past data, giving more importance to recent observations?

a) Simple moving average

b) Exponential smoothing

c) Delphi Technique

d) Time series analysis

Question 38: A company that produces a wide range of products with different equipment and low volumes of each product would most likely use which type of layout?

a) Product-oriented layout

b) Fixed-position layout

c) Process-oriented layout

d) Assembly line

Question 39: In quality management, which term describes costs incurred when a defective product reaches the customer?

a) Appraisal costs

b) Internal failure costs

c) External failure costs

d) Prevention costs

Question 40: In project management, which chart visually represents the sequence of activities and the time required for each?

a) Pareto chart

b) Gantt chart

c) Control chart

d) Fishbone diagram

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