5.6-5.7

Question 1

What is the term for a situation where multiple stages of the supply chain of a business are owned and operated by that business?

Answer 1

Vertical integration

Question 2

A hotel has a capacity of 1,000 rooms. On a given day, the number of rooms booked is 860. What is the hotel’s capacity utilization for that day?

Answer 2

86%

Question 3

A business has the following financial information:

Quantity 1 million units
Price per unit $4
Variable cost per unit $1
Fixed cost $800,000
What is the operating leverage for this business?

Answer 3

1.36

Question 4

A toy manufacturer has 60 defects for every 1,000 toys it produces. What is the defect rate?

Answer 4

60%

Question 5

A book publisher has a monthly total cost of $10,000. This book publisher produces 1,000 books per month. What is the unit cost for this publisher’s books?

Answer 5

$10 per book

Question 6

A beverage factory has 2 machines that can produce a total of 50,000 drinks per day. What is the capital productivity of this factory?

Answer 6

25,000 drinks per machine per day

Question 7

The proofreading department at a book publisher has eight employees. This department can proofread 40 books per month. What is the labor productivity of this department?

Answer 7

5 books per employee per month

Question 8

What is a benefit of just-in-case production over just-in-time production?

Answer 8

Increased economies of scale

Question 9

What is a benefit of just-in-time production over just-in-case production?

Answer 9

Improved cash flow

Question 10

What is an advantage of local supply chain procurement over global supply chain procurement?

Answer 10

Greater control

Question 11

What is an advantage of global supply chain procurement over local supply chain procurement?

Answer 11

Greater choice

Question 12

What is the term for the process of working with all of a business’s suppliers to ensure reliable and quality production and delivery of components and final goods?

Answer 12

Supply chain management

Question 13

What is the term for an operations management strategy where a business holds relatively large levels of buffer stocks so that a business can continue to operate when faced with an unforeseen event?

Answer 13

Just-in-case production

Question 14

What is the term for an operations management strategy where raw materials or other inputs are ordered and delivered immediately before their use, so that stock (inventory) can be minimized?

Answer 14

Just-in-time production

Question 15

Which of the following describes the impact on a company of a crisis?

Answer 15

Magnitude of cost if it occurs: high, Likelihood of occurrence: low

Question 16

Which of the following describes the impact on a company of creating a contingency plan?

Answer 16

Magnitude of cost: low, Likelihood of occurrence of cost: high

Question 17

What is an example of a requirement of time incurred in addressing a crisis?

Answer 17

Coordinating with attorneys

Question 18

What is an example of a type of cost of implementing a contingency plan?

Answer 18

Opportunity cost to develop plans for a range of different scenarios

Question 19

Which form of leadership would be most appropriate in times of crisis?

Answer 19

Autocratic

Question 20

Which of the following is not an example of a crisis?

Answer 20

Decrease in sales revenue

Question 21

Which of the following is not a factor in the effectiveness of crisis management?

Answer 21

Cost

Question 22

A fire drill is an example of ___.

Answer 22

An element of a contingency plan

Question 23

What type of plan addresses the central question “What if…?”

Answer 23

Contingency plan

Question 24

What is the main goal of a contingency plan?

Answer 24

To enable a business to return to normal operations as swiftly as possible.