Chapter 6 - Operations

Question 1

The business function known as “operations” is given that name rather than the name “production”. This is because:

a) Production adds no value to the firm, whereas operations do add value
b) Production is a cost, rather than a source of revenue
c) Production takes place only in factories
d) The word “production” implies that Canadian businesses “produce” only goods. The term “operations” is more encompassing, and implies the creation of services as well as goods.

Answer 1

d) The word “production” implies that Canadian businesses “produce” only goods. The term “operations” is more encompassing, and implies the creation of services as well as goods.

Question 2

According to the most recent data, posted to your lecture notes, what proportion of Canadian GDP is attributable to the provision of intangible services, as opposed the creation of physical goods?

a) Approximately 30% - 40%
b) Approximately 40% - 50%
c) Approximately 60% - 70%
d) Approximately 70% - 80%
e) Approximately 80% - 90%

Answer 2

d) Approximately 70% - 80%

Question 3

Services are often more difficult to provide to customers than goods. This is due to all of the following reasons EXCEPT:

a) Services often require the customer to be physically present
b) Services typically cannot be stored for future consumption
c) Services are more expensive to provide than goods
d) Different customers require different features to the services they purchase

Answer 3

c) Services are more expensive to provide than goods

Question 4

Question 4
“Capacity planning” involves:
a) Deciding the maximum amount of capital the firm can borrow
b) Determining how many human resources the business needs to employ to work at full capacity
c) Deciding how much product/service it should normally be able to produce
d) Determining how much each employee should produce

Answer 4

c) Deciding how much product/service it should normally be able to produce

Question 5

“Location planning” for the provision of services tends to be more difficult than location planning for the manufacturing of tangible goods. This is because:

a) Services are intangible
b) Most services cannot be stored
c) Many services are “high contract” meaning the business must be located close to customers as well as raw materials & other inputs
d) Services tend to be customised

Answer 5

c) Many services are “high contract” meaning the business must be located close to customers as well as raw materials and other inputs

Question 6

In the story “The World’s Worst Coffee Shop” the customer is unable to purchase a cup of coffee. Which of the following was the shop manager’s principle failing:

a) The coffee shop manager failed to realise that a coffee shop should have coffee
b) The coffee shop manager put too much effort into marketing
c) The coffee shop manager made no effort to understand customer needs
d) The coffee shop manager failed to establish regular routines to check the supply of coffee, and to ensure there was an adequate supply when needed

Answer 6

d) The coffee shop manager failed to establish regular routines to check the supply of coffee, and to ensure there was an adequate supply when needed

Question 7

“Scheduling” involves determining when a series of activities needs to being, to ensure that they are completed on time. A useful tool used to visualise the activities that needs to be done, and how long each will take, is:

a) A Lorenz curve
b) A Phillips graph
c) A Gantt chart
d) A scheduling graph
e) An operations chart

Answer 7

c) A Gantt chart