# MGT 325 Exam 3

Quiz by Ben Burkett, updated more than 1 year ago
 Created by Ben Burkett about 6 years ago
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### Description

Practice exam for MGT 325 Exam 3

## Resource summary

### Question 1

Question
In the A-B-C system, the typical percentage of the number of items in inventory for A items is about:
• 50
• 10
• 70
• 30
• 90

### Question 2

Question
In the A-B-C classification system, which account for 15% of the total dollar-volume for a majority of the inventory items would be classified as:
• A items
• B items
• C items
• A items plus B items
• B items plus C items

### Question 3

Question
In the A-B-C classification system, items which account for 60% of the total dollar-volume for few inventory items would be classified as:
• A items
• B items
• C items
• A items plus B items
• B items plus C items

### Question 4

Question
The EOQ model is most relevant for which one of the following?
• ordering items with dependent demand
• determination of safety stock
• ordering perishable items
• determining fixed interval order quantities
• determining fixed order quantities

### Question 5

Question
Which is not a true assumption in the EOQ model?
• production rate is constant
• no more than 3 items are involved
• usage rate is constant
• no quantity discounts

### Question 6

Question
A cycle count program will usually require that 'A' items be counted:
• daily
• once a week
• monthly
• quarterly
• more frequently than annually

### Question 7

Question
In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:
• it doubles
• it is four times the previous amount
• it is half its previous amount
• it is about 70% of its previous amount
• it increases by about 40%

### Question 8

Question
In the basic EOQ model, if lead time increases from 5 to 10 days, the EOQ will:
• double
• increase, but not double
• decrease by a factor of 2
• remain the same
• none of the above

### Question 9

Question
In the basic EOQ model, an annual demand of 40 units, an ordering cost of \$5, and a holding cost of \$1 per unit per year will result in an EOQ of:
• 20
• square root of 200
• 200
• 400
• none of these

### Question 10

Question
In the basic EOQ model, if D=60 per month, S=\$12, and H=\$10 per unit per month, EOQ is:
• 10
• 12
• 24
• 72
• 144

### Question 11

Question
In the basic EOQ model, if annual demand is 50, carrying cost is \$2, and ordering cost is \$15, EOQ is approximately:
• 11
• 20
• 24
• 28
• 375

### Question 12

Question
If average demand for an inventory item is 200 units per day, lead time is 3 days, and safety stock is 100 units, the reorder point is:
• 100 units
• 200 units
• 300 units
• 600 units
• 700 units

### Question 13

Question
If no variations in demand or lead time exist, the ROP will equal:
• the EOQ
• expected usage during the lead time
• safety stock
• the service level
• the EOQ plus safety stock

### Question 14

Question
Which one of the following isa implied by a "lead time" service level of 95%?
• Approximately 95% of the demand during lead time will be satisfied
• Approximately 95% of inventory will be used during lead time
• The probability is 95% that demand during the lead time will exactly equal the amount on hand at the beginning of lea time
• The probability is 95% that demand during lead time will not exceed the amount on hand at the beginning of lead time.
• none of the above

### Question 15

Question
Which one of the following is implied by an "annual" service level of 95%?
• Approximately 95% of demand during lead time will be satisfied
• The probability is 95% that demand will exceed supply during lead time
• The probability is 95% that demand will equal supply during lead time
• The probability is 95% that demand will not exceed supply during lead time
• None of the above

### Question 16

Question
Daily usage is exactly 60 gallons per day. Lead time is normally distributed with a mean of 10 days and a standard deviation of 2 days. What is the standard deviation of demand during lead time?
• 60 x 2
• 60 times the square root of 2
• 60 times the square root of 10
• 60 x 10
• None of the above

### Question 17

Question
Lead time is exactly 20 days long. Daily demand is normally distributed with a mean of 10 gallons per day and a standard deviation of 2 gallons. What is the standard deviation of demand during lead time?
• 20 x 2
• 20 x 10
• 2 times the square root of 20
• 2 times the square root of 10
• none of the above

### Question 18

Question
Which of these products would be most apt to involve the use of a single-period model?
• gold coins
• hammars
• fresh fish
• calculators
• frozen corn

### Question 19

Question
In a single-period model, if shortage and excess costs are equal, then the optimum service level is:
• 0
• .33
• .50
• .67
• none of these

### Question 20

Question
In a single-period model, if shortage cost is four times excess cost, then the optimum service level is percent.
• 100
• 80
• 60
• 40
• 20

### Question 21

Question
In the single-period model, if excess cost is double shortage cost, the approximate stockout risk, assuming an optimum service level, is percent.
• 100
• 67
• 50
• 33
• 5

### Question 22

Question
If, in a single-period inventory situation, the probabilities of demand being 1, 2, 3, or 4 units are .3, .3, .2, and .2, respectively. If two units are stocked, what is the probability of selling both of them?
• .5
• .6
• .7
• .8
• none of these

### Question 23

Question
If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be:
• 20
• 50
• 70
• 80
• 130

### Question 24

Question
Suppose that usage of cooking oil at Harry's Fish Fry is normally distributed with an average of 15 gallons/day and a standard deviation of two gallons/day. Harry has just fired the manager and taken over operating the restaurant himself. Harry has asked you to help him decide how to reorder cooking oil in order to achieve a service level which is seven times the risk of stockout (7/8). Lead time is eight days. Assume that cooking oil can be ordered as needed.
• 185.30
• 126.50
• 150
• 122.50
• 167.85

### Question 25

Question
A bakery's use of corn sweetener is normally distributed with a mean of 80 gallons per day and a standard deviation of four gallons per day. Lead time for delivery of the corn sweetener is normal with a mean of six days and a standard deviation of two days. If the manager wants a service level of 99 percent, what reorder point should be used?
• 502.8
• 852.8
• 853.5
• 480

### Question 26

Question
A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the economic production quantity would be approximately:
• the same
• 20% larger
• 40% larger
• 20% smaller
• 40% smaller

### Question 27

Question
A manufacturer is contemplating a switch from buying to producing a certain item. Setup cost would be the same as ordering cost. The production rate would be about double the usage rate. Compared to the EOQ, the maximum inventory would be approximately:
• 70% higher
• 30% higher
• the same
• 30% lower
• 70% lower

### Question 28

Question
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are \$8.00 per order, and Stein beer costs \$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to five percent of the cost of the beer. At what point should he reorder Stein beer?
• 0 cases remaining
• 4 cases remaining
• 12 cases remaining
• 16 cases remaining
• 20 cases remaining

### Question 29

Question
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are \$8.00 per order, and Stein beer costs \$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to five percent of the cost of the beer. If he were to order 16 cases of Stein beer at a time, what would be the length of an order cycle?
• 0.25 days
• 3 days
• 1 day
• 4 days
• 20 days

### Question 30

Question
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are \$8.00 per order, and Stein beer costs \$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to five percent of the cost of the beer. If he were to order 16 cases of Stein beer at a time, what would be the average inventory level?
• 4 cases
• 12 cases
• 8 cases
• 20 cases
• 16 cases

### Question 31

Question
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are \$8.00 per order, and Stein beer costs \$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to five percent of the cost of the beer. If he were to order 16 cases of Stein beer at a time, what would be the daily total inventory costs, EXCLUDING the cost of the beer?
• \$2.00
• \$4.00
• \$1.28
• \$3.28
• \$2.56

### Question 32

Question
The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of Stein beer each day. Order costs are \$8.00 per order, and Stein beer costs \$.80 per six-pack (each case of Stein beer contains four six-packs). Orders arrive three days from the time they are placed. Daily holding costs are equal to five percent of the cost of the beer. What is the economic order quantity for Stein beer?
• 8 cases
• 11 cases
• 14 cases
• 20 cases
• 32 cases

### Question 33

Question
A design engineer wants to construct a sample mean chart for controlling the service life of a halogen headlamp his company produces. He knows from numerous previous samples that this service life is normally distributed with a mean of 500 hours and a standard deviation of 20 hours. On three recent production batches, he tested service life on random samples of four headlamps, with these results: Sample Service Life (hours) 1 195 500 505 500 2 525 515 505 515 3 470 480 460 470 90. What is the sample mean service life for sample 2?
• 460 hours
• 495 hours
• 500 hours
• 515 hours
• 525 hours

### Question 34

Question
A design engineer wants to construct a sample mean chart for controlling the service life of a halogen headlamp his company produces. He knows from numerous previous samples that this service life is normally distributed with a mean of 500 hours and a standard deviation of 20 hours. On three recent production batches, he tested service life on random samples of four headlamps, with these results: Sample Service Life (hours) 1 195 500 505 500 2 525 515 505 515 3 470 480 460 470 What is the mean of the sampling distribution of sample means when service life is in control?
• 250 hours
• 470 hours
• 495 hours
• 500 hours
• 515 hours

### Question 35

Question
A design engineer wants to construct a sample mean chart for controlling the service life of a halogen headlamp his company produces. He knows from numerous previous samples that this service life is normally distributed with a mean of 500 hours and a standard deviation of 20 hours. On three recent production batches, he tested service life on random samples of four headlamps, with these results: Sample Service Life (hours) 1 195 500 505 500 2 525 515 505 515 3 470 480 460 470 What is the standard deviation of the sampling distribution of sample means for whenever service life is in control?
• 5 hours
• 6.67 hours
• 10 hours
• 11.55 hours
• 20 hours

### Question 36

Question
A design engineer wants to construct a sample mean chart for controlling the service life of a halogen headlamp his company produces. He knows from numerous previous samples that this service life is normally distributed with a mean of 500 hours and a standard deviation of 20 hours. On three recent production batches, he tested service life on random samples of four headlamps, with these results: Sample Service Life (hours) 1 195 500 505 500 2 525 515 505 515 3 470 480 460 470 If he uses upper and lower control limits of 520 and 480 hours, what is his risk (alpha) of concluding service life is out of control when it is actually under control (Type I error)?
• 0.0026
• 0.0456
• 0.3174
• 0.6826
• 0.9544

### Question 37

Question
A design engineer wants to construct a sample mean chart for controlling the service life of a halogen headlamp his company produces. He knows from numerous previous samples that this service life is normally distributed with a mean of 500 hours and a standard deviation of 20 hours. On three recent production batches, he tested service life on random samples of four headlamps, with these results: Sample Service Life (hours) 1 195 500 505 500 2 525 515 505 515 3 470 480 460 470 If he uses upper and lower control limits of 520 and 480 hours, on what sample(s) (if any) does service life appear to be out of control?
• sample 1
• sample 2
• sample 3
• both samples 2 and 3
• all samples are in control

### Question 38

Question
The Chair of the Operations Management Department at Quality University wants to construct a p-chart for determining whether the four faculty teaching the basic P/OM course are under control with regard to the number of students who fail the course. Accordingly, he sampled 100 final grades from last year for each instructor, with the following results: Instructor Number of Failures Prof. A 13 Prof. B 0 Prof. C 11 Prof. D 16 What is the sample proportion of failures (p) for Prof. D?
• 0
• .04
• .11
• .13
• .16

### Question 39

Question
The Chair of the Operations Management Department at Quality University wants to construct a p-chart for determining whether the four faculty teaching the basic P/OM course are under control with regard to the number of students who fail the course. Accordingly, he sampled 100 final grades from last year for each instructor, with the following results: Instructor Number of Failures Prof. A 13 Prof. B 0 Prof. C 11 Prof. D 16 What is the estimate of the mean proportion of failures for these instructors?
• .10
• .11
• .13
• .16
• .40

### Question 40

Question
The Chair of the Operations Management Department at Quality University wants to construct a p-chart for determining whether the four faculty teaching the basic P/OM course are under control with regard to the number of students who fail the course. Accordingly, he sampled 100 final grades from last year for each instructor, with the following results: Instructor Number of Failures Prof. A 13 Prof. B 0 Prof. C 11 Prof. D 16 What is the estimate of the standard deviation of the sampling distribution for an instructor's sample proportion of failures?
• .0075
• .03
• .075
• .3
• .75

### Question 41

Question
The Chair of the Operations Management Department at Quality University wants to construct a p-chart for determining whether the four faculty teaching the basic P/OM course are under control with regard to the number of students who fail the course. Accordingly, he sampled 100 final grades from last year for each instructor, with the following results: Instructor Number of Failures Prof. A 13 Prof. B 0 Prof. C 11 Prof. D 16 What are the .95 (5% risk of Type I error) upper and lower control limits for the p-chart?
• .95 and .05
• .13 and .07
• .1588 and .0412
• .16 and .04
• .1774 and .0226

### Question 42

Question
The Chair of the Operations Management Department at Quality University wants to construct a p-chart for determining whether the four faculty teaching the basic P/OM course are under control with regard to the number of students who fail the course. Accordingly, he sampled 100 final grades from last year for each instructor, with the following results: Instructor Number of Failures Prof. A 13 Prof. B 0 Prof. C 11 Prof. D 16 Using .95 control limits, (5% risk of Type I error), which instructor(s), if any, should he conclude is (are) out of control?
• none
• Prof. B
• Prof. D
• both Prof. B and Prof. D
• all

### Question 43

Question
A Quality Analyst wants to construct a control chart for determining whether four machines, all producing the same product, are under control with regard to a particular quality attribute. Accordingly, she inspected 1,000 units of output from each machine in random samples, with the following results: Machine Total Defectives #1 23 #2 15 #3 29 #4 13 What is the sample proportion of defectives for machine #1?
• .023
• .02
• .0115
• .0058
• .005

### Question 44

Question
A stint for use is coronary surgery requires a special coating. Specifications for this coating call for it to be at least 0.05 millimeters but no more than 0.15 millimeters. Suppose the criterion for evaluating this process is that the appropriate capability index must be at least 1.3. With a long-run process mean of 0.09 and a standard deviation of 0.015, is this process capable?
• Yes
• No

### Question 45

Question
Studies on a bottle-filling machine indicates it fills bottles to a mean of 16 ounces with a standard deviation of 0.10 ounces. What is the process specification, assuming the Cpk index of 1?
• 0.10 ounces
• 0.20 ounces
• 0.30 ounces
• 16.0 ounces plus or minus 0.30 ounces
• none of the above

### Question 46

Question
Studies on a machine that molds plastic water pipe indicate that when it is injecting 1-inch diameter pipe, the process standard deviation is 0.05 inches. The one-inch pipe has a specification of 1-inch plus or minus 0.10 inch. What is the process capability index (Cpk) if the long-run process mean is 1 inch?
• 0.50
• 0.67
• 1.00
• 2.00
• none of the above

### Question 47

Question
The specification limit for a product is 8 cm and 10 cm. A process that produces the product has a mean of 9.5 cm and a standard deviation of 0.2 cm. What is the process capability, Cpk?
• 3.33
• 1.67
• 0.83
• 2.50
• none of the above

### Question 48

Question
The specifications for a product are 6 mm ± 0.1 mm. The process is known to operate at a mean of 6.05 with a standard deviation of 0.01 mm. What is the Cpk for this process?
• 3.33
• 1.67
• 5.00
• 2.50
• none of the above

### Question 49

Question
138. A process results in a few defects occurring in each unit of output. Long-run, these defects should be monitored with___________________.
• p-charts
• c-charts
• x-bar charts
• r-charts
• o-charts

### Question 50

Question
When a process is in control, it results in there being, on average, 16 defects per unit of output. C-chart limits of 8 and 24 would lead to a ________________ chance of a Type I error.
• 67%
• 92%
• 33%
• .03%
• 5%

### Question 51

Question
When a process is in control, it results in there being, on average, 16 defects per unit of output. C-chart limits of 4 and 28 would lead to a chance of a Type I error.
• 67%
• 92%
• 33%
• 0.3%
• 5%

### Question 52

Question
A tool that is not used for quality management is ________________.
• Flowchart
• Histogram
• Perato Analysis
• Redesign
• Check sheets

### Question 53

Question
The four dimensions of quality that are sometimes used to determine fitness for use of a product are
• performance, special features, durability, and service after sale
• performance, special features, conformance, and reliability
• special features, conformance, reliability, and durability
• performance, conformance, reliability, and durability
• special features, conformance, durability, and service after sale

### Question 54

Question
A tool that depicts process variation graphically is a(n) .
• Affinity diagram
• Check list
• Control Chart
• Flow Chart
• Relationship diagram

### Question 55

Question
Which isn't a cost of quality?
• Prevention cost
• External failure
• Extended Service Contracts
• Internal failure
• Appraisal costs

### Question 56

Question
Lost production time, scrap, and rework are examples of
• internal failure costs
• external failure costs
• appraisal costs
• prevention costs
• replacement costs

### Question 57

Question
Warranty service, processing of complaints, and costs of litigation are examples of
• internal failure costs
• external failure costs
• appraisal costs
• prevention costs
• replacement costs

### Question 58

Question
Costs of inspectors, testing, test equipment, and labs are examples of
• internal failure costs
• external failure costs
• appraisal costs
• prevention costs
• replacement costs

### Question 59

Question
Loss of business, liability, productivity and costs are consequences of
• Labor Unions
• Globalization
• Poor Quality
• Robotics
• Micro-factories

### Question 60

Question
Quality planning and administration, quality training, and quality control procedures are examples of
• internal failure costs
• external failure costs
• appraisal costs
• prevention costs
• replacement costs

### Question 61

Question
ISO 9000 standards do not have a requirement for
• resource
• remedial
• systems
• training
• management

### Question 62

Question
A quality circle is
• responsible for quality
• total quality control
• an inspection stamp found on meat
• a voluntary group of employees
• none of the above

### Question 63

Question
ISO 9000 currently requires of a certified organization
• Quarterly reporting
• Product diversity
• Annual audits
• A minimum of four supervisory levels
• Continuous improvement

### Question 64

Question
The quality control improvement tool which distinguishes between the "important few" and the "trivial many" is
• brainstorming
• check sheets
• Pareto analysis
• cause-and-effect diagrams
• fail-safe methods

### Question 65

Question
TQM stands for:
• Taguchie Quality Methods
• Tactical Quality Measurements
• The Quality Matrix
• Total Quality Management
• Total Quantity Measurement

### Question 66

Question
Which of the following is an element of TQM?
• continuous improvement
• competitive benchmarking
• employee empowerment
• team approach
• all of the above

### Question 67

Question
85. Management behaviors supporting an organizational culture that encourages continuous improvement include which of the following? (I) develop a vision statement for the organization (II) develop a reward system that promotes the philosophy (III) institute continuous training programs (IV) make decisions that adhere to the philosophy
• I, II, and IV
• I, II, III, and IV
• I and III
• II, III, and IV
• II and IV

### Question 68

Question
The tool that is useful in the collection and organization of data is:
• a control chart
• a Pareto chart
• a check sheet
• a flow chart
• none of the above

### Question 69

Question
A quality improvement technique that involves the sharing of thoughts and ideas in a way that encourages unrestrained collective thinking is:
• Pareto analysis
• benchmarking
• brainstorming
• a control chart
• a check sheet

### Question 70

Question
In order for TQM to be successful, it is essential that most of the organization be
• members of quality circles
• under contract
• ISO certified
• trained in error detection techniques
• in agreement with the philosophy and its goals

### Question 71

Question
The typical difference between "quality circles" and "continuous improvement teams" is
• Quality circles work on product design only
• Continuous improvement teams work on product and process design
• Continuous improvement teams use only engineers while quality circles use just the workers doing the work
• the amount of employee empowerment
• There is no difference-they are just the same

### Question 72

Question
Which of the following is not a goal of process improvement?
• increasing customer satisfaction
• reducing waste
• achieving higher quality
• identifying the cause of a problem
• All are the goals

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