Deck 7: Process Strategies

Question 1

The tool that calculates which process has the lowest cost at any specified production volume is a crossover chart.

Answer 1

True

Question 2

A product-focused process is commonly used to produce:

A) high-volume, high-variety products.
B) low-volume, high-variety products.
C) high-volume, low-variety products.
D) low-variety products at either high- or low-volume.
E) high-volume products of either high- or low-variety.

Answer 2

C

Question 3

Which of the following industries is most likely to have low equipment utilization?

A) auto manufacturing
B) commercial baking
C) television manufacturing
D) steel manufacturing
E) restaurants

Answer 3

E

Question 4

Intermittent processes are organized around processes to facilitate high-volume, low-variety production.

Question 5

In process-focused facilities, utilization of facilities is high.

Question 6

Which one of the following products is most likely made in a job shop environment?

A) rolls of newsprint
B) custom furniture
C) television sets
D) cigarettes
E) canned vegetables

Question 7

One of the similarities between product focus and mass-customization is:

A) the volume of outputs.
B) the use of modules.
C) many departments and many routings.
D) the variety of outputs.
E) All of these are similarities.

Question 8

A job shop is an example of a(n):

A) repetitive process.
B) continuous process.
C) line process.
D) intermittent process.
E) specialized process.

Question 9

The term focused processes refers to the quest for increased efficiency, whether in goods or services, that results from specialization.

Question 10

The typical full-service restaurant uses a process-focused process.

Question 11

Harley-Davidson, because it has so many possible combinations of products, utilizes the process strategy of mass customization.

Question 12

Three of the four types of processes are:

A) goods, services, and hybrids.
B) manual, automated, and service.
C) process focus, repetitive focus, and product focus.
D) modular, continuous, and technological.
E) input, transformation, and output.

Question 13

Which of the following products is likely to be assembled on a repetitive process line?

A) automobiles
B) custom personal computers
C) custom cakes
D) steel
E) beer

Question 14

The assembly line is a classic example of a repetitive process.

Question 15

Frito-Lay is to ________ focus as Dell Computer is to ________ focus.

A) process, repetitive
B) product, repetitive
C) repetitive, product
D) process, product
E) product, mass customization

Question 16

An assembly line is an example of a:

A) product-focused process.
B) process-focused process.
C) repetitive process.
D) line process.
E) specialized process.

Question 17

Fast-food restaurants usually adopt a product-focused strategy for their processes.

Question 18

A firm's process strategy is its approach to transforming resources into goods and services.

Question 19

Arnold Palmer Hospital uses which focus?

A) process
B) repetitive
C) product
D) mass customization
E) A and D

Question 20

High fixed costs and low variable costs are typical of which approach?

A) product
B) process
C) mass customization
D) repetitive
E) A and C

Question 21

Which of the following is FALSE regarding repetitive processes?

A) They use modules.
B) They allow easy switching from one product to the other.
C) They are the classic assembly lines.
D) They have more structure and less flexibility than a job shop layout.
E) They include the assembly of basically all automobiles.

Question 22

Which of the following phrases best describes process focus?

A) low volume, high variety
B) Finished goods are usually made to a forecast and stored.
C) Operators are less broadly skilled.
D) high fixed costs, low variable costs
E) low inventory

Question 23

A quasi-custom product:

A) gets its apparent customization from the combinations available from a small number of modules.
B) is often the output of repetitive focus facilities.
C) is a valid description of a fast-food sandwich.
D) only applies in services.
E) All but D are true.

Question 24

Which of the following companies use a mass customization approach?

A) Dell
B) Align Technology
C) Frito-Lay
D) Arnold Palmer hospital
E) A and B

Question 25

Product-focused processes:

A) allow more customization, but are not very efficient.
B) tend to have long, continuous production runs.
C) are processes that accommodate a variety of products or customer groups.
D) apply only to service firms, not to manufacturers.
E) are profitable because customers demand flexibility, not specialization.

Question 26

Harley Davidson:

A) utilizes job shops to make each of its modules.
B) uses product focused manufacturing.
C) uses a large number of modules to build a small number of different bikes.
D) uses work cells to feed its assembly line.
E) All of these are true.

Question 27

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE?

A) The crossover point is approximately 6667 units.
B) It is impossible for one process to have both of its costs lower than those of another process.
C) Process Y is cheaper than process X at all volumes.
D) Process X should be selected for very large production volumes.
E) Process X is more profitable than process Y and should be selected.

Question 28

Which of the following characteristics best describes repetitive focus?

A) It uses sophisticated scheduling to accommodate custom orders.
B) Its output is a standardized product produced from modules.
C) Operators are broadly skilled.
D) It is widely used for the manufacture of steel.
E) low volume, high variety

Question 29

________ is a process strategy based on a product-oriented production process that uses modules.

Question 30

Which of the following phrases best describes product focus?

A) low volume, high variety
B) Finished goods are usually made to order.
C) Processes are designed to perform a wide variety of activities.
D) high fixed costs, low variable costs
E) high inventory

Question 31

________ is a rapid, low-cost production process that caters to constantly changing unique customer desires.

Question 32

The process strategy that is organized around processes to facilitate low-volume, high-variety processes is called a(n) ________.

Question 33

Kirstin is thinking about opening an Italian restaurant and needs to buy a dough maker. Machine A has fixed costs of $300 and variable costs of $1/pound. Machine B has fixed costs of $1000 and variable costs of $0.30/pound. What is the crossover point? For 500 pounds of dough, which machine is better?

A) 1000; Machine A
B) 1000; Machine B
C) 538; Machine A
D) 538; Machine B
E) 1857; Machine A

Question 34

Which of the following businesses uses a product-focused approach?

A) Shouldice Hospital
B) fine-dining restaurants
C) Arnold Palmer Hospital
D) Spotify
E) Ping Inc.

Question 35

Goods made to order are typical of ________ and ________ approaches while goods made to forecast are typical of ________ and ________ approaches.

A) process, mass customization; repetitive, product
B) product, mass customization; repetitive, process
C) product, process; repetitive, mass customization
D) repetitive, product; mass customization, process
E) repetitive, process; mass customization, product

Question 36

The crossover point is that production quantity where:

A) variable costs of one process equal the variable costs of another process.
B) fixed costs of a process are equal to its variable costs.
C) total costs equal total revenues for a process.
D) total costs for one process equal total costs for another process.
E) the process no longer loses money.

Question 37

Align Technology uses a ________ approach to produce clear plastic removable aligners.

A) mass customization
B) product focus
C) process focus
D) repetitive focus
E) crossover

Question 38

An organization's approach to transforming resources into goods and services is called its ________.

Question 39

________ represent an organization's attempt to gain increased efficiency through specialization, which can include, for example, concentrating on certain classes of customers.

Question 40

Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $7.50 per unit. What is the crossover point between process A and process B?

A) 50 units
B) 200 units
C) 250 units
D) $5,000
E) $9,500

Question 41

What is the link between focused processes and specialization? What kinds of focus are possible?

Question 42

The local convenience store makes personal sized pizzas. Currently, its process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $18,000, and a variable cost of $1.85 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen for the customer to finish heating at home. This alternate process has a fixed cost of $24,000, but a lower variable cost (because much less energy is used in baking) of $1.05 per pizza.
(a) What is the crossover point between the existing process and the proposed process?
(b) If the owner expects to sell 7,000 pizzas, should he get the new oven?

Question 43

How are modules useful in manufacturing processes?

Question 44

Bridget is considering how to get to work over the summer. She has two options. Option A is to buy a seasonal bus pass for $100. Option B is to pay $1.25 for each ride. Identify the fixed and variable costs for each option. If she has to ride both to and from work, how many days of work would it take for the seasonal pass to cost the same amount as Option B?

Question 45

Identify the four basic process strategies, and describe them in a complete sentence or two each.

Question 46

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable costs are $50 per unit. The firm is considering a fundamental shift in process, to repetitive manufacturing. The new process would have fixed costs of $90,000, and variable costs of $10. What is the crossover point for these processes? For what range of outputs is each process appropriate?

Question 47

A non-profit organization is planning a raffle to raise money. It has two options for tickets. The first option is to do the tickets by hand, with fixed costs of $50 and variable costs of $.05 per ticket. The second option is to outsource production. This would result in fixed costs of $500 and variable costs of $.01. If the organization plans to sell 10,000 tickets which option should it choose?

Question 48

Kirstin is thinking about opening a Chinese restaurant and needs to buy a rice cooker. Machine A has fixed costs of $100 and variable costs of $1/pound. Machine B has fixed costs of $500 and variable costs of $0.10/pound. If Kirstin plans to sell 1000 pounds of rice, which machine should she choose? What is the crossover point?

Question 49

A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit. The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand). The costs of this proposed shop are fixed costs = $14,000 per year and variable cost = $10 per unit. If a price of $120 will allow 400 units to be sold, what profit (or loss) can this proposed new process expect? Do you anticipate that the manager will want to change the process? Explain.

Question 50

In an affluent society, how do we produce a wide number of options for products at low cost?

Question 51

A firm is about to undertake the manufacture of a product, and it is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $4,300 per month and variable costs of $9 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $30,000 per month and variable costs of $0.80 per unit.
(a) At what output does the large intermittent process become cheaper than the small one?
(b) At what output does the repetitive process become cheaper than the larger intermittent process?

Question 52

Mary is considering purchasing a machine from one of two suppliers. Supplier A's machine has an annual fixed cost of $10,000 and a unit variable cost of $2.10. Supplier B's machine has an annual fixed cost of $16,000 and a unit variable cost of $3.00. How large should Mary's annual demand be in order to make Supplier B's machine the better choice?

Question 53

Brandon's computer shop is considering two different configuration options. The first one is to have each computer built by the sales associates when they have free time. The second option is to hire a dedicated assembly technician. Option A has variable costs of $50 per computer and no fixed costs. Option B has a fixed cost of $1,000 but variable costs of only $10 per computer. What is the crossover point?

Question 54

What is mass customization?

Question 55

Karla's candle factory is considering two different manufacturing options. Option A is highly automated with fixed costs of $25,000 and variable costs of $0.10/candle. Option B uses hand labor with fixed costs of $10,000 and variable costs of $0.50/candle. If demand for Karla's candles is 45,000, which option should she pick?

Question 56

Big John's Manufacturing currently produces its lead product on a machine that has a variable cost of $3.50 per unit, and fixed costs of $62,000. Big John is considering purchasing a new machine that would drop the variable cost to $1.90 per unit, but has fixed costs of $150,000. What is the crossover point between the two machines?

Question 57

When selecting new equipment and technology, decision makers look for flexibility-the ability to respond with little penalty in time, cost, or customer value.

Question 58

An organization is considering three process configuration options. There are two different intermittent processes, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 per month and variable costs of $1 per unit.
(a) If the company produced 20,000 units, what would be its cost under each of the three choices?
(b) Which process offers the lowest cost to produce 40,000 units? What is that cost?

Question 59

Why is Harley-Davidson identified as a repetitive manufacturer, not a mass customizer?

Question 60

Which of the following is TRUE regarding the concept of flexibility?

A) It is the ability to respond with little penalty in time, cost, or customer value.
B) It may be accomplished with digitally controlled equipment.
C) It may involve modular or movable equipment.
D) All of these are true.
E) None of these is true.

Question 61

Time-function mapping is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

Question 62

A(n) ________ uses symbols to analyze the movement of people or material.

Question 63

A flowchart with the addition of a time axis becomes a process chart.

Question 64

What is a drawing of the movement of material, product, or people?

A) flowchart
B) process chart
C) service blueprint
D) process map
E) vision system

Question 65

Identify the five major tools of process analysis and design. Describe them in a sentence or two each.

Question 66

Why do modern operations managers look for flexibility in their equipment?

Question 67

Which of the following is TRUE?

A) Service blueprinting focuses on the provider's interaction with its supplier.
B) The main purpose of flowcharts is to identify and eliminate waste.
C) Value-stream mapping is a variation of time-function mapping.
D) A process chart is a flowchart with time added on the horizontal axis.
E) Time-function mapping extends the value analysis back to suppliers.

Question 68

Describe value-stream mapping. Explain how it is different from process mapping.

Question 69

A value-stream map includes both (1) inventory quantities, and (2) time on the horizontal axis.

Question 70

Professional services typically require low levels of labor intensity.

Question 71

Activity times should not be included in a service blueprint.

Question 72

One fundamental difference between a process chart and a flowchart is that:

A) the process chart adds a time dimension to the horizontal axis, while a flowchart is not time-oriented.
B) the process chart includes the supply chain, while the flowchart stays within an organization.
C) the process chart is more like a table, while the flowchart is more like a schematic diagram.
D) the process chart focuses on the customer and on the provider's interaction with the customer, while the flowchart does not deal directly with the customer.
E) None of these is true, because a process chart and a flowchart are the same thing.

Question 73

An example of the postponement strategy for improving service productivity is having the customer wait until you have sufficient time to serve the customer.

Question 74

Flowcharts use distance, but not time, to show the movement of material, product, or people through a process.

Question 75

________ is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

Question 76

Service blueprinting:

A) provides the basis to negotiate prices with suppliers.
B) mimics the way people communicate.
C) determines the best time for each step in the process.
D) focuses on the provider's interaction with the customer.
E) uses the schematic of a house to diagram a service process.

Question 77

________ involves the ability to respond with little penalty in time, cost, or customer value.

Question 78

A special form of time-function mapping, which goes beyond the organization into its supply chain, is ________.

Question 79

Value-stream mapping:

A) is a variation of time-function mapping.
B) examines the supply chain to determine where value is added.
C) extends time function mapping back to the supplier.
D) starts with the customer and works backwards.
E) All of these are true.

Question 80

Time-function mapping is a flowchart with time added to the horizontal axis.