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MBA Operations Management - Test Bank - Chapter 7

MBA Operations Management

Operations Management, 12e (Heizer/Render/Munson)

Chapter 7  Process Strategy 

 

Section 1   Four Process Strategies

 

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

Answer:  TRUE

Diff: 1

Key Term:  Process strategy

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) Intermittent processes are organized around processes.

Answer:  TRUE

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

3) In process-focused facilities, utilization of facilities is low.

Answer:  TRUE

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

4) The typical full-service restaurant uses a product-focused process.

Answer:  FALSE

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  FALSE

Diff: 2

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

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

Answer:  TRUE

Diff: 1

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  TRUE

Diff: 2

Key Term:  Crossover chart

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  TRUE

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) repetitive process.
  2. B) continuous process.
  3. C) line process.
  4. D) intermittent process.
  5. E) specialized process.

Answer:  D

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

10) Three of the four types of processes are:

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

Answer:  C

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) auto manufacturing
  2. B) commercial baking
  3. C) television manufacturing
  4. D) steel manufacturing
  5. E) restaurants

Answer:  E

Diff: 2

Key Term:  Process focus

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

12) A product-focused process is commonly used to produce:

  1. A) high-volume, high-variety products.
  2. B) low-volume, high-variety products.
  3. C) high-volume, low-variety products.
  4. D) low-variety products at either high- or low-volume.
  5. E) high-volume products of either high- or low-variety.

Answer:  C

Diff: 2

Key Term:  Product focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) rolls of newsprint
  2. B) custom furniture
  3. C) television sets
  4. D) cigarettes
  5. E) canned vegetables

Answer:  B

Diff: 2

Key Term:  Process focus

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) automobiles
  2. B) custom personal computers
  3. C) custom cakes
  4. D) steel
  5. E) beer

Answer:  A

Diff: 2

Key Term:  Repetitive process

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

15) An assembly line is an example of a:

  1. A) product-focused process.
  2. B) process-focused process.
  3. C) repetitive process.
  4. D) line process.
  5. E) specialized process.

Answer:  C

Diff: 2

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

16) Arnold Palmer Hospital uses which focus?

  1. A) process
  2. B) repetitive
  3. C) product
  4. D) mass customization
  5. E) A and D

Answer:  A

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

17) One of the similarities between process focus and mass-customization is:

  1. A) the volume of outputs.
  2. B) the use of modules.
  3. C) many departments and many routings.
  4. D) the variety of outputs.
  5. E) All of the above are similarities.

Answer:  D

Diff: 2

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

18) Frito-Lay is to ________ focus as Harley Davidson is to ________ focus.

  1. A) process, repetitive
  2. B) product, repetitive
  3. C) repetitive, product
  4. D) process, product
  5. E) product, mass customization

Answer:  B

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) product
  2. B) process
  3. C) mass customization
  4. D) repetitive
  5. E) A and C

Answer:  E

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) process, mass customization; repetitive, product
  2. B) product, mass customization; repetitive, process
  3. C) product, process; repetitive, mass customization
  4. D) repetitive, product; mass customization, process
  5. E) repetitive, process; mass customization, product

Answer:  A

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) mass customization
  2. B) product focus
  3. C) process focus
  4. D) repetitive focus
  5. E) crossover

Answer:  A

Diff: 2

Key Term:  Mass customization

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

22) Which of the following companies use a mass customization approach?

  1. A) Dell
  2. B) Align Technology
  3. C) Frito-Lay
  4. D) Arnold Palmer hospital
  5. E) A and B

Answer:  E

Diff: 2

Key Term:  Mass customization

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

23) Harley Davidson:

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

Answer:  D

Diff: 2

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

24) Which of the following is FALSE regarding repetitive processes?

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

Answer:  B

Diff: 2

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

25) Which of the following phrases best describes product focus?

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

Answer:  D

Diff: 2

Key Term:  Product focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

26) Which of the following phrases best describes process focus?

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

Answer:  A

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

27) Which of the following characteristics best describes repetitive focus?

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

Answer:  B

Diff: 3

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

28) A quasi-custom product:

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

Answer:  E

Diff: 3

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

29) 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 $15 per unit. What is the crossover point between process A and process B?

  1. A) 50 units
  2. B) 200 units
  3. C) $2,500
  4. D) $5,000
  5. E) $9,500

Answer:  A

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

30) 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?

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

Answer:  C

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

31) The crossover point is that production quantity where:

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

Answer:  D

Diff: 2

Key Term:  Crossover chart

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

32) Product focused processes:

  1. A) allow more customization, but are not very efficient.
  2. B) are desirable because resource needs increase slowly with the complexity of a process.
  3. C) are processes that are specialized for relatively few products or customer groups.
  4. D) apply only to service firms, not to manufacturers.
  5. E) are profitable because customers demand flexibility, not specialization.

Answer:  C

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  process strategy

Diff: 2

Key Term:  Process strategy

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  process focus

Diff: 2

Key Term:  Process focus

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Repetitive focus

Diff: 2

Key Term:  Repetitive process

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Mass customization

Diff: 2

Key Term:  Mass customization

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Focused processes

Diff: 3

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  While Harley-Davidson's motorcycles variety, they are not as individualized as Dell's personal computers. The variety comes from choices in predefined modules, and there is apparently no place for a customer to get customization that would go beyond what is available in these modules.

Diff: 3

Key Term:  Repetitive process

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Focused processes are a means of obtaining increased productivity through forms of specialization. Focus can take several forms, including concentrating on specific classes of customers, working only with products in selected product families, specializing in a specific service, or working with a narrow range of technology.

Diff: 3

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

40) How are modules useful in manufacturing processes?

Answer:  Modules are parts or components of a product previously prepared. By using modules, the final product can be quickly assembled. Using a different combination of modules allows for quasi-customization.

Diff: 2

Key Term:  Modules

AACSB:  Reflective thinking

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

41) What is mass customization?

Answer:  Mass customization is rapid, low-cost production of goods and services that fulfill increasingly unique customer desires. It brings us the variety of products traditionally provided by the process focus, with low costs associated with standardized high volume production (the product focus).

Diff: 2

Key Term:  Mass customization

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Process focus is a job shop—high variety and low volume; repetitive focus is an assembly line—relatively standardized products with options from modules; product focus is for high volume, low-variety, products, such as oil refining and flour milling; and mass customization is for high volume, high variety.

Diff: 2

Key Term:  Process strategy

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

43) In an affluent society, how do we produce a wide number of options for products at low cost? Hint: Focus on how to address some of the major challenges of mass customization.

Answer:  For mass customization, products should be built-to-order. Product design must be imaginative. Process design must be flexible and able to accommodate changes in both design and technology. Inventory management requires tight control. Tight schedules are needed that track orders and material from design through delivery. Responsive partners in the supply chain can yield effective collaboration.

Diff: 3

Key Term:  Mass customization

Objective:  LO 7.1 Describe four process strategies

Learning Outcome:  Describe major approaches to sales and operations planning

 

44) 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 $5. What is the crossover point for these processes? For what range of outputs is each process appropriate?

Answer:  The crossover is at 1800 units annually. For volumes under 1800, the process focus is cheaper; for volumes over 1800 units, the repetitive focus is cheaper.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

45) Big John's Manufacturing currently produces its lead product on a machine that has a variable cost of $0.32 per unit, and fixed costs of $75,000. Big John is considering purchasing a new machine that would drop the variable cost to $.28 per unit, but has fixed costs of $150,000. What is the cross-over point between the two machines?

Answer:  1,875,000 units

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

46) 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 $20,000, and a variable cost of $1.75 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 $1.25 per pizza.

  1. What is the crossover point between the existing process and the proposed process?
  2. If the owner expects to sell 9,000 pizzas, should he get the new oven?

Answer:  (a) the crossover is 8,000 units (b) for production quantities of 8,000 or larger, the new, more flexible process has a lower cost.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

47) 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 $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.

  1. At what output does the large intermittent process become cheaper than the small one?
  2. At what output does the repetitive process become cheaper than the larger intermittent process?

Answer:  (a) at 1125 units, the large job shop becomes cheaper than the small job shop; (b) at 38,000 units, the repetitive shop is cheaper than the larger job shop.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

48) 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.

  1. If the company produced 20,000 units, what would be its cost under each of the three choices?
  2. Which process offers the lowest cost to produce 40,000 units? What is that cost?

Answer:  (a) at 20,000 units, the costs are: small intermittent = $203,000; large intermittent = $52,000; and repetitive = $70,000 (b) at 40,000 units, repetitive process is cheapest, at $90,000 (small intermittent = $403,000, and large intermittent = $92,000).

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

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 = $24,000 per year and variable cost = $10 per unit. If a price of $80 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.

Answer: 

Old: TR = $40,000, TC = $16,000, therefore Profit = $24,000.

New: TR = $80 × 400 = $32,000, TC = $24,000 + $10 × 400 = $28,000, for a profit of $4,000.

The manager should not change. The larger repetitive process is less profitable than the smaller process-focused shop.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

50) 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 $5 per computer. What is the cross-over point?

Answer:  50V = 1000 + 5V, V (cross-over point) = 22.2 computers

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

51) 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?

Answer:  50 + .05V = 500 + .01V, V = 11,250 tickets (students may solve for the cross-over point and realize higher VC option is cheaper at 10,000 since it is below the cross-over point). Another viable method is to find the cost for each option, yielding Option 1 = 50 + .05(10,000) = $550 and Option 2 = 500 + .01(10,000) = $600. Thus the organization should choose the first option.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

52) 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 $.1/pound. If Kirstin plans to sell 100 pounds of rice, which machine should she choose? What is the cross-over point?

Answer: 

Machine A costs 100 + 1(100) = $200

Machine B costs $500 + .1(100) = $510

Thus she should buy machine A.

Crossover occurs when 100 + V = 500 + .1V, or V = 444.4 pounds of rice

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

53) 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 $.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?

Answer: 

Option A: VC = 0 FC = 100

Option B: VC = .25 FC= 0

100 = .25V, V = 400 rides, since she has to take 2 rides each time she works, she would need to work 200 days for the two options to cost the same amount.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

54) 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 $.1/candle. Option B uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle. If demand for Karla's candles is 25,000, which option should she pick?

Answer:  Option A: $25,000 + .1(25,000) = $27,500

Option B: $10,000 + .5(25,000) = $22,500

Karla should pick Option B

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

55) 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?

Answer:  The answer is that there is no demand for which Supplier B's machine will be better. Both Supplier B's fixed and variable costs are higher than Supplier A's.

Diff: 2

Key Term:  Crossover chart

AACSB:  Analytical thinking

Objective:  LO 7.2 Compute crossover points for different processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

Section 2   Selection of Equipment

 

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

Answer:  TRUE

Diff: 2

Key Term:  Flexibility

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) What have restaurants such as Steakhouses and Stacked Restaurants used to replace their traditional paper menus?

  1. A) spoken descriptions
  2. B) singing descriptions
  3. C) menus painted on the walls
  4. D) index cards containing a picture of each item
  5. E) iPad menus

Answer:  E

Diff: 1

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

3) Which of the following is true regarding the concept of flexibility?

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

Answer:  D

Diff: 2

Key Term:  Flexibility

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Flexibility

Diff: 2

Key Term:  Flexibility

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Flexibility in equipment provides managers with the ability to respond to changes in demand with little penalty in time, cost, or customer value. And in this age of rapid technological change and short product life cycles, adding flexibility to the production process can be a major competitive advantage.

Diff: 2

Key Term:  Flexibility

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

Section 3   Process Analysis and Design

 

1) A value-stream map includes both (1) inventory quantities, and (2) symbols for customers and suppliers.

Answer:  TRUE

Diff: 2

Key Term:  Value-stream mapping (VSM)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) Service blueprinting is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

Answer:  TRUE

Diff: 2

Key Term:  Service blueprinting

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

3) Activity times should not be included in a service blueprint.

Answer:  FALSE

Diff: 2

Key Term:  Service blueprinting

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

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

Answer:  FALSE

Diff: 2

Key Term:  Time-function mapping (or process mapping)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  TRUE

Diff: 2

Key Term:  Time-function mapping (or process mapping)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  FALSE

Diff: 2

Key Term:  Flowchart

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

7) Value-stream mapping:

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

Answer:  E

Diff: 2

Key Term:  Value-stream mapping (VSM)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

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

  1. A) the process chart adds a time dimension to the horizontal axis, while a flowchart is not time-oriented.
  2. B) the process chart includes the supply chain, while the flowchart stays within an organization.
  3. C) the process chart is more like a table, while the flowchart is more like a schematic diagram.
  4. 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.
  5. E) None of these is true, because a process chart and a flowchart are the same thing.

Answer:  C

Diff: 2

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

9) Service blueprinting:

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

Answer:  D

Diff: 2

Key Term:  Service blueprinting

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

  1. A) flowchart
  2. B) process chart
  3. C) service blueprint
  4. D) process map
  5. E) vision system

Answer:  A

Diff: 2

Key Term:  Flowchart

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  flowchart

Diff: 1

Key Term:  Flowchart

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  value-stream mapping

Diff: 2

Key Term:  Value-stream mapping (VSM)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  Service blueprinting

Diff: 1

Key Term:  Service blueprinting

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

14) Describe Value-stream mapping. Explain how it is different from process mapping.

Answer:  Value-stream mapping is a variation on time-function mapping or process mapping. The most fundamental difference between them is that Value-stream mapping is not confined to the organization itself. In particular, in its analysis of where value is added, it extends the analysis to the organization's supply chain. Value-stream mapping takes into account not only the process but also the management decisions and information systems that support the process.

Diff: 2

Key Term:  Value-stream mapping (VSM)

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  A flowchart is a schematic or drawing of the movement of material, product, or people. Time-function mapping is a flow chart, with the addition of time on the horizontal axis. Value-stream mapping shows how to add value in the flow of materials and information through the entire production process. Process charts use symbols, time, and distance to provide an objective and structured way to analyze and record the activities that make up a process. Service blueprinting focuses on the customer and the provider's interaction with the customer.

Diff: 3

Objective:  LO 7.3 Use the tools of process analysis

Learning Outcome:  Describe major approaches to sales and operations planning

 

Section 4   Special Considerations for Service Process Design

 

1) Professional services typically require low levels of labor intensity.

Answer:  FALSE

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

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

Answer:  FALSE

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

3) Which of the following are all strategies for improving productivity in services?

  1. A) separation, self-service, automation, and scheduling
  2. B) lean production, strategy-driven investments, automation, and process focus
  3. C) reduce inventory, reduce waste, reduce inspection, and reduce rework
  4. D) high interaction, mass customization, service factory, and just-in-time
  5. E) process focus, repetitive focus, product focus, and mass customization focus

Answer:  A

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

4) Which of the following is not one of the strategies for improving service productivity?

  1. A) self-service
  2. B) automation
  3. C) scheduling
  4. D) separation
  5. E) mass customization

Answer:  E

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

5) In mass service and professional service, the operations manager should focus extensively on:

  1. A) automation.
  2. B) equipment maintenance.
  3. C) sophisticated scheduling.
  4. D) human resources.
  5. E) cost-cutting initiatives.

Answer:  D

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

6) In the mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except:

  1. A) automation.
  2. B) standardization.
  3. C) tight quality control.
  4. D) removing some services.
  5. E) customization.

Answer:  E

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

7) The strategy for improving service productivity that customizes at delivery, rather than at production, is ________.

Answer:  postponement

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

8) Provide an example of the focus strategy for improving service productivity.

Answer:  The focus strategy refers to restricting the offerings. Examples will vary, but a restaurant with a limited menu would be one example.

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

9) Provide an example of the postponement strategy for improving service productivity.

Answer:  The postponement strategy refers to customizing the product at delivery, not at production. Examples will vary, but a home builder might leave some tasks unfinished until the house is sold, so that the buyer can make those final decisions. Carpeting, paint colors, cabinet doors, and some appliance choices might be good examples. Another example would be cars or vans.

Diff: 2

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

10) Identify the techniques for improving service productivity. For any two techniques, describe in a short paragraph, and include an example.

Answer:  The seven techniques are separation, self-service, postponement, focus, modules, automation, scheduling, and training.

  • Separation: structuring the service such that the customer must go where the service is offered (a medical facility)
  • Self-service: let customers perform their own comparisons (supermarket shopping)
  • Postponement: customizing at time of delivery or in the final stages of the process (dealer-installed versus factory-installed options on automobiles, boats, etc.; Wendy's Hamburgers)
  • Focus: restricting the product offerings, options, or degree of customization allowed (limited number of factory installed options on a new automobile)
  • Modules: services selected from modular choices (health insurance programs)
  • Automation: separating services that may lend themselves to automation (automatic teller machines)
  • Scheduling: precise personnel scheduling (keep close watch on how many checkout lanes are needed)
  • Training: clarifying options, teaching problem avoidance (after-sale maintenance personnel, counselors)

Diff: 3

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

Section 5   Production Technology

 

1) Process control is the use of information technology to monitor and control a physical process.

Answer:  TRUE

Diff: 1

Key Term:  Process control

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) One use of camera-and-computer-based vision systems is to replace humans doing tedious and error-prone visual inspection activities.

Answer:  TRUE

Diff: 1

Key Term:  Vision systems

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

3) Additive manufacturing is often referred to as 3D printing.

Answer:  TRUE

Diff: 1

Key Term:  Additive manufacturing

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

4) Recent events suggest that additive manufacturing is just a fad.

Answer:  FALSE

Diff: 1

Key Term:  Additive manufacturing

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

5) Automated storage and retrieval systems are commonly used in distribution facilities of retailers.

Answer:  TRUE

Diff: 2

Key Term:  Automated storage and retrieval system (ASRS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

6) Flexible manufacturing systems, because of easily changed control programs, are able to perform such tasks as manufacturing one-of-a-kind parts economically.

Answer:  TRUE

Diff: 2

Key Term:  Flexible manufacturing system (FMS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

7) Which of the following is TRUE regarding vision systems?

  1. A) They are consistently accurate.
  2. B) They are modest in cost.
  3. C) They do not become bored.
  4. D) All of the above are true.
  5. E) None of the above is true.

Answer:  D

Diff: 2

Key Term:  Vision systems

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

8) The advantage of additive manufacturing includes supporting:

  1. A) innovative product design.
  2. B) ASRS and AGVs.
  3. C) information numeric control.
  4. D) flexible manufacturing systems (FMS).
  5. E) all of the above

Answer:  A

Diff: 2

Key Term:  Additive manufacturing

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

9) The advantage of additive manufacturing includes supporting:

  1. A) innovative product design.
  2. B) minimal custom tooling.
  3. C) low inventory.
  4. D) speed to market.
  5. E) all of the above

Answer:  E

Diff: 2

Key Term:  Additive manufacturing

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

10) Additive manufacturing can use which of the following materials?

  1. A) plastics
  2. B) ceramics
  3. C) living cells
  4. D) chocolate
  5. E) all of the above

Answer:  E

Diff: 2

Key Term:  Additive manufacturing

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

11) The use of information technology to monitor and control a physical process is known as:

  1. A) process control.
  2. B) computer-aided design.
  3. C) information numeric control.
  4. D) numeric control.
  5. E) IT oversight.

Answer:  A

Diff: 2

Key Term:  Process control

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

12) Which of the following technologies could enable a cashier to scan the entire contents of a shopping cart in seconds?

  1. A) ASRS
  2. B) AGV
  3. C) CAD/CAM
  4. D) RFID
  5. E) FMS

Answer:  D

Diff: 2

Key Term:  Radio frequency identification (RFID)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

13) Which of the following provides automatic placement and withdrawal of parts and products into and from designated places in a warehouse?

  1. A) AGV
  2. B) CAD/CAM
  3. C) CIM
  4. D) ASRS
  5. E) FMS

Answer:  D

Diff: 2

Key Term:  Automated storage and retrieval system (ASRS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

14) Computer-integrated manufacturing (CIM) includes manufacturing systems that have:

  1. A) computer-aided design, a flexible manufacturing system, inventory control, warehousing and shipping integrated.
  2. B) transaction processing, management information systems, and decision support systems integrated.
  3. C) automated guided vehicles, robots, and process control integrated.
  4. D) robots, automated guided vehicles, and transfer equipment integrated.
  5. E) all of their computers integrated with the marketing department.

Answer:  A

Diff: 2

Key Term:  Computer-integrated manufacturing (CIM)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

15) Which one of the following technologies is used ONLY for material handling, NOT actual production or assembly?

  1. A) robots
  2. B) CNC
  3. C) CAD
  4. D) AGVs
  5. E) FMS

Answer:  D

Diff: 2

Key Term:  Automated guided vehicle (AGV)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

16) A system using an automated work cell controlled by electronic signals from a common centralized computer facility is called:

  1. A) an adaptive control system.
  2. B) robotics.
  3. C) a flexible manufacturing system.
  4. D) an automatic guided vehicle (AGV) system.
  5. E) a manufacturing cell.

Answer:  C

Diff: 2

Key Term:  Flexible manufacturing system (FMS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

17) "Operators simply load new programs, as necessary, to produce different products" describes:

  1. A) CAD.
  2. B) automated guided vehicles.
  3. C) flexible manufacturing systems.
  4. D) vision systems.
  5. E) process control.

Answer:  C

Diff: 2

Key Term:  Flexible manufacturing system (FMS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

18) ________ is the use of information technology to control a physical process.

Answer:  Process control

Diff: 2

Key Term:  Process control

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

19) ________ is a computer-controlled warehouse that provides for the automatic placement of parts into and from designated places within the warehouse.

Answer:  Automated storage and retrieval system or ASRS

Diff: 2

Key Term:  Automated storage and retrieval system (ASRS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

 

20) A(n) ________ uses an automated work cell controlled by electronic signals from a common centralized computer facility.

Answer:  flexible manufacturing system or FMS

Diff: 2

Key Term:  Flexible manufacturing system (FMS)

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

21) Identify the typical elements in a process control system.

Answer:  Sensors collect data, which are read on a periodic basis. Measurements are digitized and transmitted to a computer. Computer programs read the file and analyze the data. Output is produced in the form of signals, diagrams, charts, messages, etc.

Diff: 3

Key Term:  Process control

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

22) Identify nine areas of technology that enhance production and productivity.

Answer:  (1) machine technology, (2) automatic identification systems (AIS), (3) process control, (4) vision systems, (5) robots, (6) automated storage and retrieval systems (ASRSs), (7) automated guided vehicles (AGVs), (8) flexible manufacturing systems (FMSs), and (9) computer-integrated manufacturing (CIM)

Diff: 3

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

Section 6   Technology in Services

 

1) Production technology has had a major impact on services, but as yet there has been little reduction in service labor requirements.

Answer:  FALSE

Diff: 2

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) Optical checkout scanners and ATMs are examples of technology's impact on services.

Answer:  TRUE

Diff: 1

AACSB:  Information technology

Objective:  LO 7.5 Identify recent advances in production technology

Learning Outcome:  Describe major approaches to sales and operations planning

 

3) Advances in technology:

  1. A) have impacted the manufacturing sector only.
  2. B) have had only a limited impact on services.
  3. C) have failed to change the level of customer interaction with an organization.
  4. D) have had a dramatic impact on customer interaction with services and with products.
  5. E) have dramatically changed health care, but have not changed retailing.

Answer:  D

Diff: 2

AACSB:  Information technology

Objective:  LO 7.4 Describe customer interaction in service processes

Learning Outcome:  Describe major approaches to sales and operations planning

 

Section 7   Process Redesign

 

1) Successful process redesign focuses on departmental areas where small, continuous improvements can be made.

Answer:  FALSE

Diff: 2

Key Term:  Process redesign

Learning Outcome:  Describe major approaches to sales and operations planning

 

2) Process redesign:

  1. A) is the fundamental rethinking of business processes.
  2. B) is sometimes called process reengineering.
  3. C) tries to bring about dramatic improvements in performance.
  4. D) often focuses on activities that cross functional lines.
  5. E) all of the above

Answer:  E

Diff: 1

Key Term:  Process redesign

Learning Outcome:  Describe major approaches to sales and operations planning

 

3) ________ is the fundamental rethinking of business processes to bring about dramatic improvements in performance.

Answer:  Process redesign

Diff: 2

Key Term:  Process redesign

Learning Outcome:  Describe major approaches to sales and operations planning

----------------------------------

OPERATIONS MANAGEMENT - 2017 - COLLECTION

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EBOOKS

Operations Management, 2015, 12th Edition, William J. Stevenson - Free Download Link
Operations Management, Sustainability and Supply Chain Management, 11th Edition, 2014, Jay Heizer, Barry Render - Free Download Link

Operations Management: Sustainability and Supply Chain Management, 12th Edition, Jay Heizer, Barry Render, Chuck Munson, 2017
Principles of Operations Management: Sustainability and Supply Chain Management, 10th Edition, 2017
Operations Research: An Introduction, 10th Edition, Hamdy A. Taha, 2017
Introduction to Operations and Supply Chain Management, 4th Edition, Cecil B. Bozarth, Robert B. Handfield, 2016
Operations Management: Processes and Supply Chains, 11th Edition, Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman, 2016

Free Online Course Materials

1. Operations Management Ebooks - Free Downloads

2. Slides - 11th Edition - Free Downloads

3. Slides - 12nd Edition - Free Downloads

4. Full List of Videos Case Studies - Link

5. All articles about Operations Management

http://top20mba.com/mba-cases/94-mba-operation-management

2017 Updates

6. QUIZ, Multiple choice questions and answers

7. CASE STUDY GUIDES

8. Video Case study guides

 

Good Luck and Success!

 

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