Better Business 5th Edition By Michael R. Solomon – Test Bank

Chapter 11 Production, Operations, and Supply Chain Management

1) Which of the following statements about manufacturing in the United States is TRUE?
A) The manufacturing industry has done little to stimulate the economy.
B) Manufacturing has surged in the last decade due to decreases in imported goods.
C) The manufacturing sector is responsible for a small share of total economic output.
D) The United States has transitioned from a service-based economy to an industrial-based, manufacturing economy.
E) Manufacturing remains a fundamental component of the U.S. economy.
Answer: E
Explanation: Manufacturing, although it has been hit hard in the past decade by significant increases in imported goods and related job losses, remains a fundamental component of the U.S. economy. Manufacturing generates other service-based economic activities, such as transporting goods, generating software that is needed to assist with processes, and marketing and selling the goods. Moreover, because manufacturing uses a substantial amount of commodities and services as inputs, the manufacturing sector is actually responsible for a large share of total economic output. The manufacturing sector has played a dominant role in stimulating the economy.
Diff: 2
AACSB: Reflective Thinking
LO: 11.1: Explain how manufacturing and production are important to the U.S. and global economies.
Classification: Concept

2) Production is the process through which resources are converted into finished products and given value.
Answer: TRUE
Explanation: It is a series of related activities, with value being added as each activity or stage is completed. All businesses, whether they are strictly manufacturing, strictly service, or a combination of both, require some form of production process.
Diff: 1
AACSB: Reflective Thinking
LO: 11.1: Explain how manufacturing and production are important to the U.S. and global economies.
Classification: Concept

3) Companies that provide a service do NOT need to be concerned with efficient production processes.
Answer: FALSE
Explanation: All businesses, whether they produce strictly manufactured products, strictly services, or a combination of both (which most do), utilize production processes. How efficiently a company handles the production process can either help or hinder the overall success of the business and the competitiveness of the good or the service in the marketplace.
Diff: 2
AACSB: Reflective Thinking
LO: 11.1: Explain how manufacturing and production are important to the U.S. and global economies.
Classification: Concept
4) How does manufacturing affect the global economy?
Answer: As U.S. companies search to reduce their costs of manufacturing, they offshore production to third-world or developing countries, such as those in Asia and Africa to take advantage of lower wage rates. Outsourcing the production of these and other products to third-world countries helps to improve their standard of living, which contributes to overall world economic growth. According to the Global Manufacturing Competitive Index, China remains the most competitive manufacturing nation followed by the United States, Germany, and Japan. Lower-wage countries, such as Taiwan and Mexico, which have not traditionally been large manufacturing nations, now make the list. The Global Manufacturing Competitive Index predicts in the next ten years a shift, forecasting the United States would be the most competitive in manufacturing, followed by China.
Diff: 2
AACSB: Reflective Thinking
LO: 11.1: Explain how manufacturing and production are important to the U.S. and global economies.
Classification: Concept

5) Jesse works for a canning factory that creates soda cans for distribution. His job is to move identically filled boxes from the end of the production line to the shipping area. He is one of only thirty employees at the factory because most of the work is done by machines. Which type of production does Jesse’s company use?
A) flexible production
B) market-driven production
C) customer-driven production
D) mass production
E) custom design
Answer: D
Explanation: Mass production relies on machines and production lines to produce identical goods. Jesse moves identical cans. Most of the work is being done by machines. Jesse’s company must use mass production methods.
Diff: 2
AACSB: Reflective Thinking, Analytical Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Application
6) A company uses machines programmed to process different part types simultaneously, allowing them to mass-produce customized products. This company uses a ________ manufacturing process.
A) mass
B) customer-driven
C) flexible
D) prospect-to-cash
E) lean production
Answer: C
Explanation: In flexible manufacturing, several machines are linked together by one central computer. All the machines in the system can process different part types simultaneously. Unlike a mass-production system, an FMS can adapt to changes in schedules and product specifications. Mass production uses an assembly line method with machines that perform one task. Customer-driven methods adjust the process to fit customer needs. Prospect-to-cash is a process used to determine the most cost-effective way to manufacture a product. Lean production is a set of principles concerned with reducing waste and improving flow.
Diff: 1
AACSB: Reflective Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Application

7) Jim runs a plant that produces cosmetics and uses a flexible manufacturing production process, while his brother Bill runs a plant that manufactures basic household appliances using a mass production system. The benefit Jim’s plant has over Bill’s plant is that Jim’s plant ________.
A) can produce products with slight variations
B) focuses on reducing waste and improving flow
C) produces a large quantity of goods more quickly
D) is rigid and therefore significantly less expensive
E) stops or slows production down to customize small batches when customization is desired
Answer: A
Explanation: Bill runs a mass production plant. Bill’s plant is rigid, so it can only produce identical items. Because Jim runs a flexible production plant, he is able to create a wider variety of items to meet customer needs, giving his production an advantage over Bill’s.
Diff: 2
AACSB: Reflective Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Concept
8) The goal achieved by using mass production is to ________.
A) produce goods of the highest possible quality
B) replace all employee jobs with speedier machines
C) provide the maximum flexibility in production
D) produce large quantities of goods at a low cost
E) process different parts simultaneously
Answer: D
Explanation: Mass production is used to produce mass quantities of identical products at a low cost. The quality is a lesser factor than volume. Although machines are used in mass production, and have reduced the number of employees needed, employees will always be needed to operate the machines used in production. Because of the assembly line method used in mass production, flexibility in meeting consumer needs is lost.
Diff: 1
AACSB: Reflective Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Concept

9) When referring to flexible manufacturing, it is TRUE that it ________.
A) relies heavily on labor, since humans are more adaptable and smarter than even the fastest machines
B) uses machines designed to perform multiple tasks so they can be used to produce a variety of products
C) achieves its flexibility at the cost of much slower rates of production than mass production techniques
D) is only possible when using mass production processes since these processes are specifically designed to adapt
E) stops or slows down production when variations in design are desired
Answer: B
Explanation: Flexible production uses machines designed to perform multiple tasks all at the same time so that they can produce a variety of products. The use of machines provides for an increase in flexibility over mass production with little change in rate of production.
Diff: 1
AACSB: Reflective Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Concept
10) Flexible production is made up of four components. Which of the following is NOT a component?
A) central computers
B) processing machines
C) prospect-to-cash
D) human labor
E) material handling systems
Answer: C
Explanation: Unlike a mass-production system, an FMS can adapt to changes in schedules and product specifications. The four components of the flexible production system include processing machines, material handling systems, central computer controls, and human labor.
Diff: 2
AACSB: Reflective Thinking
LO: 11.2: Describe production management, and discuss the common production processes that are used by businesses.
Classification: Concept