Business Operations Management Flashcards
7 cards from real CBO practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Operations Management flashcards as text
A business is experiencing a bottleneck in its production process. According to the Theory of Constraints, what should be the first step?
Answer: Identify and exploit the constraint before elevating it
The Theory of Constraints prescribes first identifying the constraint, then exploiting it to maximize its output before investing in additional capacity.
A franchise operator must balance following the franchisor's system with local market needs. Which operational document typically governs this relationship?
Answer: Franchise Disclosure Document (FDD) and franchise agreement
The FDD (required by FTC) and franchise agreement together define the rights, obligations, fees, and operational standards governing the franchisee-franchisor relationship.
Which risk management strategy involves purchasing insurance to handle potential financial losses?
Answer: Risk transfer
Risk transfer shifts the financial consequences of a risk to a third party, most commonly through insurance policies.
A business operator is analyzing customer profitability and finds that 20% of customers generate 80% of revenue. This observation reflects which principle?
Answer: The Pareto Principle
The Pareto Principle (80/20 rule) states that roughly 80% of effects come from 20% of causes, commonly observed in customer revenue distributions.
A business is required to collect and remit sales tax. Which government authority establishes the sales tax rate and rules for a retail business operating in Texas?
Answer: The Texas Comptroller of Public Accounts
Sales tax is a state and local tax administered by the state's revenue agency; in Texas, the Texas Comptroller of Public Accounts oversees sales tax compliance.
When negotiating with vendors, a business operator successfully reduces payment terms from net 30 to net 60. What is the primary operational benefit?
Answer: It improves the business's cash flow by extending time before payment is due
Extending payment terms from 30 to 60 days gives the business an additional 30 days to collect revenue before paying suppliers, improving working capital.
A business operator is evaluating whether to make a component in-house or outsource it. Which cost should NOT be included in the make-or-buy analysis?
Answer: Sunk costs already incurred on existing equipment
Sunk costs are past expenditures that cannot be recovered and are irrelevant to future decisions like make-or-buy analysis.