CBO Business Operations Management 5

Question 1

A business is experiencing a bottleneck in its production process. According to the Theory of Constraints, what should be the first step?

Accepted Answer

Identify and exploit the constraint before elevating it

Answer

The Theory of Constraints prescribes first identifying the constraint, then exploiting it to maximize its output before investing in additional capacity.

Question 2

A franchise operator must balance following the franchisor's system with local market needs. Which operational document typically governs this relationship?

Accepted Answer

Franchise Disclosure Document (FDD) and franchise agreement

Answer

The FDD (required by FTC) and franchise agreement together define the rights, obligations, fees, and operational standards governing the franchisee-franchisor relationship.

Question 3

Which risk management strategy involves purchasing insurance to handle potential financial losses?

Accepted Answer

Risk transfer

Answer

Risk transfer shifts the financial consequences of a risk to a third party, most commonly through insurance policies.

Question 4

A business operator is analyzing customer profitability and finds that 20% of customers generate 80% of revenue. This observation reflects which principle?

Accepted Answer

The Pareto Principle

Answer

The Pareto Principle (80/20 rule) states that roughly 80% of effects come from 20% of causes, commonly observed in customer revenue distributions.

Question 5

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?

Accepted Answer

The Texas Comptroller of Public Accounts

Answer

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.

(CBO) Certified Business Operator Practice Test

(CBO) Certified Business Operator Practice Test

CBO Business Operations Management 5