FREE CTP Operational Efficiency & Cost Reduction Questions and Answers

Question 1

What is the goal of operational efficiency in a turnaround process?

Accepted Answer

Reduce costs without affecting quality

Answer

The goal of operational efficiency in a turnaround process is to streamline business operations to achieve the same or better output with fewer resources. This involves identifying and eliminating waste, optimizing processes, and improving productivity, all while maintaining or enhancing product or service quality. It's about doing more with less, smartly, to improve profitability and competitiveness.

Question 2

Which of the following is a common method for reducing operational costs?

Accepted Answer

Outsourcing non-core activities

Answer

Outsourcing non-core activities allows a company to leverage external specialists, often at a lower cost, and reduces internal overheads such as salaries, benefits, and infrastructure associated with those functions. This strategy enables the company to focus its resources on its core competencies, leading to overall cost reduction. Options like hiring more staff or increasing compensation would typically increase operational costs.

Question 3

What is lean manufacturing?

Accepted Answer

Eliminating waste and improving efficiency

Answer

Lean manufacturing is a systematic approach focused on maximizing customer value while minimizing waste in all forms, including overproduction, waiting, unnecessary transport, over-processing, excess inventory, unnecessary motion, and defects. By eliminating waste and improving efficiency, lean principles streamline processes, reduce costs, and enhance overall productivity. It's not just about speed or inventory reduction, but a holistic approach to efficiency.

Question 4

How does automation help in operational efficiency?

Accepted Answer

By improving production speed and consistency

Answer

Automation replaces manual tasks with machines or software, significantly improving the speed and consistency of production processes. This leads to higher output, fewer errors, and reduced labor costs, thereby enhancing overall operational efficiency. While it may reduce some human jobs, its primary benefit to efficiency is through optimized and consistent performance.

Question 5

What is the role of cost-benefit analysis in cost reduction?

Accepted Answer

To evaluate potential improvements based on costs and benefits

Answer

Cost-benefit analysis is a systematic process used to evaluate the potential benefits of a proposed action or project against its associated costs. In cost reduction, it helps decision-makers determine whether the financial and non-financial advantages gained from a particular cost-saving initiative outweigh the resources and efforts required to implement it. This ensures that cost reduction efforts are strategically sound and yield positive net results.

CTP - Certified Turnaround Professional Practice Test

CTP - Certified Turnaround Professional Practice Test

FREE CTP Operational Efficiency & Cost Reduction Questions and Answers