MEM Operations Management 4 — Questions and Answers
Question 1: A firm's COGS is $2M, and average inventory is $400K. What is the inventory turnover ratio, and approximately how many days of supply does it represent?
- 5 turns; ~73 days (Correct answer)
- 4 turns; ~91 days
- 5 turns; ~60 days
- 6 turns; ~61 days
Correct answer: 5 turns; ~73 days
Turnover = $2M/$400K = 5; days of supply = 365/5 ≈ 73 days.
Question 2: Which quality tool is used to separate the 'vital few' causes from the 'trivial many' by ranking defects by frequency?
- Pareto chart (Correct answer)
- Control chart
- Fishbone diagram
- Scatter plot
Correct answer: Pareto chart
A Pareto chart ranks defect causes by frequency or impact, visually identifying the 20% of causes driving 80% of problems.
Question 3: In make-or-buy analysis, the break-even volume Q is determined by which equation?
- Q = (F_make − F_buy) / (V_buy − V_make) (Correct answer)
- Q = F_make / (V_make − V_buy)
- Q = F_buy / V_make
- Q = (V_buy − V_make) / F_make
Correct answer: Q = (F_make − F_buy) / (V_buy − V_make)
Break-even occurs where total make cost equals total buy cost: F_make + V_make×Q = F_buy + V_buy×Q, solving to Q = (F_make − F_buy)/(V_buy − V_make).
Question 4: A process produces outputs with a mean of 50mm and standard deviation of 1mm. Specifications are 50 ± 3mm. What is the process capability index Cp?
- 1.0 (Correct answer)
- 1.5
- 2.0
- 0.5
Correct answer: 1.0
Cp = (USL − LSL) / (6σ) = (53 − 47) / (6×1) = 6/6 = 1.0.
Question 5: Which supply chain concept describes the phenomenon where small demand fluctuations at retail amplify into large order swings at the manufacturer level?
- Bullwhip effect (Correct answer)
- Forrester effect
- Demand pooling
- Safety stock cascade
Correct answer: Bullwhip effect
The bullwhip effect describes how demand signal distortion increases upstream in the supply chain, causing unnecessary inventory and capacity swings.
Question 6: An MRP system shows a net requirement of 200 units in week 6, with a lead time of 2 weeks and lot size of 100. When should the planned order release be issued?
- Week 4 (Correct answer)
- Week 5
- Week 6
- Week 3
Correct answer: Week 4
Planned order release = requirement week − lead time = week 6 − 2 = week 4, for 200 units (2 lots of 100).
Question 7: In project management, 'crashing' a project activity means which of the following?
- Adding resources to reduce activity duration at extra cost (Correct answer)
- Removing non-critical tasks from the schedule
- Reallocating resources from slack activities to critical ones
- Extending the deadline to reduce overtime costs
Correct answer: Adding resources to reduce activity duration at extra cost
Crashing accelerates an activity by adding resources (e.g., overtime, extra crew), accepting a higher direct cost to shorten project duration.
MEM Operations Management 4
A firm's COGS is $2M, and average inventory is $400K.
What is the inventory turnover ratio, and approximately how many days of supply does it represent?