MEM Operations Management 4

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?

Accepted Answer

5 turns; ~73 days

Answer

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?

Accepted Answer

Pareto chart

Answer

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?

Accepted Answer

Q = (F_make − F_buy) / (V_buy − V_make)

Answer

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?

Accepted Answer

1.0

Answer

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?

Accepted Answer

Bullwhip effect

Answer

The bullwhip effect describes how demand signal distortion increases upstream in the supply chain, causing unnecessary inventory and capacity swings.

MEM - Master of Engineering Management Practice Test

MEM - Master of Engineering Management Practice Test

MEM Operations Management 4