CPIM Part 2 Final Study Guide With Complete Solution

Distribution requirements planning (DRP) provides transportation planners with: Answers locations for scheduling deliveries. backhauling information. load optimization information. current and future shipping requirements. - Answer Answer Rationale DRP can convert the schedule of planned orders into transportation data elements such as weight, volume, and number of pallets. current and future shipping requirements. Which is a decision at the operations strategy level related to planning and controlling the delivery of products and services? Answers Should the operation develop its products or services in house or outsource the design? What should be the size of the workforce and how much subcontracting should be used? How should operations adjust its activity levels in response to demand fluctuations? What aggregate levels of inventory should be maintained? - Answer Answer Rationale Operational strategies address detailed day-to-day planning. The adjustment of activity levels is one example of an operational decision related to planning and controlling the delivery of products and services. The other answer choices either relate to other areas of the operational plan or are tactical (more long-term) decisions. How should operations adjust its activity levels in response to demand fluctuations? Which helps set boundaries around the type of work the company will pursue and indicates what is out of scope? Answers Project scope statement Vision Core values Mission - Answer Answer Rationale The APICS Dictionary, 16th edition, defines mission as "the overall goal(s) for an organization set within the parameters of the business scope." Mission What can happen when management fails to articulate a concise operational strategy that is aligned with overall corporate strategy? Answers Departmental "specialists" will tend to optimize their own areas of control without consideration for the rest of the organization. Enterprise resources planning (ERP) system accuracy will continue to be reliable because employee training is part of ERP system startup. Company-wide solutions will become a viable substitute for the weak operational strategy. IT security will likely fall victim to corporate espionage. - Answer Answer Rationale In the absence of a more explicit operations strategy, specialists in areas such as inventory control or process technology will tend to develop their own "systems" protecting their own organizational positions. Departmental "specialists" will tend to optimize their own areas of control without consideration for the rest of the organization. What is the primary purpose of a core values statement? Answers Emphasizes to shareholders the organization's commitment to ethical behavior Enhances recruitment of the right kind of employees Provides ethical and business guidepost to organization members Satisfies the needs of legal and regulatory stakeholders - Answer Answer Rationale While a core values statement can support recruitment, its primary function is for the existing members of the organization. It helps guide future business and ethical decisions. Provides ethical and business guidepost to organization members Strategies that lack stability over time and employee acceptance are the result of an organization not having which of the following? Answers Mission and vision Differentiation strategies Dependability and flexibility Big opportunities and eight accelerators - Answer Answer Rationale A business's mission, vision, and core values create a foundation for the organization's strategy by unifying leaders and employees behind a shared vision of the organization's principles and future. Without this foundation, strategies can lack stability over time and broad acceptance by executives, managers, and employees. Mission and vision Which quantitative forecasting technique applies past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family? Answers Concurrent forecasting Seasonality Life cycle analysis Trend - Answer Answer Rationale Life cycle analysis is a quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family. Life cycle analysis What is a strengths, weaknesses, opportunities, and threats (SWOT) analysis best used for? Answers Helping formulate and update the company's mission and vision statements Initiating discussions within the monthly sales and operations planning (S&OP) activity Identifying whether the company is in a position to pursue attractive market opportunities and defend against external threats Convincing venture capitalists to invest in a new business proposal - Answer Answer Rationale In evaluating a company's overall situation, a key question is whether the company is in a position to pursue attractive market opportunities and defend against external threats to its future well-being. Identifying whether the company is in a position to pursue attractive market opportunities and defend against external threats At a minimum, a company's key success factors should include which of the following? Answers Generous portions of narrative from the company's mission and vision statements Company's targeted year-end stock price Internal rate of return stated as a percent of earnings Those attributes or strengths with the greatest impact on future success in the marketplace - Answer Answer Rationale Key success factors are the product attributes, organizational strengths, and accomplishments that have the greatest impact on future success in the marketplace. Those attributes or strengths with the greatest impact on future success in the marketplace Threats to a company's future well-being often take the form of: Answers a smear campaign orchestrated by a nefarious competitor. a stock market adjustment. the entry of lower-cost foreign competitors. burdensome, oppressive regulations. - Answer Answer Rationale Threats to a company's future well-being often stem from the emergence of cheaper or better technology or the entry of lower-cost foreign competitors. the entry of lower-cost foreign competitors. According to the five forces model of competition, when does supplier rivalry weaken? Answers When buyer costs to switch brands are low When buyer costs to switch brands are high When buyer demand is diminishing When competitors are numerous - Answer Answer Rationale When customers' costs to switch brands of purchased components are high, rivals have less opportunity to convert customers to their products. When buyer costs to switch brands are high Through the use of value chain analysis, cost performance may be improved by: Answers charging more for products that use activities within the value chain. imposing high utilization targets for value chain operations. identifying and eliminating non-value-added activities. finding lower-cost raw materials. - Answer Answer Rationale Value chain analysis can improve the company's cost performance by identification and elimination of non-value-added activities. identifying and eliminating non-value-added activities. What factors are considered in determining industry attractiveness? Answers Supplier collaboration and cumulative competitive pressure Supplier collaboration and relative strength of seller versus rivals Profitability and supplier collaboration Profitability and cumulative competitive pressure - Answer Answer Rationale Profitability and cumulative competitive pressure are factors considered when determining an industry's attractiveness. Profitability and cumulative competitive pressure An organization is attempting to break into a market that already has several competitors who have significant market share. Which action would increase the level of competition and pressure on these established competitors? Answers Imitate the competitors' products features and price closely. Choose specific products to produce where the cost of switching brands is high for the consumer. Introduce a daring but risky strategic innovation. Start with products that already have steadily increasing demand. - Answer Answer Rationale Rivalry tends to be weaker when the rival (the company trying to break into the market in this case) pursues a "me too" strategy and there are no daring strategic innovators. Therefore, daring innovations are an opportunity that could pay off. Introduce a daring but risky strategic innovation. When aligning capabilities with needs, the response could be extremely focused with little excess capacity or flexibility or be designed with excess capacity and more flexibility. What would be the more desirable strategy? Answers Aligning more tightly and continuously assessing and adjusting Aligning tightly initially and then expanding in a stepwise fashion Aligning with little excess capacity to better contain overhead costs Aligning or responding with excess capacity - Answer Answer Rationale Markets and operational capabilities must be aligned. The superior strategy here is to align more loosely (with excess capacity) rather than more tightly (with just the right level of capacity). Aligning or responding with excess capacity What should leaders do to ensure that strategic goals are clearly articulated and prioritized to address only those of highest importance? Answers Make sure that all IT initiatives are dollarized and prioritized using the internal rate of return method for improvement. Align improvement initiatives with strategic objectives. See that all department-initiated improvement initiatives are prioritized based on speed and value of implementation. See that improvement initiatives are acceptable to the people and to the departments in which the people reside. - Answer Answer Rationale To get the most from initiatives to execute strategy more proficiently, managers must have a clear idea of what specific outcomes really matter. Once initiatives to improve operations are linked to the company's strategic priorities, then comes the managerial task of building a total quality culture that is genuinely committed to achieving the performance outcomes that strategic success requires. Align improvement initiatives with strategic objectives. A company is developing which of the following when it is investing in resources that enhance its value chain proficiency with the goal of attaining industry-leading status? Answers Market share Core competency Strategic plan Competitiveness - Answer Answer Rationale Creating industry-leading proficiency for tasks within the company's value chain activities is a core competency enhancement. Core competency A market leader in systems computing fails to adapt to market trends for smaller devices and cloud computing. This reveals a poor assessment process concerning its: Answers monthly sales and operations planning (S&OP). strengths, weaknesses, opportunities, and threats (SWOT) analyses. operations strategy. executive dashboard capabilities. - Answer Answer Rationale The operations strategy shapes the long-term capabilities of an operation and should be consistent with the overall strategy. operations strategy. What will increase rivalry among sellers in the same industry? Answers Buyer demand grows slowly or is flat, and cost to switch brands is high. Customer loyalty is high, and cost to switch brands is high Both strong and weak rivals exist. Buyer demand grows slowly or is flat, and both strong and weak rivals exist. - Answer Answer Rationale When buyer demand grows slowly or is flat, sellers must compete harder to increase revenues. When strong and weak rivals exist, strong competitors tend to exploit their advantages and weak ones have to move quickly to compete. It is harder to entice a customer to switch when they are loyal. Buyers are not likely to change suppliers. Buyer demand grows slowly or is flat, and both strong and weak rivals exist. The distribution center servicing a corner store chain initiated isolating food groups by storage temperature. This action represents competing on: Answers products at lower costs. varying product volumes. product speed. superior-quality products. - Answer Answer Rationale From a competitive perspective, isolating food groups by storage temperature facilitates the company's ability to deliver quality products. superior-quality products. Once the company's value chain has been documented and internal consensus has been gained, the next step in using value chain analysis is: Answers identifying key functions and people in each step to facilitate duplication and fail-safe processes. finding overlapping activities and consolidating whenever possible. isolating core activities from non-core activities with the goal of outsourcing the non-core activities. completing a value chain analysis for the company's most significant competitors. - Answer Answer Rationale The primary purpose of value chain analysis is to facilitate an activity-by-activity comparison of how effective a company is relative to its competitors. completing a value chain analysis for the company's most significant competitors. The strategic management of any operation: Answers cannot be separated from how well operational resources are managed at the detail level. should not be constrained by past operational efficiencies or quality performance. is the key driver of operations, regardless of the operation's past performance. will be determined by the ability of the facility to react to short-term changes in schedule or product mix. - Answer Answer Rationale Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality). cannot be separated from how well operational resources are managed at the detail level. Operations strategy formulation should be: Answers a five-year rolling activity updated biannually. a monthly seven-step process involving top management. an annual process with quarterly adjustments. a relatively infrequent event. - Answer Answer Rationale The process of formulating an entirely new operations strategy should be a relatively infrequent event. a relatively infrequent event. What is a core competency? Answers Task best done by outsourcing to an innovative supplier Rare capability a company possesses, often protected by patents Operation a company performs better than anyone else in the marketplace Proficiently performed activity central to the company's strategy and competitive success - Answer Answer Rationale To be a core competency, a task must be performed proficiently and must be central to the company's strategy and competitiveness. Proficiently performed activity central to the company's strategy and competitive success An adaptive company that frequently experiments with developing potentially disruptive products experiences a new product failure. How will the company likely view this failure? Answers As a reason to never revisit this niche market As an opportunity to observe competitive responses As an activity inhibiting future variations of this type of behavior As a valuable knowledge-gathering experience - Answer Answer Rationale Adaptive companies use experimentation far more broadly than their rivals. While experimentation necessarily produces failure, adaptive companies are very tolerant of failure, viewing it as a learning opportunity. As a valuable knowledge-gathering experience What is the primary use of environmental scanning? Answers To identify threats and opportunities To identify effective supply chains To understand current markets To understand competitors' strategies - Answer Answer Rationale Environmental scanning looks at external factors that represent either threats to the organization or opportunities for it. Identifying effective supply chains and understanding competitors and markets are not objectives of environmental scanning. To identify threats and opportunities What is a characteristic of a centralized organizational structure? Answers Dominance of headquarters in decision making and planning Development of functional silos poor at collaboration Poorly defined reporting lines and decision-making authority Empowering of low-level employees to make decisions about their work - Answer Answer Rationale In centralized structures, decision making and planning occurs at the top. Employee empowerment and poorly defined reporting lines are more characteristic of decentralized structures. Functional structure is a type of organizational structure. Dominance of headquarters in decision making and planning Corporate goals identified using a top-down and bottom-up approach should be prioritized by using: Answers a Delphi forecast process where a panel of experts are engaged for this specific purpose. a Pareto analysis revealing that 80% of the potential gains will come from 20% of the opportunities. an activity-based costing process applied to each goal. a strengths, weaknesses, opportunities, and threats analysis involved with each goal. - Answer Answer Rationale By developing a strengths, weaknesses, opportunities, and threats (SWOT) analysis involved with each goal, the most important goals should move to the top. a strengths, weaknesses, opportunities, and threats analysis involved with each goal. When a company's competence in performing a certain task reaches the level of a competitively superior strength, this is a: Answers core competency. technical advantage. strategic imperative. candidate for KPI monitoring. - Answer Answer Rationale A core competency is a proficiently performed task that is central to a company's strategy and competitiveness. core competency. What does the five forces model of competition suggest will happen to rivalry between competitors when high exit barriers exist, such as job protection agreements, or in industries in which assets cannot be easily sold? Answers It will increase. It often results in backward integration. It will invite even more competition. It will diminish. - Answer Answer Rationale In a vertical market with many competitors, rivalry increases. It will increase. An important component of analyzing the driving forces of an industry is to determine whether the forces will lead to an increase or decrease in which of the following? Answers Industry costs Technology change Competitive intensity Internal strengths - Answer Answer Rationale One step in analyzing an industry's driving forces is to determine whether the prevailing forces are acting to make the industry environment more or less attractive, including whether they are making competition more or less intense. Competitive intensity Whether a company's internal weaknesses make it competitively vulnerable depends upon: Answers the importance of the liability and if it is negated by a strength. the competitor's strength in this area. customer perceptions. product, price, promotion, and place. - Answer Answer Rationale Nearly all companies have competitive liabilities. Whether a company's internal weaknesses make it competitively vulnerable depends upon how much they matter in the marketplace and whether they are offset by the company's strengths. the importance of the liability and if it is negated by a strength. Which of the following is critical information that is required during the operations strategic planning process? Answers Overall objectives of the organization Human resources plan for future hiring Supply chain design Prior year's net income statement - Answer Answer Rationale One area's strategic plan must be aligned with the strategic plan of the overall company. Overall objectives of the organization A design engineering group has dismantled a new product from another supplier. This is an example of: Answers thievery. competitive analysis. disintermediation. unethical behavior. - Answer Answer Rationale Performing a competitive analysis of a competitor or its products allows a company to understand the competitor's strategies, capabilities, prices, and costs. competitive analysis. While assessing market opportunities, successful companies: Answers view every industry opportunity as a possible industry disruptor, and they devote resources to investigate them. view every industry opportunity as tempting, but they will be constrained by their resources and capabilities. view every industry opportunity as a potential game changer, and they will be prepared to thoroughly pursue them. view every industry opportunity as an emerging market channel, and they prepare accordingly - Answer Answer Rationale Managers must guard against viewing every industry opportunity as a company opportunity. Rarely does a company have the resources to pursue all available opportunities. view every industry opportunity as tempting, but they will be constrained by their resources and capabilities. In hopes of achieving strategic goals, executives may: Answers initiate a public relations organization to advertise the company's strategic objectives. pit one department or group against another in hopes of instilling competition. engage specialists to lobby the government in hopes of attaining special tax breaks. provide resources for only those projects that facilitate accomplishing strategic goals. - Answer Answer Rationale Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests. provide resources for only those projects that facilitate accomplishing strategic goals.` One of an organization's core values is that "we share bad news early." Which is necessary to see this value in practice? Answers The mandate comes from the top. Leaders and managers model the behavior. The value is included in the mission and vision. The value is published in the employee handbook. - Answer Answer Rationale Core values serve as business and ethical principles for all members in the business, but they function only when they are mirrored in the behavior of leaders and managers. Leaders and managers model the behavior. How can value chain analysis provide a cost improvement/advantage? Answers By increasing batch sizes to spread setup costs over more product By identifying and outsourcing the highest-volume activities to suppliers with low labor rates By providing the ability to rationalize product lines by eliminating low-volume sellers By identifying where on the value chain the company has a strategic advantage and exploiting it - Answer Answer Rationale A proven approach to gaining a cost advantage is to identify where on the value chain the company has a strategic advantage and to then exploit it. By identifying where on the value chain the company has a strategic advantage and exploiting it In the five forces model of competition, as products available from rival suppliers become less differentiated, supplier rivalry is said to: Answers increase. diminish design innovation. become stagnant. cause price increases. - Answer Answer Rationale With similar product offerings, buyers have less reason to be brand-loyal, thus increasing supplier rivalry. increase Which of the following includes an analysis of the nature of the firm, the market, and the business environment? Answers Strategic plan S&OP Benchmarking Product family analysis - Answer Answer Rationale S&OP is incorrect, because although it is concerned with these factors, the analysis is conducted as a part of the business planning process. Benchmarking is incorrect because it is a separate part of business planning, which does not include analysis of the nature of the firm, the market, or the business environment. Product family analysis is incorrect because it occurs as a part of S&OP and does not include analysis of the nature of the firm, the market, or the business environment. Strategic plan What is the purpose of a VRIN test? Answers To evaluate the attractiveness of an industry To identify external threats and opportunities To assess the strength of an organization's competitive advantage To identify key competitive skills in an industry - Answer Answer Rationale A VRIN (valuable, rare, inimitable, nonsubstitutable) test assesses an organization's competitive abilities. To assess the strength of an organization's competitive advantage A company seeks to maximize the life span and utilization of all products delivered. From this perspective, which of the following would an elevator company do? Answers Sell the elevators and service contracts. Sell the elevators at a breakeven or a loss and manage service as its key revenue generator. Sell the elevators and provide free service. Sell the elevators as a service, maintaining ownership itself. - Answer Answer Rationale The concept of natural capitalism divides the world's resources into four basic areas: natural, human, manufactured, and financial capital. Under this philosophy, an elevator company would see the elevator as a service, maintaining ownership itself. Sell the elevators as a service, maintaining ownership itself. When outsourcing products or processes, a critical first step for all involved is identification of the company's: Answers patents. strategic plan. core competencies. existing capacity strategy. - Answer Answer Rationale Core competencies are the skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. core competencies. In an annual new product planning activity, using forecasts of product groups by dollars is often regarded as step two, with step one being a competitive: Answers reverse engineering activity. competence assessment. merger policy. SWOT analysis. - Answer Answer Rationale A SWOT analysis looks at the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy. It is important to recognize what a company's strengths and weaknesses are in terms of a new product. SWOT analysis. The five forces model: Answers identifies market trends. is used to determine the economic features of a market. considers the impact of buyers on competition. determines what market positions rivals occupy. - Answer Answer Rationale The five forces model consists of the following elements: rivalry among competitive sellers, buyer bargaining power, substitute products, supplier power, and new entrants into the marketplace. considers the impact of buyers on competition. What would be an effective response for an established player when a competitor attacks with a disruptive business model or a product with features that are simpler and more affordable? Answers Immediately start an aggressive plan to acquire the upstart. Introduce a better product, and cross-sell and up-sell existing products. Offer temporary discounts for existing products. Wait to see if the competitor is successful. - Answer Answer Rationale Incumbents often fail to counterattack a competitor's disruptive advances. For example, Craig's List offers free classifieds, and in all but one of the top 50 U.S. metropolitan markets for classified ads, it dominates. What was different about that one metropolitan area? That company responded quickly to the business model threat by launching its own free classifieds site along with other significant changes. Lessons learned? When faced with a disruptive competitor, consider quickly matching the disruptive business model. Introduce a better product, and cross-sell and up-sell existing products. Which of the following is the most powerful and most widely used tool for diagnosing the principal competitive pressures in a market? Answers Four Ps (price, product, promotion, placement) Income statement Balance sheet Five forces model - Answer Answer Rationale The five forces model analyzes competitive pressures in a market and assesses the strength and importance of each of those pressures. Five forces model The strongest threats relating to competition in an established industry are likely to come from: Answers mergers and acquisitions. existing competitors. angel investors. new technology innovators. - Answer Answer Rationale Established companies in an industry already have the resources to compete and are the most likely source of new competition. existing competitors. What is a typical first step in assessing a company's overall advantage or disadvantage as contrasted with its competitors? Answers Segregate the company's operations into different types of primary and secondary activities. Identify all competitors and hypothesize their various strengths. Reverse-engineer products from the top 20% of all competitors. Outsource all non-core-competency tasks. - Answer Answer Rationale A first step in evaluating a company's economic advantage or disadvantage relative to its competitors is to segregate the company's operations into different types of primary and secondary activities. Segregate the company's operations into different types of primary and secondary activities. Which of the following is true of a company's core competency? Answers It is tied to a measure of production efficiency. It is associated with a task in the company's value chain activities. It is related to a company's product quality. It could be the company's product innovation capabilities. - Answer Answer A core competency is a proficiently performed internal activity that is central to a company's strategy and competitiveness. 3M has a core competency in product innovation. Its record of introducing new products goes back several decades, and new product introduction is central to 3M's strategy of growing its business. It could be the company's product innovation capabilities. The plan for determining actions to support the mission, goals, and objectives of an organization is the: Answers tactical plan. strategic plan. sales and operations plan. project plan. - Answer Answer Rationale The strategic plan is the plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization strategic plan. A company is focusing on its supply chain design and costs. A competitive strategy would be to understand how effectively and efficiently it delivers value to customers as compared with its: Answers primary regulatory overseer. supply chain partners. quality function deployment strategy. competitors. - Answer Answer Rationale To remain competitive, a company must understand how effectively and efficiently it delivers value to customers relative to its competitors. competitors Which of the following describes core competencies? Answers Not directly related to the company's products or markets Directly related to the company's products or markets Ideal candidates for cost improvement initiatives including outsourcing Quantifiable and dollarized in financial reporting - Answer Answer Rationale According to theAPICS Dictionary, core competencies are "bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth." Directly related to the company's products or markets Why should caution be exercised in using value chain analysis alone in efforts to meet or beat top competitors' costs? Answers Value chain analysis often ignores purchasing. Competitors may spend more on sales and marketing; this is typically not revealed in value chain analysis. Financial and portfolio analysis are superior tools for cost reductions. Cost and price differences may emanate from supplier and distribution superiority. - Answer Answer Rationale Cost and price differences between competitors may have their origins in activities performed by suppliers or by distribution allies. Cost and price differences may emanate from supplier and distribution superiority. Product positioning refers to a product's relationship: Answers in the distribution network based on its customer base. to other products based on total sales. in the marketplace based on its features. in the production facility based on similar products. - Answer Answer Rationale Product positioning is the marketing effort involved in placing a product in a market to serve a particular niche or function. in the marketplace based on its features. The voice of the customer process is in complete alignment with: Answers quality function deployment (QFD). qualitative forecast techniques. the Delphi method. process flow analysis methodology. - Answer Answer Rationale The voice of the customer involves actual customer descriptions of the functions and features customers desire for goods and services. It relates to QFD. quality function deployment (QFD). Which of the following is likely true of a new product development strategy? Answers It will take a back seat to product volumes if operations are highly efficient. It will be more robust and aggressive if accompanied by heightened confidence that operations is capable of delivering a quality product. It will be downsized if operations continuously beats standard times. It will be used to augment manufacturing if there is significant uncertainty in operational delivery. - Answer Answer Rationale Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality). It will be more robust and aggressive if accompanied by heightened confidence that operations is capable of delivering a quality product. Which of the following performance objectives refers to the time that has elapsed between the beginning and the end of the sales transaction? Answers Speed Flexibility Dependability Quality - Answer Answer Rationale There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. Speed refers to the time that has elapsed between the beginning and the end of the sales transaction, and is focused on delivery lead time. The importance of speed varies depending on the industry - some industries will depend on getting products to customers as quickly as possible. Achieving speed requires the analysis of all transaction steps, in order to identify any opportunities to shorten the steps and/or the gaps between steps. Speed When strategically aligning operational capabilities with market needs, caution must be exercised so that: Answers operations capabilities are 100% aligned with all market forecasts. employee staffing is soft enough so that a good amount of overtime will be necessary. capabilities are not so tightly aligned as to offer little to no room for response flexibility. all capital projects are completely approved and aligned with the most optimistic market forecast. - Answer Answer Rationale When assessing the potential for failure, operations should look to its line of fit concerning alignment to market needs. Too tight a fit risks market needs expanding beyond operational capabilities. capabilities are not so tightly aligned as to offer little to no room for response flexibility. "The voice of the customer" refers to identifying customer wants through which two of the following mechanisms? Answers Working to resolve customer complaints and listening to requests from potential customers Listening to requests from potential customers and producing reliable products consistently Listening to requests from potential customers and conducting in-depth qualitative customer interviews Producing reliable products consistently and conducting in-depth qualitative customer interviews - Answer Answer Rationale "Listening to the voice of the customer" refers to the information marketing and product design need when creating new products. The idea is to design new products that reflect what the customer actually wants versus what marketing thinks they should have. Listening to requests from potential customers and conducting in-depth qualitative customer interviews What is needed to determine the gap between customer expectations and customer perceptions of a product-service package the organization sells? Answers Market research Market penetration Marketing Market development - Answer Answer Rationale Performed properly, market research provides background information on the gap between customer expectations and customer perceptions of a product or service. Market research Which of the following performance objectives refers to the ability to keep promises to customers? Answers Dependability Speed Cost Speed - Answer Answer Rationale Dependability refers to keeping promises to customers. These promises can include factors such as time and volume, and the ability to delivery the correct amount in the required time frame. Dependability From the customer's perspective, what does delivery lead time consist of? Answers Time from requirement for a product to receipt of the product Time from placing an order to use of the product Time from receipt of the customer order to the delivery of the product Time from start of the order preparation to use of the product - Answer Answer Rationale Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Time from receipt of the customer order to the delivery of the product Which if the following performance objectives refers to an operation's ability to offer different configurations of a product and react to requests for changes from a customer? Answers Speed Quality Cost Flexibility - Answer Answer Rationale Flexibility has two dimensions: volume/mix and agility. That is, an operation's ability to produce different types and/or varieties of products or services, and also how quickly the operation is able to respond to requested changes. Flexibility A B2B organization makes replaceable belts for newspaper printing press maintenance. When identifying their customer segments, who would be the economic buyer? Answers Printing press manufacturers Newspaper readers Newspaper companies The Associated Press - Answer Answer Rationale The economic buyer is the organization whose budget funds the purchase. Since these are maintenance items for products out in the field, the newspaper companies would be the primary buyers. The printing press manufacturers would also be buyers but would buy in lower volume. Newspaper companies Which of the following is true of strategy development in most corporations? Answers The CEO is the primary strategy architect, with little influence from others. Other senior executives help fashion major elements of the strategy. The business strategy is formulated first by department heads and then fine-tuned by the CEO and staff. Much "borrowing" through competitive benchmarking occurs. - Answer Answer Rationale In most corporations, strategy is the product of more than just the CEO's handiwork. Typically, other senior executives—business unit heads, the CFO, and the vice presidents of production, marketing, HR, and other functional departments—have influential strategy-making roles and help fashion the chief strategy components. Other senior executives help fashion major elements of the strategy. The traditional hierarchical structure is good at running the day-to-day affairs of the organization, which includes executing the current strategy and continuously improving it. An organization develops a dual operating system consisting of a traditional organizational hierarchy and a network organizational structure. The latter develops "big opportunities." What is a typical role for the traditional organizational hierarchy? Answers Focusing more on creativity than logic Executing strategic changes that are extensions of the current strategy Focusing more on leadership than management Executing strategic changes that require speed and agility - Answer Answer Rationale The traditional hierarchical structure is good at running the day-to-day affairs of the organization, which includes executing the current strategy and continuously improving it. Executing strategic changes that are extensions of the current strategy What happens once the final draft of a company's strategy has been formulated? Answers It must next be published in the company's annual report if the company is publicly traded. It is typically submitted to the company's board of directors for review and approval. It must be filed with the Securities and Exchange Commission. All stakeholders have approximately 30 days to fine-tune it. - Answer Answer Rationale The strategy-making efforts of top managers are complemented by advice and counsel from the company's board of directors. Normally all major strategic decisions are submitted to the board for review, discussion, and official approval. It is typically submitted to the company's board of directors for review and approval. What is vital to periodically evaluate regarding a breakthrough strategy designed to significantly increase inventory turnover? Answers Whether specific goals should be set if progress on the strategy is starting to slow Whether the change has introduced unintended consequences such as to quality Whether enough pressure is being placed on functional areas that could further increase inventory turnover Whether inventory turnover is becoming too high and needs to be lengthened - Answer Answer Rationale Strategies and tactics need to be monitored to ensure that unexpected negative results have not been introduced. Increasing inventory turnover is a worthy goal, but it could promote taking shortcuts that harm quality and result in customer dissatisfaction. Whether the change has introduced unintended consequences such as to quality Which of the following represents a trend in supplier relationships? Answers Increase in the number of transportation providers Fewer partnerships with customers Decrease in the outsourced production of goods and services Reduction in the number of suppliers - Answer Answer Rationale Shrinking the number of suppliers enables companies to form much closer supply channel relationships. Reduction in the number of suppliers At what do the organizational structures commonly found in large and successful organizations tend to be effective and efficient? Answers Functioning and executing Innovating and changing Such organizational structures tend to be neither effective nor efficient. Such organizational structures tend to be effective in most areas but not efficient. - Answer Answer Rationale Traditional organizational structures that most large and successful organizations have are usually good at keeping the organization functioning and executing effectively and efficiently. However, these same structures tend to have lost the entrepreneurship and agile innovation ability that makes start-ups so great.