OPM 3000 EXAM QUESTIONS WITH ANSWERS
100% VERIFIED
Operations Management - ANSWER Match supply with demand while making a profit
and being efficient
How to make profit - ANSWER drive up demand or by using resources more efficiently
How to match supply with demand - ANSWER Predict/react to consumer demand and
allocate resources efficiently to meet those predictions
Why might it be hard to match supply with demand - ANSWER demand is fluid, supply is
generally inflexible
Utility - ANSWER measure of customers preferences. Consumption utility, price, and
inconvenience
Consumption utility - ANSWER a measurement of how much you like a service ignoring
the effects of price and its inconvenience
Inconvenience - ANSWER reduction in utility that results from the effort of obtaining the
product or service
Pareto dominated - ANSWER when a firm's product or service is inferior to competitors
on ALL dimensions of the customer utility function
Efficient frontier - ANSWER the set of firms that are not pareto dominated
Inefficiency frontier - ANSWER the gap between a firm and the efficient frontier
How to overcome inefficiency - ANSWER being mindful of waste, variability and
inflexibility
Waste - ANSWER the consumption of inputs and resources that do not add value to the
customer
Variability - ANSWER predictable or unpredictable changes in the demand or the supply
process
Inflexibility - ANSWER the inability to adjust to either changes in the supply process or
changes in customer demand
Questions managers face everyday - ANSWER is our process performing well? How can
we make it better?
Process - ANSWER a set of activities that take a collection of inputs, perform some work
,or activities with those inputs, and then yield a set of outputs
Process scope - ANSWER the set of activities and processes included in the process
Flow unit - ANSWER the unit of analysis that is considered in a process analysis (riders
at an amusement park)
Process metric - ANSWER something we can measure that informs us about the
performance and capability of a process
Inventory - ANSWER number of flow units that's in process. Takes up space and costs
money
Flow rate - ANSWER the rate at which flow units travel through a process (customers
per minute). The minimum of demand or process capacity
Flow time - ANSWER the time a flow unit spends in a process, from start to finish
Littles law - ANSWER the law that describes the relationship between three key process
metrics: Inventory = flow rate * flow time
Process Analysis - ANSWER a rigorous framework for understanding the detailed
operations of a business
Process flow diagram - ANSWER graphical way to describe the process. Boxes depict
resources arrows depict the direction of flow units and triangles to depict inventory
location
Upstream - ANSWER the parts of the process that are at the beginning of the process
flow
Downstream - ANSWER the parts of the process that are at the end of the process flow
Processing time - ANSWER the time it takes a resource to complete one flow unit
Capacity - ANSWER the maximum number of flow units that can flow through a resource
per unit of time
Process Capacity - ANSWER the maximum flow rate a process can provide per unit of
time
Utilization - ANSWER ratio between flow rate and capacity
Cycle time - ANSWER time between completing two consecutive flow units (1/flow rate)
Bottleneck - ANSWER resource with the lowest capacity in a multistep process is the
bottleneck
, Capacity constrained - ANSWER the case in which demand exceeds supply, and the flow
rate is equal to process capacity. The bottleneck is the resource with the least capacity
Demand constrained - ANSWER the case in which process capacity exceeds demand
and thus the flow rate is equal to the demand rate. The bottleneck is demand itself
Profit in operational metrics - ANSWER Profit = flow rate * (avg price/unit - avg cost/unit)
Cost of direct labor - ANSWER the labor cost associated with serving one customer,
which is the total wages paid per unit of time divided by the flow rate. Total wages (per
unit of time) / flow rate
Labor content - ANSWER the amount of work that goes into serving one customer which
is the sum of the processing times involving labor. Sum of processing times with labor
Average labor utilization - ANSWER the average utilization across all resources
Idle time - ANSWER the amount of time per flow unit for which a single resource is paid,
but is not actually working
Total idle time - ANSWER the amount of idle time per flow unit, added up across all
resources. Total idle time = cycle time * number of employees - labor content
Takt time - ANSWER the ratio between the resource time available and the quantity
needed to meet that demand. It is a demand driven measure. Available resource time /
required quantity to meet demand. Or 1/demand rate
Target manpower - ANSWER ratio between the labor content and the takt time
determines the minimum number of resources required to meet demand. This minimum
does not have to be an integer number and it assumes all resources are perfectly
utilized. Labor content / takt time.
100% VERIFIED
Operations Management - ANSWER Match supply with demand while making a profit
and being efficient
How to make profit - ANSWER drive up demand or by using resources more efficiently
How to match supply with demand - ANSWER Predict/react to consumer demand and
allocate resources efficiently to meet those predictions
Why might it be hard to match supply with demand - ANSWER demand is fluid, supply is
generally inflexible
Utility - ANSWER measure of customers preferences. Consumption utility, price, and
inconvenience
Consumption utility - ANSWER a measurement of how much you like a service ignoring
the effects of price and its inconvenience
Inconvenience - ANSWER reduction in utility that results from the effort of obtaining the
product or service
Pareto dominated - ANSWER when a firm's product or service is inferior to competitors
on ALL dimensions of the customer utility function
Efficient frontier - ANSWER the set of firms that are not pareto dominated
Inefficiency frontier - ANSWER the gap between a firm and the efficient frontier
How to overcome inefficiency - ANSWER being mindful of waste, variability and
inflexibility
Waste - ANSWER the consumption of inputs and resources that do not add value to the
customer
Variability - ANSWER predictable or unpredictable changes in the demand or the supply
process
Inflexibility - ANSWER the inability to adjust to either changes in the supply process or
changes in customer demand
Questions managers face everyday - ANSWER is our process performing well? How can
we make it better?
Process - ANSWER a set of activities that take a collection of inputs, perform some work
,or activities with those inputs, and then yield a set of outputs
Process scope - ANSWER the set of activities and processes included in the process
Flow unit - ANSWER the unit of analysis that is considered in a process analysis (riders
at an amusement park)
Process metric - ANSWER something we can measure that informs us about the
performance and capability of a process
Inventory - ANSWER number of flow units that's in process. Takes up space and costs
money
Flow rate - ANSWER the rate at which flow units travel through a process (customers
per minute). The minimum of demand or process capacity
Flow time - ANSWER the time a flow unit spends in a process, from start to finish
Littles law - ANSWER the law that describes the relationship between three key process
metrics: Inventory = flow rate * flow time
Process Analysis - ANSWER a rigorous framework for understanding the detailed
operations of a business
Process flow diagram - ANSWER graphical way to describe the process. Boxes depict
resources arrows depict the direction of flow units and triangles to depict inventory
location
Upstream - ANSWER the parts of the process that are at the beginning of the process
flow
Downstream - ANSWER the parts of the process that are at the end of the process flow
Processing time - ANSWER the time it takes a resource to complete one flow unit
Capacity - ANSWER the maximum number of flow units that can flow through a resource
per unit of time
Process Capacity - ANSWER the maximum flow rate a process can provide per unit of
time
Utilization - ANSWER ratio between flow rate and capacity
Cycle time - ANSWER time between completing two consecutive flow units (1/flow rate)
Bottleneck - ANSWER resource with the lowest capacity in a multistep process is the
bottleneck
, Capacity constrained - ANSWER the case in which demand exceeds supply, and the flow
rate is equal to process capacity. The bottleneck is the resource with the least capacity
Demand constrained - ANSWER the case in which process capacity exceeds demand
and thus the flow rate is equal to the demand rate. The bottleneck is demand itself
Profit in operational metrics - ANSWER Profit = flow rate * (avg price/unit - avg cost/unit)
Cost of direct labor - ANSWER the labor cost associated with serving one customer,
which is the total wages paid per unit of time divided by the flow rate. Total wages (per
unit of time) / flow rate
Labor content - ANSWER the amount of work that goes into serving one customer which
is the sum of the processing times involving labor. Sum of processing times with labor
Average labor utilization - ANSWER the average utilization across all resources
Idle time - ANSWER the amount of time per flow unit for which a single resource is paid,
but is not actually working
Total idle time - ANSWER the amount of idle time per flow unit, added up across all
resources. Total idle time = cycle time * number of employees - labor content
Takt time - ANSWER the ratio between the resource time available and the quantity
needed to meet that demand. It is a demand driven measure. Available resource time /
required quantity to meet demand. Or 1/demand rate
Target manpower - ANSWER ratio between the labor content and the takt time
determines the minimum number of resources required to meet demand. This minimum
does not have to be an integer number and it assumes all resources are perfectly
utilized. Labor content / takt time.
