OPSY 5315 Operations Management Final Exam | Complete
Practice Questions, Answers & Detailed Rationales 2026/2027
Question 1
What is the primary objective of the Economic Order Quantity (EOQ)
model?
• A. To minimize the total cost of holding inventory and ordering
inventory.
• B. To eliminate all inventory in the system.
• C. To maximize the amount of safety stock.
• D. To minimize the purchase price of raw materials.
Correct Answer: A. To minimize the total cost of holding inventory and
ordering inventory.
Detailed Rationale: The EOQ model finds the optimal order quantity
where the sum of annual holding costs and annual setup/ordering costs
is at its minimum.
Question 2
In ABC Analysis, which items typically represent the smallest percentage
of the number of items but the highest percentage of the annual dollar
volume?
• A. Category C.
• B. Category B.
• C. Category A.
, • D. Category D.
Correct Answer: C. Category A.
Detailed Rationale: Category A items are the most expensive and
critical; they require tight control and frequent review.
Question 3
What does a "Kanban" system signal?
• A. A change in the company strategy.
• B. The need for more raw materials from the supplier.
• C. A "pull" signal for parts to be moved or produced from an
upstream process.
• D. A machine failure.
Correct Answer: C. A "pull" signal for parts to be moved or produced
from an upstream process.
Detailed Rationale: Kanban cards act as a visual authorization to
produce or withdraw inventory, which is the cornerstone of JIT "pull"
production.
Question 4
Which of the following is NOT one of the "7 Wastes" (Muda) in
Lean/TPS?
• A. Overproduction.
• B. Motion.
• C. Customer satisfaction.
• D. Waiting.
,Correct Answer: C. Customer satisfaction.
Detailed Rationale: Customer satisfaction is a goal. The 7 Wastes are:
Overproduction, Waiting, Transport, Processing, Inventory, Motion, and
Defects.
Question 5
What is the "Bullwhip Effect" in supply chains?
• A. The rapid growth of a company.
• B. The distortion and amplification of demand information as it
moves upstream from retailer to manufacturer.
• C. The effect of advertising on sales.
• D. A whip-like motion of a conveyor belt.
Correct Answer: B. The distortion and amplification of demand
information as it moves upstream from retailer to manufacturer.
Detailed Rationale: Small fluctuations in retail demand can cause
massive, erratic swings in production schedules at the factory level,
often caused by lack of data sharing.
Question 6
In the context of Six Sigma, what does a "DMAIC" cycle stand for?
• A. Define, Manage, Act, Implement, Control.
• B. Define, Measure, Analyze, Improve, Control.
• C. Design, Measure, Assess, Integrate, Change.
• D. Data, Monitor, Analyze, Improve, Correct.
Correct Answer: B. Define, Measure, Analyze, Improve, Control.
, Detailed Rationale: DMAIC is the structured problem-solving
framework used in Six Sigma projects to drive continuous improvement.
Question 7
If a process has a Six Sigma capability, what is the theoretical defect
rate?
• A. 3.4 defects per million opportunities (DPMO).
• B. 50%.
• C. 0.0034%.
• D. 34%.
Correct Answer: A. 3.4 defects per million opportunities (DPMO).
Detailed Rationale: Six Sigma aims for extremely high precision, defined
as 3.4 defects per million, accounting for a 1.5-sigma shift in the mean.
Question 8
What is "Safety Stock"?
• A. Stock kept to prevent accidents.
• B. Extra inventory held to buffer against uncertainty in demand or
lead time.
• C. Inventory that is expired.
• D. Stock that is on sale.
Correct Answer: B. Extra inventory held to buffer against uncertainty in
demand or lead time.
Detailed Rationale: Without safety stock, a firm would run out of items
whenever demand or lead time exceeds the average.
Practice Questions, Answers & Detailed Rationales 2026/2027
Question 1
What is the primary objective of the Economic Order Quantity (EOQ)
model?
• A. To minimize the total cost of holding inventory and ordering
inventory.
• B. To eliminate all inventory in the system.
• C. To maximize the amount of safety stock.
• D. To minimize the purchase price of raw materials.
Correct Answer: A. To minimize the total cost of holding inventory and
ordering inventory.
Detailed Rationale: The EOQ model finds the optimal order quantity
where the sum of annual holding costs and annual setup/ordering costs
is at its minimum.
Question 2
In ABC Analysis, which items typically represent the smallest percentage
of the number of items but the highest percentage of the annual dollar
volume?
• A. Category C.
• B. Category B.
• C. Category A.
, • D. Category D.
Correct Answer: C. Category A.
Detailed Rationale: Category A items are the most expensive and
critical; they require tight control and frequent review.
Question 3
What does a "Kanban" system signal?
• A. A change in the company strategy.
• B. The need for more raw materials from the supplier.
• C. A "pull" signal for parts to be moved or produced from an
upstream process.
• D. A machine failure.
Correct Answer: C. A "pull" signal for parts to be moved or produced
from an upstream process.
Detailed Rationale: Kanban cards act as a visual authorization to
produce or withdraw inventory, which is the cornerstone of JIT "pull"
production.
Question 4
Which of the following is NOT one of the "7 Wastes" (Muda) in
Lean/TPS?
• A. Overproduction.
• B. Motion.
• C. Customer satisfaction.
• D. Waiting.
,Correct Answer: C. Customer satisfaction.
Detailed Rationale: Customer satisfaction is a goal. The 7 Wastes are:
Overproduction, Waiting, Transport, Processing, Inventory, Motion, and
Defects.
Question 5
What is the "Bullwhip Effect" in supply chains?
• A. The rapid growth of a company.
• B. The distortion and amplification of demand information as it
moves upstream from retailer to manufacturer.
• C. The effect of advertising on sales.
• D. A whip-like motion of a conveyor belt.
Correct Answer: B. The distortion and amplification of demand
information as it moves upstream from retailer to manufacturer.
Detailed Rationale: Small fluctuations in retail demand can cause
massive, erratic swings in production schedules at the factory level,
often caused by lack of data sharing.
Question 6
In the context of Six Sigma, what does a "DMAIC" cycle stand for?
• A. Define, Manage, Act, Implement, Control.
• B. Define, Measure, Analyze, Improve, Control.
• C. Design, Measure, Assess, Integrate, Change.
• D. Data, Monitor, Analyze, Improve, Correct.
Correct Answer: B. Define, Measure, Analyze, Improve, Control.
, Detailed Rationale: DMAIC is the structured problem-solving
framework used in Six Sigma projects to drive continuous improvement.
Question 7
If a process has a Six Sigma capability, what is the theoretical defect
rate?
• A. 3.4 defects per million opportunities (DPMO).
• B. 50%.
• C. 0.0034%.
• D. 34%.
Correct Answer: A. 3.4 defects per million opportunities (DPMO).
Detailed Rationale: Six Sigma aims for extremely high precision, defined
as 3.4 defects per million, accounting for a 1.5-sigma shift in the mean.
Question 8
What is "Safety Stock"?
• A. Stock kept to prevent accidents.
• B. Extra inventory held to buffer against uncertainty in demand or
lead time.
• C. Inventory that is expired.
• D. Stock that is on sale.
Correct Answer: B. Extra inventory held to buffer against uncertainty in
demand or lead time.
Detailed Rationale: Without safety stock, a firm would run out of items
whenever demand or lead time exceeds the average.
