OPSY 5315 Operations Management Exam 3 | Complete
Practice Questions, Correct Answers & Detailed Rationales
2026/2027
Question 1
Which of the following is a qualitative forecasting method?
• A. Exponential smoothing.
• B. Delphi method.
• C. Moving average.
• D. Linear regression.
Correct Answer: B. Delphi method.
Detailed Rationale: Qualitative methods rely on expert judgment,
surveys, or opinion rather than historical numerical data. The Delphi
method uses a panel of experts to reach a consensus forecast.
Question 2
What is the primary purpose of "Time Series" forecasting?
• A. To predict future demand based on past demand patterns.
• B. To identify the cause of machine failure.
• C. To design a new factory layout.
• D. To calculate the number of employees needed.
Correct Answer: A. To predict future demand based on past demand
patterns.
,Detailed Rationale: Time series models (like moving averages,
exponential smoothing) assume that the future will follow the patterns
established in the past.
Question 3
What does a "Smoothing Constant" (𝛼) of 1.0 mean in exponential
smoothing?
• A. The forecast will be very stable.
• B. The forecast will completely ignore the most recent actual
demand.
• C. The new forecast is equal to the most recent actual demand.
• D. The model is unusable.
Correct Answer: C. The new forecast is equal to the most recent actual
demand.
Detailed Rationale: 𝛼 = 1.0gives 100% weight to the latest
observation, making the forecast reactive to the newest data point,
effectively ignoring the past.
Question 4
What is the "Capacity Utilization" rate if the actual output is 80 units
and the design capacity is 100 units?
• A. 125%
• B. 80%
• C. 20%
• D. 100%
,Correct Answer: B. 80%
Detailed Rationale: Utilization = (Actual Output / Design Capacity) ×
100. () = 0.80 or 80%.
Question 5
What is the difference between "Design Capacity" and "Effective
Capacity"?
• A. Design capacity is always lower.
• B. Design capacity is the theoretical maximum output; Effective
capacity is what can be achieved given planned downtime and
maintenance.
• C. Effective capacity is always the same as actual output.
• D. Design capacity excludes maintenance time.
Correct Answer: B. Design capacity is the theoretical maximum output;
Effective capacity is what can be achieved given planned downtime and
maintenance.
Detailed Rationale: Design capacity is the output under ideal
conditions. Effective capacity accounts for unavoidable realities like shift
changes, maintenance, and lunch breaks.
Question 6
When should a company use "Aggregate Planning"?
• A. To determine daily work schedules for individual machines.
• B. To plan production, workforce, and inventory levels for an
intermediate time horizon (3–18 months).
, • C. To decide where to build a new factory.
• D. To hire a specific employee for a project.
Correct Answer: B. To plan production, workforce, and inventory levels
for an intermediate time horizon (3–18 months).
Detailed Rationale: Aggregate planning balances capacity and demand
over the medium term to minimize costs.
Question 7
What is a "Chase Strategy" in aggregate planning?
• A. Hiring and firing workers to match demand fluctuations exactly.
• B. Keeping a constant workforce and absorbing demand variations
with inventory.
• C. Using only overtime to meet demand.
• D. Ignoring customer demand.
Correct Answer: A. Hiring and firing workers to match demand
fluctuations exactly.
Detailed Rationale: In a chase strategy, production matches demand
exactly, which keeps inventory levels low but leads to high labor costs
due to turnover.
Question 8
What is a "Level Strategy" in aggregate planning?
• A. Hiring people only in summer.
• B. Maintaining a constant production rate and workforce, using
inventory to absorb demand fluctuations.
Practice Questions, Correct Answers & Detailed Rationales
2026/2027
Question 1
Which of the following is a qualitative forecasting method?
• A. Exponential smoothing.
• B. Delphi method.
• C. Moving average.
• D. Linear regression.
Correct Answer: B. Delphi method.
Detailed Rationale: Qualitative methods rely on expert judgment,
surveys, or opinion rather than historical numerical data. The Delphi
method uses a panel of experts to reach a consensus forecast.
Question 2
What is the primary purpose of "Time Series" forecasting?
• A. To predict future demand based on past demand patterns.
• B. To identify the cause of machine failure.
• C. To design a new factory layout.
• D. To calculate the number of employees needed.
Correct Answer: A. To predict future demand based on past demand
patterns.
,Detailed Rationale: Time series models (like moving averages,
exponential smoothing) assume that the future will follow the patterns
established in the past.
Question 3
What does a "Smoothing Constant" (𝛼) of 1.0 mean in exponential
smoothing?
• A. The forecast will be very stable.
• B. The forecast will completely ignore the most recent actual
demand.
• C. The new forecast is equal to the most recent actual demand.
• D. The model is unusable.
Correct Answer: C. The new forecast is equal to the most recent actual
demand.
Detailed Rationale: 𝛼 = 1.0gives 100% weight to the latest
observation, making the forecast reactive to the newest data point,
effectively ignoring the past.
Question 4
What is the "Capacity Utilization" rate if the actual output is 80 units
and the design capacity is 100 units?
• A. 125%
• B. 80%
• C. 20%
• D. 100%
,Correct Answer: B. 80%
Detailed Rationale: Utilization = (Actual Output / Design Capacity) ×
100. () = 0.80 or 80%.
Question 5
What is the difference between "Design Capacity" and "Effective
Capacity"?
• A. Design capacity is always lower.
• B. Design capacity is the theoretical maximum output; Effective
capacity is what can be achieved given planned downtime and
maintenance.
• C. Effective capacity is always the same as actual output.
• D. Design capacity excludes maintenance time.
Correct Answer: B. Design capacity is the theoretical maximum output;
Effective capacity is what can be achieved given planned downtime and
maintenance.
Detailed Rationale: Design capacity is the output under ideal
conditions. Effective capacity accounts for unavoidable realities like shift
changes, maintenance, and lunch breaks.
Question 6
When should a company use "Aggregate Planning"?
• A. To determine daily work schedules for individual machines.
• B. To plan production, workforce, and inventory levels for an
intermediate time horizon (3–18 months).
, • C. To decide where to build a new factory.
• D. To hire a specific employee for a project.
Correct Answer: B. To plan production, workforce, and inventory levels
for an intermediate time horizon (3–18 months).
Detailed Rationale: Aggregate planning balances capacity and demand
over the medium term to minimize costs.
Question 7
What is a "Chase Strategy" in aggregate planning?
• A. Hiring and firing workers to match demand fluctuations exactly.
• B. Keeping a constant workforce and absorbing demand variations
with inventory.
• C. Using only overtime to meet demand.
• D. Ignoring customer demand.
Correct Answer: A. Hiring and firing workers to match demand
fluctuations exactly.
Detailed Rationale: In a chase strategy, production matches demand
exactly, which keeps inventory levels low but leads to high labor costs
due to turnover.
Question 8
What is a "Level Strategy" in aggregate planning?
• A. Hiring people only in summer.
• B. Maintaining a constant production rate and workforce, using
inventory to absorb demand fluctuations.
