BUS 140 Operations Management

Exam 1 Study Guide

EXAM IS Closed-book and YOU SHOULD BRING

One SCANTRON sheet (FORM NO. 882-E)
#2 pencil and eraser
Calculator
One page handwritten study paper (double side ok)
FORMAT
True / False, Multiple Choice
o Answer on the SCANTRON sheet

CH 1-2
Covers lecture notes and textbook chapter 1-2.
Key concepts
1. operations management
basic functions of business organization and their
interrelation/overlap (importance of OM)
2. production goods versus delivering service
3. OM as a transforming process
4. key trends and issues in business
5. competitiveness
6. mission, goals, strategies, tactics
7. core competencies
8. environmental scanning: SWOT
9. order qualifiers versus order winners
10. productivity
definition, different types, how to compute, different measures
11. productivity growth

[Page 65: Problem 4 part a, b and c]

Prior to New Equipment
Workforce: 5 workers
Output: 80 carts/hr
Labor: $10/hr
Machine: $40/hr

With New Equipment

Workforce: 4 workers
Output: 84 carts/hr
Labor: $10/hr
Machine: $50/hr

a. Labor Productivity
Before:
(80 carts/hr) / (5 workers) = 16 carts per worker per hour
After:
(84 carts/hr) / (4 workers) = 21 carts per worker per hour

BUS 140 Operations Management

Exam 1 Study Guide

b. Multifactor Productivity
Before:
(80 carts/hr) / ($10/hr 5 + $40/hr) = 0.89 carts/$
After:
(84 carts/hr) / ($10/hr 4 + $50/hr) = 0.93 carts/$
c.
Labor productivity increased by 31.25% (5/16).
Multifactor productivity increased by 4.5% (.04/.89).

CH 3
Covers textbook chapter 3.
Typo on page 113: Weighted average, Ft should be Ft+1
Do not cover:
trend-adjusted exponential smoothing (page 92)
trend: linear trend equation
techniques for seasonality (page 93-98)
associative model (page 98-103)
how to construct a control chart (page 104)
tracking signal (page 105)
Key concepts
1. forecast
2. forecast accuracy: error, MAD, MSE, MAPE
3. types of forecast

judgmental (such as Delphi method)

quantitative
time series
o nave
o averaging

n-period moving average
choice of moving average period (n)

weighted moving average
how to choose weights

exponential smoothing
how to choose smoothing constant alpha
o seasonality: how seasonality is expressed in both the
additive model and the multiplicative model
4. important factors in choosing a forecasting technique

[Page 122, Problem 3]

a.
88 + .1(89.6 88) = 88.16
b.
88.16 + .1(92 88.16) = 88.54
[Page 122, Problem 4 part a, b, c and d]
a.

22

BUS 140 Operations Management

b.
c.

Exam 1 Study Guide

22 + 18 + 21 + 22
= 20.75
4
F3 = 20 + .30(22 20) = 20.6
F4 = 20.6 + .30(18 20.6) = 19.82
F5 = 19.82 + .30(21 19.82) = 20.17
F6 = 20.17 + .30(22 20.17) = 20.72

[Quiz2]
1. Which of the following forecasting methodologies is considered a qualitative forecasting
technique?
A. Consumer surveys
B. Regression analysis
C. Exponential smoothing
D. Simple moving average
2. Which phrase most closely describes the Delphi technique
A. Associate forecast
B. Consumer survey
C. Series of anonymous questionnaire
D. Developed in India
E. Historical data
3. In order to increase the responsiveness of a forecast made using the moving average
technique, the number of data points in the average should be:
A. Decreased
B. Increased
C. Multiplied by a larger alpha
D. Multiplied by a smaller alpha
E. None of the above
(Question 4-6) The owner of Darkest Tans Unlimited in a local mall is forecasting the demand
for November the one new tanning booth based on the following historical data:
Month Number of Tanners
May:
250
June:
270
July:
190
Aug:
200
Sep:
220
Oct:
210
4. What is November forecast using a three-month simple moving average
A. 200
B. 220
C. 210 [(200+220+210)/3 = 210)]
D. 190
E. None of the above

BUS 140 Operations Management

Exam 1 Study Guide

5. What is November forecast using a four-month weighted moving average weights of 0.4, 0.3,
0.2, and 0.1?
A. 290
B. 209 [F11 = 0.4 F10+0.3 F9+0.2 F8+01 F7 = 0.4* 210+0.3*220+
0.2*200+0.1*190 = 209]
C. 201
D. 210
E. None of the above
6. What is November forecast using exponential smoothing with =0.2, if Septembers
forecast was 145?
A. 160
B. 170
C. 201
D. 210
E. None of the above
[Step 1: F10 = F9+ (A9-F9) = 145+0.2(220-145) = 160
Step 2: F11 = F10+ (A10- F10) = 160+0.2 (210-160) =170]