Substituting capital equipment in place of direct labor can be economically justified for which of the following scenarios?
Correct Answer: A
Explanation Substituting capital equipment in place of direct labor can be economically justified for the scenario where volumes are forecasted to increase. This is because capital equipment can provide higher productivity, efficiency, and quality than direct labor, especially when the demand for the product or service is high or growing. Capital equipment can also reduce the labor costs, such as wages, benefits, training, and turnover, that are associated with direct labor12. Therefore, investing in capital equipment can lower the unit cost and increase the profit margin of the product or service, as well as improve the customer satisfaction and loyalty. The other scenarios are not likely to justify substituting capital equipment in place of direct labor, because they are either irrelevant or ineffective. Material prices are forecasted to increase (B) is a factor that affects the cost of inputs, not outputs. Substituting capital equipment in place of direct labor may not reduce the material costs, unless the capital equipment can use less or cheaper materials than direct labor. Implementing a pull system in production is a method of managing inventory and production based on actual customer demand, rather than forecasts. Substituting capital equipment in place of direct labor may not facilitate the implementation of a pull system, unless the capital equipment can provide more flexibility and responsiveness than direct labor. Functional layouts are being utilized (D) is a way of arranging the production facilities according to the type of operation or function performed. Substituting capital equipment in place of direct labor may not improve the performance or efficiency of a functional layout, unless the capital equipment can reduce the setup time or transportation cost between different functions. References: Make-or-Buy Decision - Definition & Examples | Marketing Tutor Make-or-Buy Decision - Overview, How It Works, Triggers Make or Buy Decision - Definition & Examples | Marketing Tutor Make or Buy Decision - What Is It, Examples, Factors, Advantages
Question 2
In the design and development of a manufacturing process, process engineers wouldmost likely be responsible fordecisions relating to:
Correct Answer: B
Question 3
Which of the following conditions is required for an effective single-sourcing relationship?
Correct Answer: C
Explanation An effective single-sourcing relationship requires that the organizations must be mutually dependent. This means that both the customer and the supplier rely on each other for their success and benefit from the partnership. Mutual dependence can foster trust, collaboration, communication, innovation, and problem-solving between the parties. It can also reduce the risks of supply disruptions, quality issues, price fluctuations, and contract breaches. Mutual dependence can be achieved by aligning the goals, values, and strategies of the organizations, as well as by sharing information, resources, and risks. Demand for the customer's products does not have to be stable for a single-sourcing relationship to work. In fact, single sourcing can help the customer cope with demand variability by ensuring a consistent supply of goods or services from the supplier. The supplier does not have to offer the lowest price per unit for a single-sourcing relationship to be effective. The customer may choose a single supplier based on other factors, such as quality, delivery, innovation, or reputation. The price per unit may not reflect the total cost of ownership, which includes other costs such as transportation, inventory, maintenance, and warranty. The organizations do not have to be located close to each other for a single-sourcing relationship to be successful. With advances in technology and logistics, distance is not a major barrier for communication and coordination between the customer and the supplier. Moreover, single sourcing can reduce the complexity of managing multiple suppliers across different locations. References := What Is Single Sourcing? (Plus Benefits and 7 Examples), Single Sourcing Vs Sole Sourcing Sourcing | CIPS, What Is Single Sourcing In Procurement And Why Is It Important?
Question 4
A machine is suddenly having excessive downtime. Which of the following tools would be used in a root cause correctiveaction process to determine the problem?
Correct Answer: D
Explanation A3 method is a tool that can be used in a root cause corrective action process to determine the problem of a machine that is suddenly having excessive downtime. A3 method is a structured problem-solving approach that follows the Plan-Do-Check-Act (PDCA) cycle and uses a single sheet of paper (A3 size) to document the problem, analysis, countermeasures, and results1. A3 method can help identify the root cause of a problem by using tools such as the 5 Whys or the fishbone diagram, and then develop and implement effective corrective actions to prevent recurrence2. A3 method can also help communicate the problem and the solution to stakeholders, as well as monitor and evaluate the outcomes3. The steps of the A3 method are4: Step 1: Define the problem and its impact. Describe the current situation, the gap between the actual and the desired state, and the scope and magnitude of the problem. Step 2: Identify the root cause of the problem. Use tools such as the 5 Whys or the fishbone diagram to analyze the factors that contribute to the problem and drill down to its root cause. Step 3: Propose countermeasures to address the root cause. Generate possible solutions that can eliminate or reduce the root cause, and evaluate their feasibility, effectiveness, and costs. Step 4: Implement countermeasures. Select the best solution and plan how to execute it. Define the roles, responsibilities, resources, timeline, and expected outcomes of the implementation. Step 5: Check results and process. Measure and compare the results before and after the implementation, and verify if the problem has been solved or improved. Also check if the process has been followed correctly and document any deviations or issues. Step 6: Standardize successful processes or identify unresolved issues. If the results are satisfactory, standardize the new process and ensure that it is sustained. If not, identify the remaining or new issues and repeat the A3 method. Therefore, A3 method is a tool that can be used in a root cause corrective action process to determine the problem of a machine that is suddenly having excessive downtime. References: 1: What is an A31 2: How to Use an A3 Report for Problem Solving 2 3: The A3 Problem Solving Method 4 4: The A3 Report - A Simple Tool for Complex Problems 5
Question 5
Which of the following circumstances would cause a move from acceptance sampling to 100% inspection?
Correct Answer: C
Explanation A move from acceptance sampling to 100% inspection would be caused by the circumstance of downstream operators encountering recurring defects. Acceptance sampling is a quality control technique that uses statistical sampling to determine whether to accept or reject a production lot of material. It is employed when one or several of the following hold: testing is destructive; the cost of 100% inspection is very high; and 100% inspection takes too long1. 100% inspection is a quality control technique that examines every item in a production lot for defects or nonconformities. It is employed when the cost of passing a defective item is very high; testing is nondestructive; and 100% inspection does not take too long2. Downstream operators are the workers or machines that perform the subsequent operations or processes on the products after they have been inspected or tested. Downstream operators encountering recurring defects means that the products that have passed the acceptance sampling or testing are still found to be defective or nonconforming by the downstream operators. This can indicate that the acceptance sampling or testing is not effective or reliable in detecting or preventing defects or nonconformities. This can also result in negative consequences, such as rework, waste, delays, customer complaints, or safety issues. Therefore, this circumstance would cause a move from acceptance sampling to 100% inspection, as it would require a more thorough and rigorous quality control technique to ensure that no defective or nonconforming products are passed to the downstream operators. The other options are not circumstances that would cause a move from acceptance sampling to 100% inspection. History shows that the quality level has been stable from lot to lot is not a circumstance that would cause a move from acceptance sampling to 100% inspection, but rather a circumstance that would support the use of acceptance sampling. Quality level is the proportion of conforming items in a production lot. Quality level being stable from lot to lot means that there is little variation or fluctuation in the quality of the products over time. This can indicate that the production process is under control and consistent in meeting the quality standards or specifications. Therefore, this circumstance would support the use of acceptance sampling, as it would reduce the risk of accepting a defective lot or rejecting a conforming lot. The company uses one of its qualified suppliers is not a circumstance that would cause a move from acceptance sampling to 100% inspection, but rather a circumstance that would support the use of acceptance sampling. A qualified supplier is a supplier that has met certain quality, delivery, and service standards and has been approved by the company to supply goods or services without inspection or testing. A qualified supplier is expected to maintain a high level of performance and reliability, as well as to report any issues or deviations that may affect the delivery process. Therefore, this circumstance would support the use of acceptance sampling, as it would reduce the need for 100% inspection by relying on the supplier's quality assurance system. The percent of defects is expected to be greater than 5% is not a circumstance that would cause a move from acceptance sampling to 100% inspection, but rather a circumstance that would require a change in the acceptance sampling plan. The percent of defects is the proportion of defective items in a production lot. The percent of defects being expected to be greater than 5% means that there is a high probability of finding defective items in the production lot. This can indicate that the production process is out of control or inconsistent in meeting the quality standards or specifications. Therefore, this circumstance would require a change in the acceptance sampling plan, such as reducing the acceptable quality limit (AQL), increasing the sample size, or decreasing the acceptance number, to increase the likelihood of rejecting a defective lot. References := Acceptance Sampling - an overview | ScienceDirect Topics, What Is Acceptance Sampling? Definition And Examples
