MOE Term 1 mock Operations Management Quiz

What does operations management primarily govern?

• Financial planning

• Production process

• Human resources

• Marketing strategies

Answer explanation

Operations management primarily governs the production process, focusing on the efficient transformation of inputs into outputs. This includes overseeing production planning, quality control, and resource allocation.

Which of the following is NOT a method of production?

• Mass Customization

• Batch Production

• Job Production

• Quality Control

Answer explanation

Quality Control is not a method of production; it refers to the processes used to ensure that products meet certain standards. In contrast, Mass Customization, Batch Production, and Job Production are all production methods.

What is the primary focus of a Financial Risk Manager?

• Supervising labor costs

• Overseeing marketing campaigns

• Managing production processes

• Identifying financial risks

Answer explanation

The primary focus of a Financial Risk Manager is identifying financial risks. This involves assessing potential financial losses and implementing strategies to mitigate those risks, unlike the other options which pertain to different business functions.

Which factor does NOT influence the location of production?

• Communication links

• Market proximity

• Labor costs

• Access to raw materials

Answer explanation

Communication links do not directly affect production location, unlike market proximity, labor costs, and access to raw materials, which are critical factors in determining where production occurs.

What does a Make-or-Buy decision involve?

• Deciding on production location

• Selecting suppliers for raw materials

• Choosing between outsourcing and insourcing

• Determining product pricing

Answer explanation

A Make-or-Buy decision primarily involves choosing between outsourcing (buying) and insourcing (making) a product or service. This choice impacts cost, quality, and control over production.

What is outsourcing?

• Bringing back offshored production

• Moving operations to another country

• Performing tasks in-house

• Hiring outside firms for tasks

Answer explanation

Outsourcing refers to hiring outside firms for tasks instead of performing them in-house. This allows companies to focus on core activities while leveraging external expertise and resources.

What does the break-even point represent?

• Total costs exceed total revenue

• Total profit equals total costs

• Total revenue equals total costs

• Total sales exceed total costs

Answer explanation

The break-even point is where total revenue equals total costs, meaning there is no profit or loss. This is the correct choice, as it defines the point at which a business covers all its expenses.

What is the Margin of Safety?

• Difference between total revenue and total costs

• Amount sales can fall before reaching break-even

• Total contribution per unit

• Total fixed costs

Answer explanation

The Margin of Safety indicates how much sales can decline before a business reaches its break-even point. Thus, it is defined as the amount sales can fall before reaching break-even, making this the correct choice.

If the selling price per unit increases, what happens to the break-even point?

• It decreases

• It becomes irrelevant

• It remains the same

• It increases

Answer explanation

If the selling price per unit increases, fewer units need to be sold to cover fixed costs, thus the break-even point decreases. This means the correct answer is that it decreases.

What does Target Profit Output refer to?

• Total costs of production

• Sales needed for specific profit

• Price projected for a product

• Desired level of profit

Answer explanation

Target Profit Output refers to the sales needed for a specific profit. It helps businesses determine how much they need to sell to achieve their desired profit level, making it crucial for financial planning.