Q&A Hero

Q: The average inventory level is inversely related to order size.

Q: EOQ inventory models are basically concerned with the timing of orders.

Q: In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage.

Q: An inventory buffer adds value and lowers cost in all supply chains.

Q: The A-B-C approach involves classifying inventory items by unit cost, with expensive items classified as A items and low-cost items classified as C items.

Q: Interest, insurance, and opportunity costs are all associated with holding costs.

Q: Decoupling operations applies to the railroad industry.

Q: An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Q: Reorder point models are primarily used for dependent-demand items.

Q: DVD recorders would be an example of independent-demand items.

Q: In the EOQ formula, holding costs under 10 percent are expressed as percentages, above 10 percent are expressed as annual unit costs.

Q: To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and the size of orders.

Q: The two main concerns of inventory control relate to the costs and the level of customer service.

Q: The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.

Q: A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Q: The objective of inventory management is to minimize the cost of holding inventory.

Q: One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

Q: ERP began in manufacturing organizations but has spread into service organizations.

Q: Load reports show capacity requirements for departments or work centers which may be more or less than the capacity available in that work center.

Q: In MRP, EOQ models tend to be less useful for materials at the lowest levels than for upper-level assemblies of the bill of materials since higher-level assemblies have larger dollar investments.

Q: MRP output reports are divided into two main groups, daily and weekly.

Q: Lot-for-lot ordering in MRP provides coverage for some predetermined number of periods (such as two or three) that extend beyond the orders already received for those periods.

Q: Safety time is sometimes used in MRP rather than safety stock quantities.

Q: One of the primary output reports of MRP concerns changes to planned orders.

Q: A regenerative MRP system is one that is updated continuously, every time there is a schedule change.

Q: One reason that accurate bills of material are important is that errors at one level become magnified at lower levels because of the multiplication process used by MRP.

Q: A net-change MRP system is one that is updated periodically but not less frequently than once a week.

Q: The term pegging refers to identifying the parent items that have generated a given set of material requirements for a part or subassembly.

Q: The gross requirements value for any given component is equal to the net requirements of that component's immediate parent multiplied by the quantity per parent.

Q: The gross requirements at one level of an MRP plan determine the gross requirements at the next lower level continuing on down to the lowest levels shown on the bill of material.

Q: MRP II did not replace or improve the basic MRP.

Q: An assembly-time chart indicates gross and net requirements taking into account the current available inventory.

Q: The inventory records contain information on the status of each item by time period.

Q: The bill of materials contains information on lead times and current inventory position on every component required to produce the end item.

Q: A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of an end item.

Q: The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule.

Q: MRP, considering inventory position, bills of material, open purchase orders, and lead times guarantees a feasible production plan if the inputs to MRP are accurate.

Q: Initially, a master production schedulethe output from MRPmay not represent a feasible schedule.

Q: The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time necessary to produce the end items.

Q: Net requirements equal gross requirements minus safety stock.

Q: The master production schedule states which end items are to be produced, in addition to when and how many.

Q: MRP is used within most MRP II and ERP systems.

Q: Lumpy demand for components results primarily from the periodic scheduling of batch production.

Q: Independent demand tends to be more "lumpy" than dependent demand, meaning that we need large quantities followed by periods of no demand.

Q: Low-level coding represents items less than $18 per unit.

Q: MRP works best if the inventory items have dependent demand.

Q: End item Alpha's product structure tree and inventory information are as follows: (A) If 50 units of Alpha are to be assembled, how many additional units of S will be needed? All parts can be ordered using lot-for-lot ordering, except M, which must be ordered in multiples of 40 units. [Hint: You don't need to do an MRP plan.] (B) An order for 100 units of Alpha is scheduled to be shipped at the start of week 9. When is the earliest that any particular component must be started so that the order for Alpha will be ready to ship? [Hint: You don't need to do an MRP plan.]

Q: Given the following data, construct a material requirements plan which will result in 100 units of Parent 1 (P1) at the beginning of week 6, and 200 units of Parent 2 (P2) at the beginning of week 8:

Q: Develop a material requirements plan for end item P and its components, given the following tree. Assume that all lead times are one week, and that lot-for-lot ordering is used except for item F, which is ordered in multiples of 400 units. One hundred units of P should be available at the start of week 4 and at the start of week 8. Beginning inventories are: 20 Ps, 100 As, and 200 Fs. Scheduled receipts are: 800 Fs at the start of week 1.

Q: Given the following information, develop a material requirements plan that will lead to 400 units of product P being available at the beginning of week 7.

Q: The following is a list of components required to produce one unit of end item P: P: 2 As, 3 Bs, 3 Cs A: 5 Ms, 2 Rs B: 1 D, 3 Ns C: 1 T, 4 Ns M: 1 N Determine the number of Ns that will be needed to make 60 Ps in each of these cases: (A) There are currently 10 Ps on hand. (B) On-hand inventory consists of 15 Ps, 10 As, 20 Bs, 10 Cs, 100 Ns, 300 Ts, and 200 Ms. The product structure tree is:

Q: Using the product tree shown, determine the following: (A) The quantity of component K that will be needed to assemble 80 units of P, assuming no on-hand inventory of any components exists. (B) The quantity of component K needed to assemble 80 units of P, given on-hand inventory of 30 As, 50 Bs, and 20 Cs. [Add closing parens in figure where needed.]

Q: Net requirements for component J are as follows: 60 units in week 2, 40 units in week 3, and 60 units in week 5. If a fixed-period, three-period lot-sizing method is used, what will be the quantity of the first planned receipt? A. 60 B. 100 C. 160 D. cannot be determined E. none of the choices

Q: Net requirements for component J are as follows: 60 units in week 2, 40 units in week 3, and 60 units in week 5. If a fixed-period, two-period lot-sizing method is used, what will be the quantity of the first planned receipt? A. 60 units B. 120 units C. 180 units D. cannot be determined E. none of the choices

Q: ERP's primary value comes from applications: A. deployment. B. development. C. interfaces. D. integration. E. networking.

Q: Comparing known and expected capacity requirements with projected capacity availability is the job of: A. planned releases. B. load reports. C. lot sizing. D. work loading. E. time fencing.

Q: Which of the following represents an attempt to balance the benefits of stability against the benefits of responding to new information? A. safety stock B. safety time C. bills of material D. time fences E. fixed-period lot sizing

Q: Bunny Helpers, Inc., has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand: Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle of Alka-Seltzer is included for those who overindulge. If the firm is using a fixed-period lot size of two periods, what is the order size for the first order? A. 120 B. 200 C. 280 D. 160 E. 150

Q: Refer to this product tree: If 40 Ps are needed, and on-hand inventory consists of 15 Ps and 10 each of all other components and subassemblies, how many Cs are needed? A. 340 B. 350 C. 380 D. 400 E. 590

Q: Refer to this product tree: If 17 Ps are needed, and no on-hand inventory exists for any items, how many Cs will be needed? A. 8 B. 16 C. 136 D. 204 E. 272

Q: Which of these products would be most likely to have dependent demand? A. refrigerators B. automobile engines C. televisions D. brownies E. automobiles

Q: Which of these items would be most likely to have dependent demand? A. Xbox batteries B. toy trains C. flowers D. chocolate chip cookies E. wrist watches

Q: Which statement concerning MRP II is false? A. It is basically a computerized system. B. It can handle complex planning and scheduling quickly. C. It involves other functional areas in the production planning process. D. It involves capacity planning. E. It produces a production plan which includes all resources required.

Q: An effort to expand the scope of production resource planning by involving other functional areas in the planning process has been: A. material requirements planning. B. capacity requirements planning. C. manufacturing resources planning. D. just-in-time planning. E. multifunctional relationships planning.

Q: The _________ of ERP makes it valuable as a strategic planning tool. A. Internet base B. rapid batch capability C. employee focus D. real-time aspect E. database structure

Q: Which of the following is not usually necessary in order to have an effective MRP system? A. a computer and software B. an accurate bill of materials C. lot-for-lot ordering D. an up-to-date master schedule E. integrity of file data

Q: _______ is choosing how many to order or make. A. Quantity determination B. Package sizing C. Lot sizing D. Grouping E. Aggregation

Q: The multiplication process used by MRP to determine lower-level requirements is called: A. time-phasing. B. pegging. C. netting. D. projecting. E. exploding.

Q: When MRP II systems include feedback, they are known as: A. MRP III. B. enterprise resource planning. C. circular MRP. D. feasible MRP. E. closed loop MRP.

Q: Which of the following lot sizing methods does not attempt to balance ordering (or setup) and holding costs? A. economic order quantity B. economic run size C. lot-for-lot D. part-period E. all of these

Q: Which one of the following most closely describes the MRP approach that is used for components or subassemblies to compensate for variations in lead time? A. pegging B. safety stock C. increased order sizes D. safety time E. low-level coding

Q: Which is true of a net-change system? A. It is a batch-type system which is updated periodically. B. It is usually run at the beginning of each month. C. The basic production plan is modified to reflect changes as they occur. D. It is used to authorize the execution of planned orders. E. It indicates the amount and timing of future changes.

Q: An MRP system whose records are updated continuously is referred to as a(n): A. regenerative system. B. batch-type system. C. Plossl-Wright system. D. net-change system. E. gross-change system.

Q: An MRP system that is updated periodically to account for all changes which have occurred within a given time interval is called a(n) ________ system. A. pegging B. planned order release C. net-change D. regenerative E. exception report

Q: The identification of parent items is called: A. paternity. B. pegging. C. requirement I.D. D. relationship tracking. E. master scheduling.

Q: In MRP, the gross requirements of a given component part are calculated from: A. net requirements + amount on-hand. B. gross requirements of the immediate parent. C. planned orders of the end item. D. net requirements of end item. E. planned orders of the immediate parent.

Q: Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following? A. gross requirements B. net requirements C. economic order quantity D. gross requirements and net requirements E. net requirements and amount on hand

Q: In MRP, under lot-for-lot ordering, planned-order receipts are: A. identical to scheduled receipts. B. identical to planned-order releases. C. open orders (that is, ordered before the first time bucket, but not delivered yet). D. gross requirements. E. available-to-promise inventory.

Q: In MRP, scheduled receipts are: A. identical to planned-order receipts. B. identical to planned-order releases. C. open orders (that is, ordered before the first time bucket, but not delivered yet). D. net requirements. E. available-to-promise inventory.

Q: Which one of the following most closely describes net material requirements? A. gross requirements - amount on hand - scheduled receipts B. gross requirements - planned receipts C. gross requirements - order releases + amount on hand D. gross requirements - planned order releases E. gross requirements - amount on hand + planned order releases