4362 Exam 3 Ch. 5&6

In Theory of Constraints, which of the following is represented by "drum"?

Bottleneck resource

Buffers (inventory or time) serve which purpose according to the Theory of Constraints?

Exploit the bottleneck(s)

As the annual demand doubles, the EOQ also doubles. True/False

False

At any time, if a set of n jobs is to be scheduled on m machines, there are (n*m) ways to schedule the jobs. True/False

False

Dependent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decision for any other item held in stock. True/False

False

Dispatching involves the use of logic that guides the prioritizing of jobs at a workstation. These rules are referred to as lot-sizing rules. True/False

False

Everything else remaining the same, if Lead Time (LT) increases, ROP will decrease True/False

False

In MRP, the only source of uncertainty is supply. True/False

False

In a TOC system, inventory buffers before bottleneck resources are eliminated True/False

False

Ina single machine job shop, the makespan depends on the rule used for scheduling. True/False

False

Johnson's rule when applied in a two-machine case will provide minimum average lateness. True/False

False

KBB will provide the minimum total cost only if the net requirements in MRP are lumpy. True/False

False

Lead times are typically made up of operation or machine run time per piece × lot size. True/False

False

Non-bottleneck resources are the focus of the Theory of Constraints True/False

False

PAC stands for Process Activity Control. True/False

False

Production activity control (PAC) focuses on material requirement plans. True/False

False

Short term capacity planning should be driven by identification and management of non-bottlenecks. True/False

False

TOC stands for Theory of Operating Controls. True/False

False

The A-B-C approach involves classifying inventory items based on their name. True/False

False

The Critical Ratio rule uses the information about the processing time of the job in the current work center only. True/False

False

The EOQ is based on the assumption of lumpy demand. True/False

False

The EOQ is the smallest lot size that a supplier will allow a customer to order. True/False

False

The economic order quantity (EOQ) lot-sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods. True/False

False

The primary consideration in the development of lot-sizing procedures for MRP is the nature of the gross requirements data. True/False

False

There is no cure for reducing MRP nervousness. True/False

False

Which one of the following reasons creates a pressure for reducing inventories?

High interest or opportunity cost

A bottleneck is an operation that has the lowest capacity of any operation in the process. True/False

True

A bottleneck resource should never be starved. True/False

True

A small change caused by a relatively minor shift in the MPS may amplify the explosion process and use of the discrete lot-sizing procedures. True/False

True

Annual ordering cost is inversely related to order size. True/False

True

Both safety stock and safety lead time approaches produce an increase in inventory levels to provide a buffer against uncertainty. True/False

True

Carrying cost is a function of order size; the larger the order quantity, the higher the inventory carrying cost. True/False

True

Everything else remaining the same, if EOQ increases, Time Between Orders (TBO) will increase. True/False

True

In TOC, bottleneck work centers are scheduled using finite loading techniques. True/False

True

KBB sometimes may yield the same total cost (cost of ordering + cost of carrying) as when some other Lot sizing method is used True/False

True

MRP lot-sizing procedures are designed specifically for the discrete demand case. True/False

True

One component of the holding cost of inventory is interest. True/False

True

POQ and LFL will be the same if TBO = 1 period. True/False

True

Sequencing rules simply prioritize jobs at work centers without reference to the capacity. True/False

True

The SPT rule represents the best way to pick the next job to run, if the objective is to minimize average time per job, to minimize average number of jobs in the system, or to minimize average job lateness. True/False

True

The Theory of Constraints scheduling is also referred to as the drum-buffer-rope. True/False

True

The Theory of Constraints scheduling loads work centers to full capacity by using finite scheduling. True/False

True

The average time in the system is directly related to work-in-process inventory and average number of jobs in the system. True/False

True

The basic EOQ model ignores the purchasing cost. True/False

True

The manufacturing lot-size problem is basically one of converting requirements into a series of replenishment orders in the planning horizon. True/False

True

The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable. True/False

True

The primary connection between PAC and the rest of the MPC systems comes from material requirements plans. True/False

True

The process with the least capacity is called a bottleneck True/False

True

The routing specifies each operation to be performed to make the part and which work center will perform the operation. True/False

True

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: when to order and how much to order. True/False

True

Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered. True/False

True

Variability in demand and/or lead time can be compensated for by safety stock. True/False

True

As the service level increases, the probability of not running out of stock during a cycle decreases. True/False

True?

In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about which one of the following? a. 20. b. 50. c. 70. d. 3690.

a. 20

For a certain item, it was observed that the holding cost per annum per unit was equal to the setup cost per order. What can we say about the EOQ in this case? a. EOQ =Sqrt (2A) , where A is the annual demand. b. The EOQ depends on the actual value of setup cost for this particular case c. The EOQ depends on the actual value of holding cost for this particular case d. The EOQ is dependent upon ROP e. All options are valid

a. EOQ=Sqrt (2A), where A is the annual demand.

The prime objective of PAC is: a. Executing MPC plans b. Efficient use of capacity c. Efficient use of labor d. Efficient use of materials

a. Executing MPC plans

Which one of the following reasons creates a pressure for reducing inventories? a. High interest or opportunity cost b. On-time delivery requests from customers c. Need for better labor or equipment utilization d. Need for reduction in total payments to suppliers

a. High interest or opportunity cost

Which one of the following lot-sizing rules guarantees an optimal solution in a general MRP environment? a. KBB b. LFL c. FOQ d. EOQ e. KBB & EOQ

a. KBB

Summing the setup times and run times for all remaining operations, and subtracting this from the time remaining until the due date is referred to as a. Order Slack (ST) rule b. Critical Ratio (CR) rule c. Slack per operation (ST/O) rule d. Make-span

a. Order Slack (ST) rule

Which sequencing rule ignores all due date information as well as all information about work remaining? a. SPT b. CR c. ST d. ST/O e. All the given rules ignore information on due date & work remaining

a. SPT

In an ABC classification of inventory items which of the following is false? a. class B items have a lower monetary value than class C items. b. class A items generally have the highest unit cost items. c. ABC classification should not be used for dependent demand items. d. Class C items do not have tight control devoted to them.

a. class B items have a lower monetary value than class C items.

In Theory of Constraints, "exploit the bottleneck(s)," suggests a. creation of a schedule that maximizes the throughput of the bottlenecks. b. repeating the analysis process to look for other bottlenecks. c. considering increasing capacity of the bottleneck. d. scheduling non-bottleneck resources to support the bottleneck.

a. creation of a schedule that maximizes the throughput of the bottlenecks.

Consider consecutive processes A-B-C, where process A has a capacity of 20 units per hour, process B has a capacity of 25 units per hour, and process C has a capacity of 30 units per hour. Where would an operations manager, with some understanding of TOC, want any buffer inventory? a. in front of process A. b. in front of process B. c. in front of process C. d. inventory should not exist anywhere.

a. in front of process A

Using the Theory of Constraints scheduling logic in simulation mode can help a. negotiate achievable delivery dates and meet customer service goals. b. reduce the total cost of lot-sizing in MRP c. effectively schedule and prioritize gross requirements d. all of the options are correct answers

a. negotiate achievable delivery dates and meet customer service goals.

Which one of the following to be a factor in determining the reorder point? a. the EOQ b. the lead time c. the variability of demand d. the demand rate

a. the EOQ

Sequencing rules are used to establish a. the priorities for the jobs in a queue waiting to be processed at a work center. b. lot-sizing to meet planned orders in MRP c. disaggregation of the master production schedule d. capacity requirements for MRP schedule

a. the priorities for the jobs in a queue waiting to be processed at a work center.

Buffers (inventory or time) serve which purpose according to the Theory of Constraints? a. Identify the system bottleneck(s). b. Exploit the bottleneck(s). c. Reduce the capacity at the bottleneck(s). d. Elevate the bottleneck(s).

b. Exploit the bottleneck(s)

Which of the below lot-sizing procedures provide an optimal solution in MRP lot-sizing? a. EOQ b. KBB c. POQ d. PPB

b. KBB

An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q,R system (continuous review system) answers these questions? a. Under a Q,R rule, a fixed quantity is ordered every T time periods. b. Under a Q,R rule, a fixed quantity Q is ordered when the inventory position reaches the order point R. c. Under the Q,R rule, an order is placed once every T periods for an amount equaling the difference between current position and a desired inventory level (S) on receipt of the replenishment order. d. non of the options is correct.

b. Under Q,R rule, a fixed quantity Q is ordered when the inventory position reaches the order point R.

When several jobs arrive at a work center, there is a need for a. planning bill of materials b. a system of scheduling and prioritizing c. a system for material requirements planning d. sales and operations planning

b. a system of scheduling and prioritizing

If no variations in demand or lead time exist, the ROP will equal a. the EOQ b. demand during lead time c. safety stock d. the service level e. the EOQ plus safety stock

b. demand during lead time

Which one of the following statements concerning the economic order quantity (EOQ) model is correct? a. An increase in holding cost will increase the EOQ value. b. A decrease in demand will increase the EOQ value. c. A decrease in holding cost will increase the EOQ value. d. None of the options is true.

c. A decrease in holding cost will increase the EOQ value.

In Theory of Constraints, which of the following is represented by "drum"? a. pull scheduling at the non-bottleneck work centers b. Non-bottleneck resources c. Bottleneck resource d. Inventory and/or time buffers

c. Bottleneck resource

The Theory of Constraints (TOC) approach is also referred to as a. Drum - Buffer - Constraint b. Drum - Rope - Constraint c. Drum - Buffer - Rope d. Drum - Buffer - Bottleneck e. Bottleneck -Drum - Constraint

c. Drum-Buffer-Rope

Priority sequencing rules determine which of the following? I- Allocation of goods to customers II- Which machine to service next? III- Which job to work on at the work center? a. I only b. II only c. III only d. II & III e. I, II & III

c. III only

Freezing the schedule is one way of mitigating a. forecast errors b. changes in customer orders c. MRP system nervousness d. managerial conflicts over SOP

c. MRP system nervousness

The total time to process an entire set of jobs at a work center is referred to as a. Lead time b. Lot-sizing c. Make-span d. shortest processing time

c. Make-span

Practical application of the Theory of Constraints involves the implementation of all of the following steps except a. Identify the system bottleneck(s). b. Exploit the bottleneck(s). c. Reduce the capacity at the bottleneck(s). d. Elevate the bottleneck(s).

c. Reduce the capacity at the bottleneck(s)

When finite scheduling through bottleneck resources is complete, the result is a. increased accuracy of forecasts b. minimized cost of operations plan c. a doable MPS d. optimal lot-sizes for finished products

c. a doable MPS

According to Theory of Constraints, buffers should a. be eliminated b. be placed in the initial operation in the routing file c. be actively managed d. all of the options are correct answers

c. be actively managed

In Theory of Constraints application, "breaking the constraint" or "elevate the bottleneck(s)," means a. creating a schedule that maximizes the throughput of the bottlenecks. b. repeating the analysis process to look for other bottlenecks. c. increasing capacity of the bottleneck. d. scheduling non-bottleneck resources to support the bottleneck.

c. increasing capacity of the bottleneck

The Stock-out probability is a. the probability that all demand will be satisfied during the replenishment lead time b. the percentage of demand that is supplied from inventory c. the probability that inventory will not be sufficient to meet demand during the cycle d. All options are correct

c. the probability that inventory will not be sufficient to meet demand during the cycle.

In an ABC classification of inventory items which of the following is false?

class B items have a lower monetary value than class C items.

Which of the following is an assumption commonly made in using MRP lot-sizing procedures? a. Component requirements are aggregated by time period for planning purposes, so all requirements for each period must be available at the beginning of the period. b. All requirements for future periods must be met and cannot be back ordered. c. The requirements are properly offset for manufacturing lead times. d. All of the options are assumptions commonly made in using MRP lot-sizing procedures.

d. All of the options are assumptions commonly made in using MRP lot-sizing procedures.

Which one of the following lot-sizing rules guarantees an optimal solution when demand is constant? a. KBB b. LFL c. FOQ d. KBB & EOQ

d. KBB & EOQ

Which of the following statement about lot sizing rules is correct?

d. None of the statements is correct

Which one of the following statements about lot-sizing rules is correct? a. The Lot for Lot (L4L) procedure seeks to create inventory balances. b. The EOQ provides the optimum lot size when the demand is lumpy. c. The Lot for Lot (L4L) procedure is a special case of the fixed order quantity (FOQ) rule. d. None of the statements is correct

d. None of the statements is correct

Which one of the following is implied by a lead time service level of 95 percent? a. Approximately 95 percent of demand during lead time will be satisfied. b. Approximately 95 percent of inventory will be used during lead time. c. The probability is 0.95 that demand during lead time will exactly equal the amount on hand at the beginning of lead time. d. The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.

d. The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.

Safety stock and safety lead-time are mechanisms to cope with a. demand uncertainty. b. lead time uncertainty. c. supply uncertainty. d. all the options are valid.

d. all the options are valid.

The lot-for-lot (L4L) procedure a. uses all the information provided by the requirements schedule. b. uses the POQ formula to compute an economic time between orders (TBO). c. is based on the assumption of constant uniform demand. d. creates order quantities that are exactly equal to net requirements.

d. creates order quantities that are exactly equal to net requirements.

In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will a. double. b. increase, but not double. c. decrease by a factor of 2. d. remain the same. e. increase, but more information is needed to calculate exactly how much

d. remain the same

Examining realistic, multiple-machine, dynamic scheduling situations is possible by using a. priority sequencing rules b. linear programming c. mixed integer programming d. simulation

d. simulation

Which of the following statement(s) is (are) correct? a. In a one machine system, the order in which jobs are processed has no effect on total time to do all the jobs. b. In a one machine system, the SPT rule for sequencing the order of jobs will result in minimizing average job completion (flow) time. c. In a one machine system, the EDD rule for sequencing the order of jobs will result in minimizing average lateness d. In a two machine system, Johnson's rule for sequencing the order of jobs will result in minimizing the total time to do all the jobs on both the machines e. All options are true

e. All options are true

Which of the following statement is(are) true in ROP analysis? a. This analysis determines the safety stock quantity b. ROP increases if Safety Stock increases c. ROP increases if the Standard Deviation of Demand increases d. Safety Stock increases if Lead Time increases e. All statements are true

e. All statements are true

The need for safety stocks can be reduced by an operations strategy which a. increases lead time. b. increases lead time variability. c. increases lot sizes. d. decreases ordering costs. e. all of the options are incorrect

e. all of the options are incorrect

Which one of the following is not generally a determinant of the reorder point? a. rate of demand b. length of lead time c. lead time variability d. stockout risk e. item purchase cost

e. item purchase cost

Which of the following three strategies can be useful in reducing MRP system nervousness? I- Using Time fences II- Using Firm Planned Orders III- Careful use of Lot-Sizing procedures a. I only b. II only c. III only d. I & II only e. II & III only f. I, II, and III

f. I, II, III

The economic order quantity (EOQ) procedure

is based on the assumption of constant uniform demand

Theory of Constraints scheduling combines data in which of the following pairs?

the bill of materials (BOM) file with data in the routing file