Chapter 11

Which of the following activities is not part of the planning component of the logistics function?

Human resources management

What are the three resources that an organization must have to conducts a conversion (or transformation) process?

Materials (like raw materials), Labor ( like human resources required for operations), and Overhead (like fixed assets, indirect materials, and indirect labor)

A firm expects to sell 1000 units of its best-selling products in the coming year. Ordering costs for this product are $100 per order, and carrying costs are $2 per unit. Compute the optimum order size, using the EOQ model.

317 units

Differentiate between a bill of materials and an operations list.

Bill of materials is the form that specifies the components of a product, including descriptions and quantities of materials and parts needed. An operations list describes the chain of events that constitute a product's production. It includes all the necessary operations to be performed, identifying the locations, resources used, and standard timing for each phase.

Which of the following is not considered a benefit of using computerized conversion systems?

Increased sales and cost of sales

Why is it important to separate the functions of inventory control and the production stations? What could go wrong if these functions were not separated?

Inventory controls maintain records of inventory, while production stations have custody of materials during production. If these duties aren't segregates, one person has both custody and record keeping duties. This person would have the opportunity to steal materials or goods and alter records to cover up theft.

For which of the following computerized conversion systems is Walmart well known?

JIT

Which of the following represents a method of managing inventory designed to minimize a company's investments in inventories by scheduling materials to arrive at the time they are needed for production?

Just-in-Time (JIT)

What is the difference between MRP, MRP II, and ERP?

MRP: involves the automated scheduling of production orders and movement of materials in the production process MRP II: considers all manufacturing resources, rather than focusing on materials. It is an expansion of MRP ERP: Integrate all of the conversion processes into a single software program while still meeting the needs of each functional area; have evolved from MRP II systems

Which of the following terms relates to the control of materials being held for future production?

Stores

The term conversion processes is often used synonymously with

all of the above

Which of the following questions is most likely to be found on an internal control questionnaire concerning a company's conversion processes?

are approved requisitions required when materials are released from the company's warehouse into production?

The goal of a physical inventory reconciliation is to

compare the physical count with the perpetual records

Which of the following statements concerning an operations list is true?

it is an engineering document that describes the chain of events within a company's conversion process

Manufacturing has changed in recent years as a result of each of the following factors except

lack of economic prosperity

When additional procedures are necessary to bring a defective product up to its required specifications, this is referred to as

rework

Which of the following activities is an inventory control activity

routing

If a manufacturing company's inventory of supplies consists of a large number of small items, which of the following would be considered a weakness in internal controls?

the stores function is responsible for updating perpetual records whenever inventory items are moved

Which of the following internal controls is typically associated with the maintenance of accurate inventory records?

using physical inventory counts as a basis for adjusting the perpetual records