CPIM Part 2 Final Study Guide

RCCP takes place at which of the following planning levels? Answers Master scheduling Business planning Strategic planning MRP

Rationale RCCP is used to determine if sufficient capacity is available for the MPS. Strategic and business planning are incorrect because resource planning is used for strategic and business planning. MRP is incorrect because CRP is used for material requirements planning. Master scheduling

Which of the following is out of the machining department supervisor's direct control? Answers Operator assignments Rated capacity of the work center Tooling availability for jobs in queue Sequence of jobs to be run

Rationale Rated capacity is a calculation used for load planning. Rated capacity of the work center

Which of the following methods encourages employee involvement in an organization? Answers Implementing ideas quickly Promoting competition among employees Implementing ideas quickly, and recognizing employees for their ideas Implementing ideas quickly, recognizing employees for their ideas, and promoting competition among employees

Rationale Recognizing employees for their ideas and implementing ideas quickly both promote employee participation and commitment to an employee involvement effort. Implementing ideas quickly, and recognizing employees for their ideas

Which of the following reporting points is of most use when determining run times? Answers Partial quantity complete Move complete Production order complete Setup complete

Rationale Run time is calculated by multiplying the run time per piece by the size of the order. Knowing when the order is completed can provide the run time per piece. Production order complete

Which of the following measurements is typically calculated for each production order? Answers Internal setup Utilization Run time Efficiency

Rationale Run time is the only one dependent on the lot quantity. Run time

Which of the following improvements is most difficult to achieve with a well-implemented continuous improvement program? Answers Lot size reduction Run time reduction Workplace organization Safety stock reduction

Rationale Run time reduction may require new equipment, part design, new methodologies, etc. Run time reduction

Which of the following includes an analysis of the nature of the firm, the market, and the business environment? Answers Strategic plan S&OP Benchmarking Product family analysis

Rationale S&OP is incorrect, because although it is concerned with these factors, the analysis is conducted as a part of the business planning process. Benchmarking is incorrect because it is a separate part of business planning, which does not include analysis of the nature of the firm, the market, or the business environment. Product family analysis is incorrect because it occurs as a part of S&OP and does not include analysis of the nature of the firm, the market, or the business environment. Strategic plan

Sales and operations planning (S&OP) is typically performed at which of the following levels? Answers Raw material End item (finished goods) Semi-finished goods Product family

Rationale S&OP is typically performed at the product family level. It acts as the bridge between the strategic business plan and the master schedule. Product family

The capacity planning technique used at the S&OP planning level is: Answers detailed capacity requirements planning. rough-cut capacity planning. resource planning. input/output control.

Rationale S&OP planning uses resource planning to check key resource availability. resource planning.

Which of the following new product characteristics will most affect the choice of a product family for sales and operations planning (S&OP)? Answers Design Life cycle Mix Volume

Rationale S&OP plans families of items within a production environment and process choice, so the design of the product would determine which production process it would be similar to. Design

S&OP typically is done at which of the following levels? Answers Stock keeping units Product family Component options End item

Rationale S&OP typically is done at the product family level. End items or stock keeping units generally are planned at the master scheduling level, and are therefore incorrect answers. Component options are planned at the material planning level of MPC, and therefore also incorrect. Product family

Which type of capacity provides protection from planned and unplanned activities? Answers Theoretical capacity Productive capacity Demonstrated capacity Safety capacity

Rationale Safety capacity is the planned amount by which the available capacity exceeds current productive capacity. Safety capacity

An assemble-to-order company produces subassemblies based on actual customer orders and stocks the most commonly sold configurations. Planning occurs on a weekly basis. What would safety capacity be used for? Answers To buffer against emergency replenishment subassemblies To provide for orders received between material planning cycles that exceed current load To provide an opportunity to replenish finished goods stock To minimize the need to provide safety stock for late deliveries

Rationale Safety capacity is used to provide extra capacity for unplanned activities. To provide for orders received between material planning cycles that exceed current load

Component lead time inaccuracies are causing an increase in customer backorders. This will most likely impact the: Answers perpetual inventory. master schedule. bill of material. work center.

Rationale Shortages and customer backorders will cause master production schedule dates to be re-prioritized. master schedule.

Which of the following represents a trend in supplier relationships? Answers Increase in the number of transportation providers Fewer partnerships with customers Decrease in the outsourced production of goods and services Reduction in the number of suppliers

Rationale Shrinking the number of suppliers enables companies to form much closer supply channel relationships. Reduction in the number of suppliers

Which of the following forms the basis for simple regression equations? Answers Building a normal distribution or bell curve to indicate the magnitude and frequency of the deviation from the average Using exponential smoothing to weight the information one wants to predict against the information that is used to predict it Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values Finding a line of least squares on a chart that shows how one variable actually behaved in the past versus one that is predicted to behave in a particular way

Rationale Simple regression (also called linear regression) uses the least-squares method. As defined in the Dictionary, the least-squares method is a "method of curve fitting that selects a line of best fit through a plot of data to minimize the sum of squares of the deviations of the given points from the line." Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values

At one time, a high-end automobile subcomponent had 97 components. After an out-of-the-box evaluation, the number has been reduced to 30 parts. This part reduction is a key goal of: Answers concurrent engineering. supplier rationalization. benchmarking. design for manufacturability.

Rationale Simplification of parts, products, and processes to improve quality and reduce manufacturing costs is known as design for manufacturability. design for manufacturability.

Using simulation in manufacturing is most beneficial for: Answers identifying potential continuous improvement areas. improving data collection. prototyping new technology. training new employees.

Rationale Simulating alternate processes can identify areas where improvements can be made. identifying potential continuous improvement areas.

A new product is being introduced to the company's product mix, which will have an effect on the current period material plan due to the cumulative lead time of the purchased parts. Which of the following actions would be of immediate value to the material planner? Answers Simulating the revised material plan Modeling the key work center capacities Analyzing orders that are likely to be late Analyzing the product's cumulative lead time

Rationale Simulating the new material plan will identify those items that will be out of balance, without disrupting the already balanced plan. Simulating the revised material plan

What is the purpose of a time buffer in the theory of constraints (TOC)? Answers It opens an opportunity to exploit the system. It prevents unplanned idleness in the constrained work center. It identifies the root cause of the constraint. It processes jobs at a lower rate than demand.

Rationale Since it is so important that the constraint never be "starved" for needed inventory, a time buffer is often established in front of the constraint. It is called a time buffer because it represents the amount of time that the inventory in the buffer, which could be work in process or raw materials, is placed ahead of the bottleneck, protecting the constraint from disruption. It prevents unplanned idleness in the constrained work center.

Management has determined that the master production schedule will not be met. The last action to be taken would be to: Answers move non-utilized resources. change the master production schedule. schedule overtime. use alternate routings.

Rationale Since the master production schedule drives the ordering of all manufactured and purchased components, changing it will lead to changes throughout the planning system. Other alternatives should be considered if possible. change the master production schedule.

What is an important element of keeping project team members engaged and on track? Answers Continual updating of project cost projections Inviting top management to project meetings Ability to build flextime into the schedule Developing team member project skills

Rationale The project manager cannot successfully complete the project without the involvement of team members, so their development is critical. Developing team member project skills

When determining the transportation mode for servicing distribution warehouses, which of the following factors should be considered? Answers Speed, dependability, capability Speed, proximity of headquarters, dependability Capability, customer service, frequency Cost, dependability, customer service

Rationale The six factors to be considered are speed, completeness, dependability, capability, frequency, and cost. Speed, dependability, capability

The six sigma approach to continuous improvement consists of which of the following phases? Answers Define, measure, analyze, design, control Define, measure, analyze, improve, control Plan, do, analyze, check, act Define, plan, analyze, design, verify

Rationale The six sigma approach to continuous improvement is termed DMAIC (define, measure, analyze, improve, control). Define, measure, analyze, improve, control

A typical supplier performance evaluation would rate suppliers on their ability to meet delivery dates and: Answers quality specifications. hidden renewal requirements. transportation needs. quote promises.

Rationale The supplier must be capable of producing items that meet quality specifications. Suppliers should be aware of the metrics that will be used to measure their performance. quality specifications.

Using phantom bills of material will result in a reduction in: Answers inventory transactions and lot sizes. inventory transactions and work orders. lot sizes and product structures. product structures and work orders.

Rationale Using phantom bills of material means that subassemblies are noted on the bill of material but are not stocked as assemblies, so they do not require inventory transactions. inventory transactions and work orders.

Locating a customer-owned area in a supplier's facility can result in: Answers significant abilities in changing the mix of stock keeping units at the last minute. high performance scores on order delivery key performance indicators. significant savings in energy costs. no improvements in quality metrics.

high performance scores on order delivery key performance indicators.

Material requirements planning (MRP) may recalculate planned orders as a direct result of changes in: Answers work order receipt dates. the planning horizon. customer order dates. capacity.

work order receipt dates.

Which of the following statements is true of forecast demand in the master production schedule as it relates to material requirements planning? Answers Forecast demand is ignored within the cumulative lead time. Forecast demand is ignored beyond the cumulative lead time. Forecast demand is treated like any other gross demand. Forecast demand is treated like safety stock replenishment.

Rationale Demand is demand, no matter what the source. Forecast demand is treated like any other gross demand.

An operator can assemble a product at a rate of 30 units per hour. What is the throughput time? Answers .5 minute 1 minute 2 minutes 1 hour

Rationale 60 minutes/30 units = 2 minutes per unit. Throughput time is also called cycle time. 2 minutes

A supplier that provides services such as warehousing, freight forwarding, and delivery is known as: Answers a broker. a third-party logistics provider (3PL). an importer/exporter. a second-tier supplier.

Rationale A 3PL is a third party that provides product delivery services. a third-party logistics provider (3PL).

Some companies have created electronic scorecards to gather statistics on topics such as inventory, sales, costs, and forecasts. This is often referred to as a: Answers information technology strategy. wide area network (WAN). enterprise resources planning (ERP) system. decision support system (DSS).

Rationale A DSS assists managers in selecting and evaluating courses of action by providing a logical, usually quantitative, analysis of the relevant factors. decision support system (DSS).

In an annual new product planning activity, using forecasts of product groups by dollars is often regarded as step two, with step one being a competitive: Answers reverse engineering activity. competence assessment. merger policy. SWOT analysis.

Rationale A SWOT analysis looks at the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy. It is important to recognize what a company's strengths and weaknesses are in terms of a new product. SWOT analysis.

What is the purpose of a VRIN test? Answers To evaluate the attractiveness of an industry To identify external threats and opportunities To assess the strength of an organization's competitive advantage To identify key competitive skills in an industry

Rationale A VRIN (valuable, rare, inimitable, nonsubstitutable) test assesses an organization's competitive abilities. To assess the strength of an organization's competitive advantage

What does a large backlog indicate in an engineer-to-order environment? Answers Inventory turns are high. Capacity is too low. Job security is stable. Engineering design is too slow.

Rationale A backlog means job security and is a measure of the effectiveness of the sales process. Job security is stable.

A CEO suggests some additions to the company's automated dashboard—a number of financial measures as well as information on customer complaints, manufacturing cycle time by product group, and year-to-date spend on education and training. What is this view commonly called? Answers Balanced scorecard Balance sheet Product positioning perspective House of holistic perspectives

Rationale A balanced scorecard is a list of financial and operational measurements used to evaluate organizational performance. It may include customer, business process, financial, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Balanced scorecard

Many organizations use a balanced scorecard to create key performance indicators for their strategies. What feature of the balanced scorecard approach makes it attractive for this purpose? Answers Provides detailed performance objectives down to the operations unit level Demonstrates compliance with general accounting principles Helps define multiple perspectives on the organization's strategic goals More valid from the perspectives of external stakeholders

Rationale A balanced scorecard represents external stakeholders' needs, financial objectives, operational or process needs, and future development needs. Helps define multiple perspectives on the organization's strategic goals

A resource plan is based on which of the following components? Answers One unit of a typical product One unit of each product One lot size of a typical product One lot size of each product

Rationale A bill of resources lists the required capacity and key resources needed to manufacture one unit of a selected item or family. One unit of a typical product

The master scheduler would ignore which of the following elements when setting up the bill of resources? Answers Demand Labor Equipment Setup

Rationale Demand is external, not a resource or a constraint on a resource Demand

Products that are close to their expiration date and cannot be sold at full price are known as: Answers scrap. obsolete inventory. distressed goods. inactive inventory.

Rationale Distressed goods are products that are damaged or close to their expiration date and cannot be sold at full price. distressed goods.

Which of the following is true of the differences between inventory turns or costs in a distribution center (DC) versus for the manufacturer of the goods? Answers Distribution environments tend to have higher turns because inventory remains in stock for only a short time compared to that for a manufacturer. The distribution environment has a higher cost of goods sold than does the manufacturer for the same finished goods. Distribution environments tend to have lower turns because they don't carry any raw material inventory. Manufacturers typically approximate work-in-process value, so inventory turns tend to be more accurate in a distribution environment.

Rationale Distribution cost of goods sold includes the cost to buy or transfer the goods from the warehouse as well as the additional material-handling costs. DCs carry inventory longer as it is based on a forecast; the manufacturer would ship directly to the DC based on demand. The distribution environment has a higher cost of goods sold than does the manufacturer for the same finished goods.

Which of the following is a benefit of distribution requirements planning? Answers Decreased safety stock Decreased planning time fences Increased customer service levels Increased transportation costs

Rationale Distribution requirements planning allows for the stocking of inventory at multiple locations for servicing customers. Increased customer service levels

Which of the following is the best solution for coordinating the flow of goods through a network consisting of warehouses, distribution centers, and a production facility? Answers Distribution requirements planning Material requirements planning Advanced planning and scheduling Transportation management systems

Rationale Distribution requirements planning is the function of determining the need to replenish inventory at branch warehouses. Distribution requirements planning

During the declining phase of a product's life cycle, what are distributors most likely to do? Answers Stock the product at all warehouses to ensure that it is available. Stock the product only at centralized or targeted warehouses. Continue stocking at a normal rate until there is no inventory. Discontinue stocking all inventory.

Rationale Distributors are most likely to limit stock to a central or specific location to minimize the investment across the entire distribution network. Stock the product only at centralized or targeted warehouses.

Organizations consisting of a collection of companies that have similar and complementary supply chains will likely perform better together because of: Answers the potential for skills transfer and/or volume discounts in procuring materials, resource sharing, and logistics. their ability to corner the market for certain component parts and raw materials, driving prices down. their leverage with municipalities that depend on them for jobs and taxes. the capability to move inventories off the books in transit between various business entities.

Rationale Diversified corporations with multiple businesses that have a strategic fit with respect to their supply chain activities can perform better together because of the potential for skills transfer and/or volume discounts in procuring materials, resource sharing, and logistics the potential for skills transfer and/or volume discounts in procuring materials, resource sharing, and logistics.

What is the term for the splitting of a set of operations of a specific order into subgroups so that each can be run on a different machine? Answers Job splitting Order splitting Operation splitting Group splitting

Rationale Dividing a lot into two or more sublots and simultaneously processing each sublot is known as operation or lot splitting. Operation splitting

A product family is experiencing an upward trend in demand that is adversely affecting customer service. Which of the following forecasting techniques is most applicable? Answers Double smoothing Single smoothing Trending with bias Low alpha factor

Rationale Double smoothing adjusts a single smoothed forecast for an upward or downward trend. The other responses do not weight the current month enough to pick up trends. Double smoothing

A small past-due load often exists at a certain workstation. Otherwise, past-due loads move around the facility based on product volume and mix. This is an indication that the workstation: Answers follows a bottleneck. precedes a bottleneck. is a stand-alone work center. is a bottleneck.

Rationale A bottleneck is a facility, function, department, or resource whose capacity is less than the demand placed upon it. is a bottleneck.

Strategies that lack stability over time and employee acceptance are the result of an organization not having which of the following? Answers Mission and vision Differentiation strategies Dependability and flexibility Big opportunities and eight accelerators

Rationale A business's mission, vision, and core values create a foundation for the organization's strategy by unifying leaders and employees behind a shared vision of the organization's principles and future. Without this foundation, strategies can lack stability over time and broad acceptance by executives, managers, and employees. Mission and vision

Which of the following elements of lead time is ignored by capacity requirements planning? Answers External setup Internal setup Move Wait

Rationale External setup is performed while the previous job is being run. External setup

Trend extrapolation is used in forecasting in which of the following ways? Answers For identifying cyclical patterns For easier graphing of the forecast For identifying the presence of seasonality in product demand For projecting long-range movement

Rationale Extrapolation refers to the process of extending a forecast out a certain number of periods into the future. For projecting long-range movement

Material produced as a residual of or incidental to the production process is a: Answers co-design. by-product. co-product. residual item.

Rationale A by-product is material of value produced as a residual of or incidental to the production process. by-product.

When a company is pursuing a capacity-lagging strategy, which of the following will likely be true? Answers The organization will be more capable of protecting its market share than if it had used a capacity-leading strategy. Operations will typically find that achieving 90% to 100% capacity utilization is very difficult. The plants should always be working at full capacity. The plants will be more expensive from a machine and labor perspective than for a capacity-leading strategy.

Rationale A capacity-lagging strategy should always find plants working at full capacity. The plants should always be working at full capacity.

Which of the following should be true when a company is pursuing a capacity-leading strategy? Answers Operations should be able to shift to make-to-order or at least assemble-to-order due to shorter order cycle times. Operations will often need overproduce to balance the higher likelihood of pessimistic marketing forecasts. Operations should always have very high capacity utilization. Operations should always have sufficient capacity to meet demand.

Rationale A capacity-leading strategy should always find sufficient capacity to meet demand, but capacity utilization will likely be lower. Operations should always have sufficient capacity to meet demand.

Which manufacturing technology would most likely provide the greatest benefit to a company whose order winners are delivery speed and flexibility? Answers Quality function deployment Transfer line Automated material handling Cellular manufacturing system

Rationale A cellular manufacturing system produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell. This configuration enables high output and flexibility. Cellular manufacturing system

Material requirements planning (MRP) may recalculate planned orders as a direct result of changes in: Answers the planning horizon. customer order dates. work order receipt dates. capacity.

Rationale A change in a scheduled receipt may cause the replanning of a planned order. work order receipt dates.

A company has decided to redesign a product's overall value chain to eliminate some cost-producing activities. This product is currently in the company's broad differentiation strategy product group. What is the product likely moving to? Answers Focused low-cost strategy product group Innovation product group Focused differentiation strategy product group Product group that will compete on delivery speed

Rationale A company competes on either an overall low-cost provider strategy, a broad differentiation strategy, a focused low-cost strategy, or a focused differentiation strategy. Focused low-cost strategy product group

Which of the following best explains the concept of variation? Answers No two items are exactly alike. Control is achieved through statistical process control. Prioritization can reduce variability. Defects and variability interfere with control.

Rationale All of the other answers relate to variation in some way but do not describe the concept of variation. No two items are exactly alike.

What is the most common form of international distribution? Answers Export of products into foreign markets Licensing international companies for manufacturing processes Establishing a joint venture with a foreign organization Expansion into foreign markets through warehousing

Rationale All of these are ways to expand into foreign markets, but exporting is by far the most common and the least expensive. Export of products into foreign markets

What is a potential area of risk for distribution inventory? Answers Being located near other distribution centers Not having enough trained personnel Running out of warehouse space Need to relocate inventory based on poor planning

Rationale All of these may be slight risks, but the most potentially costly is having to relocate inventory to another distribution center based on poor planning. Need to relocate inventory based on poor planning

Which accounting method assumes that the oldest inventory is the first to be used? Answers Absorption GAAP FIFO LIFO

Rationale FIFO is a method of inventory valuation for accounting purposes that assumes that the oldest inventory (first in) is the first to be used (first out). FIFO

Which of the following is a key principle of lean purchasing? Answers Blanket orders are used. Single-source suppliers are used. Suppliers stock inventory at their location. All packaging is returned to the supplier.

Rationale All of these may be used in a lean environment, but most will not be possible without the key element of single-source supplier partnerships. Single-source suppliers are used.

What is the first step in creating a team-based environment? Answers Developing a company hierarchy Developing a project plan Developing a shared vision Developing a measurement plan

Rationale All projects and teams are based on the vision, which is a consensus of what is to be accomplished. Developing a shared vision

Which of the following is a type of flow manufacturing? Answers Mass/continuous Repetitive All of the above Batch flow

Rationale All three choices are flow manufacturing processes; material flow usually is uninterrupted. All of the above

The development of the sales and operations plan (S&OP) involves which of the following? Answers Marketing Manufacturing Marketing and finance Marketing, manufacturing, and finance

Rationale All three of these business functions are very closely involved in the S&OP process. Marketing, manufacturing, and finance

Which of the following types of demand benefits from the aggregation process? Answers Distribution Forecasted Customer Service parts

Rationale Forecasting is more accurate at higher levels of aggregation. Forecasted

he difference between available and on-hand inventory is: Answers safety stock. work in process. allocated inventory. lot size.

Rationale Allocation is the classification of quantities of items that have been assigned to specific orders but have not yet been released from the stockroom to production. This would show in inventory but is not available for other demand. allocated inventory.

Which of the following statements correctly describes allocation logic? Answers Allocations do not have to be included in the pegging process. Allocation quantities should be offset from the order due date by the parent item planned lead time. Allocations should be created at the time of order release. Allocations quantities should be set to whichever is the lower of the quantity required or the quantity available.

Rationale Allocations must be created at the time of order release. Allocations should be created at the time of order release.

Charting the process average can best be done using which of the following types of charts? Answers Median S X-bar P

Rationale An X-bar chart is a control chart in which the subgroup average is used to evaluate the stability of the process leve X-bar

Which of the following uses a finite-scheduling model to determine when an item can be delivered to a customer and includes any constraints that might restrict production? Answers Available-to-promise Constraint finite scheduling Capable-to-promise Operating curve

Rationale Capable-to-promise is the process of committing orders against available capacity as well as inventory. Capable-to-promise

Which production environments will most benefit from capable-to-promise functionality? Answers Engineer-to-order and make-to-stock Assemble-to-order and make-to-stock Assemble-to-order and make-to-order Engineer-to-order and make-to-order

Rationale Capable-to-promise is the process of committing orders against available capacity as well as inventory. Assemble-to-order and make-to-order are capacity- and lead-time-constrained, so orders should be promised based on the availability of resources. Assemble-to-order and make-to-order

What is the most appropriate way to increase the capacity available for one day on a production line? Answers Change the manufacturing layout. Reduce setup time. Increase the hours worked. Increase the speed of the line.

Rationale Capacity available is the product of available time, utilization, and efficiency. Increasing the hours worked directly increases the available time and increases capacity. Increase the hours worked.

Types of orders considered in the load distribution during capacity requirements planning include which of the following? Answers Released order, purchase orders, and firm planned orders Released orders and firm planned orders Purchase orders and firm planned orders Released orders

Rationale Capacity planning is concerned with production orders that have been released to production and with planned and firm planned orders. Released orders and firm planned orders

A new product has been introduced, and it has a fairly stable production schedule. Which of the following actions is the best use of capacity requirements planning? Answers Assessing the need for overtime or inventory buildup to support a sales promotion Identifying available load so material planning can increase the forecast to consume it Evaluating available load over time to identify projected capacity increases or decreases Helping material planning identify which customers to delay at bottleneck work centers

Rationale Capacity planning supports planning by showing needs over a horizon. Load is not determined by knowing available capacity. Assessing the need for overtime or inventory buildup to support a sales promotion

Since capacity has already been validated at the master production schedule (MPS) level, why is it checked again at the material requirements planning (MRP) level? Answers Load may have changed at the various key work enters. CRP performs a more detailed capacity check at the work center level. Capacity may have changed at the various key work centers. MPS uses only key work centers.

Rationale Capacity requirements planning (CRP) performed at the MRP level is a more detailed process than rough-cut capacity planning (RCCP) at the master production schedule level. Master production scheduling doesn't check key work centers, but RCCP does. CRP performs a more detailed capacity check at the work center level.

Which of the following is true if a work center is overstated in terms of available production capacity? Answers Capacity requirements planning becomes less useful as a feedback tool. The company will add capacity via additional personnel, tooling, or equipment. Planned order-required dates won't match customers' order-required dates. Efficiency will increase.

Rationale Capacity requirements planning becomes less useful because it does not give accurate information and an overload condition appears to be satisfactory. Capacity requirements planning becomes less useful as a feedback tool.

Which activity is a key interface with MRP? Answers Customer service Calculating cost of goods sold Sales and operation planning Capacity requirements planning

Rationale Capacity requirements planning checks to see if the necessary capacity is available to produce the MRP output as planned. Sales and operations planning indirectly influences MRP, but does not directly interact with MRP. Customer service levels are important in measuring customer satisfaction, but only indirectly interface with MRP. Cost of goods sold is the result of accumulating inventory costs; costs of goods sold is deducted from revenue when an item is sold. Capacity requirements planning

The carrying cost rate used in the economic order quantity is: Answers calculated by the master scheduler. determined by management policy. based on the unit cost. a percentage of the ordering cost.

Rationale Carrying costs include the cost of capital, risk costs, storage costs, etc. Management determines how much of the cost to apply to inventory based on a percentage of the financial value of inventory. determined by management policy.

What formula is used to calculate the cash-to-cash cycle time? Answers Inventory Days + Accounts Receivable Days - Accounts Payable Days Inventory Days + Accounts Payable Days - Accounts Receivable Days Accounts Receivable - Accounts Payable Average Accounts Payable Days

Rationale Cash-to-Cash Cycle Time = Inventory Days + Accounts Receivable Days - Accounts Payable Days Inventory Days + Accounts Receivable Days - Accounts Payable Days

Distribution requirements planning (DRP) provides transportation planners with: Answers locations for scheduling deliveries. backhauling information. load optimization information. current and future shipping requirements.

Rationale DRP can convert the schedule of planned orders into transportation data elements such as weight, volume, and number of pallets. current and future shipping requirements.

Distribution requirements planning (DRP) is most beneficial in environments that possess which of the following product and distribution network characteristics? Answers Make-to-stock product; single-level distribution network Make-to-stock product; multilevel distribution network Make-to-order product; single-level distribution network Make-to-order product; multilevel distribution network

Rationale DRP is most beneficial in a make-to-stock environment and where the distribution network is more complex. Make-to-stock product; multilevel distribution network

A company that uses a functional layout produces several product families that use the same work centers, with some units being a standard design and others having custom design. Which of the following management decisions is most applicable as it relates to master scheduling? Answers Use of a quantity/period or flow rate Use of a final assembly schedule Level and type of inventory to stock Relevance of a demand time fence

Rationale Decisions would be required on which products to keep in stock as finished goods versus assemblies. Level and type of inventory to stock

Which of the following techniques is best suited to forecasting demand when the demand pattern shows seasonal and trend components? Answers Time series analysis Decomposition Historical analogy Causal

Rationale Decomposition is the best answer. Time series analysis is incorrect because decomposition is a time series technique specifically suited to forecasting when demand shows seasonal and trend characteristics. Historical analogy and causal are not well suited to the type of time series analysis required. Decomposition

Which of the following activities will best help to reduce inventory levels? Answers Using first in, first out (FIFO) Decreasing lot sizes Outsourcing logistics functions Using smaller distribution centers

Rationale Decreasing the purchasing or production lot size will directly decrease cycle inventories. Decreasing lot sizes

Which of the following priority rules is used in a dedicated assembly line? Answers Critical ratio Required date First in, first out Last in, first out

Rationale Dedicated assembly lines are FIFO (first in, first out) by design. First in, first out

A job shop environment includes which of the following? Answers Functional layout, variable routings, dedicated machines, job costing Functional layout, variable routings, dedicated machines Functional layout, variable routings, job costing Variable routings, dedicated machines, job costing

Rationale Dedicated machines are typically found in a flow ship, while multi-purpose machines are found in a job shop. Functional layout, variable routings, job costing

From the customer's perspective, what does delivery lead time consist of? Answers Time from requirement for a product to receipt of the product Time from placing an order to use of the product Time from receipt of the customer order to the delivery of the product Time from start of the order preparation to use of the product

Rationale Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Time from receipt of the customer order to the delivery of the product

Which of the following ranks manufacturing environments from longest to shortest delivery lead time? Answers Make-to-stock, assemble-to-order, make-to-order, engineer-to-order Make-to-order, assemble-to-order, engineer-to-order, make-to-stock Engineer-to-order, make-to-order, assemble-to-order, make-to-stock Assemble-to-order, engineer-to-order, make-to-stock, make-to-order

Rationale Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Engineer-to-order environments are theoretically the slowest to fulfill. Time is required not only to build the product but to custom-design it to meet the customer's unique requirements. Engineer-to-order, make-to-order, assemble-to-order, make-to-stock

The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called: Answers regression. time series decomposition. smoothing. demand filtering.

Rationale Demand filtering is a method of controlling variations by providing a check that limits the amount of the variation from one period to the next. A demand filter typically is a ratio of the new demand to the average of the old demand. demand filtering.

A person dominates the discussion in a meeting. Another individual requests additional input from other members of the group. This second person is the: Answers sensei. extrapolator. supervisor. gatekeeper.

Rationale Gatekeeping is a group technique to effectively manage a situation, discussion, or meeting. gatekeeper.

Which of the following factors is fundamental to development of a marketing strategy? Answers Labor capability Order qualifiers Vertical integration Supplier's geographical location

Rationale Generally, a supplier must meet minimum requirements to be considered a viable competitor in the marketplace. Customer requirements may be based on price, quality, delivery, and so forth and are called order qualifiers. Order qualifiers

What is a disadvantage of single sourcing? Answers Competitive prices Shorter lead times Risk of catastrophic event at supplier Longer order processing times

Rationale If the supplier's plant is destroyed, companies relying on that supplier are at risk for production disruptions, delays in filling customer orders, and lost sales revenue. Risk of catastrophic event at supplier

Increasing the yield of a product reduces: Answers kanban size. product cost. finished goods inventory. queue time.

Rationale If yield is increased, fewer materials and less operation time are necessary, which reduces the cost of the product. product cost.

An infinite capacity planning report would typically show what type of load profile? Answers Load based on maximum available capacity Load based on demonstrated available capacity Load based on planned and existing manufacturing orders Load based on rated capacity

Rationale Infinite capacity planning uses planned and firm planned orders as well as the uncompleted operations of scheduled receipt to calculate load requirements, without regard to any kind of available capacity. Load based on planned and existing manufacturing orders

Group members engaged in continuous improvement activities often encounter which of the following obstacles? Answers Conflicting goals Meeting schedules Training requirements Management involvement

Rationale Individuals and departments may have conflicting goals or hidden agendas or conflicting interpretations of the business goals. Conflicting goals

What is the best approach for managing planning vs. execution in capacity management? Answers Backlog monitoring Critical ratio Input/output control Capacity requirements planning

Rationale Input/output control is a technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored. Input/output control

The line balancing approach to capacity management would be most appropriate in which of the following production environments? Answers Project Repetitive Repair Intermittent

Rationale Line balancing, which balances the assignment of tasks to minimize idle time, is most appropriate in a repetitive manufacturing environment that repeatedly produces the same discrete product or family of products. Repetitive

A company is implementing lean principles, including reducing its supplier base. What is a key element for the supplier rating system? Answers Kanban cycle time Delivery lead time Lowest cost On-time delivery

Rationale On-time delivery reliability will be a key performance measure. On-time delivery

A design engineering group has dismantled a new product from another supplier. This is an example of: Answers thievery. competitive analysis. disintermediation. unethical behavior.

Rationale Performing a competitive analysis of a competitor or its products allows a company to understand the competitor's strategies, capabilities, prices, and costs. competitive analysis.

What conditions are most favorable to a best-cost provider strategy? Answers General increase in quality levels in category due to new technology Period of economic recession and declining household income Periods of economic energy and expansion of wealth Intense price-cutting tactics among category leaders

Rationale Periods of limited wealth create greater sensitivity to cost while customers still want some level of quality. Period of economic recession and declining household income

A firm that relies too heavily on external suppliers may experience which of the following problems? Answers The suppliers may evolve into competitors. The suppliers may evolve into competitors, and the firm's employees may fail to develop critical skills. The firm's employees may fail to develop critical skills, and the firm may fail to develop technology important to its survival. The suppliers may evolve into competitors, the firm's employees may fail to develop critical skills, and the firm may fail to develop technology important to its survival.

Rationale Placing too heavy a reliance on a supplier can increase the risks of the loss of core competencies (skills and technology) and of the supplier becoming a competitor. The suppliers may evolve into competitors, the firm's employees may fail to develop critical skills, and the firm may fail to develop technology important to its survival.

Which technique facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences? Answers Mixed-model scheduling Material-dominated scheduling Mixed-flow scheduling Processor-dominated scheduling

Rationale Processor-dominated scheduling is a technique that schedules equipment (processor) before materials. Processor-dominated scheduling

When is processor-dominated scheduling most often and most effectively used? Answers Capacity is relatively expensive. Material is relatively expensive. Capacity is flexible. Order due dates are inflexible.

Rationale Processor-dominated scheduling is used when capacity is relatively expensive and inflexible (e.g., costly setup times). Due dates are usually flexible. Capacity is relatively expensive.

The basic requirement of the design of a manufacturing process is to meet: Answers production schedules. line balancing standards. product specifications. management cost objectives.

Rationale Producing the product or service to the specifications is the goal of the process design. product specifications.

Which are components of product cost? Answers Overhead, labor, and material costs Ordering and material costs Transportation and labor costs Standard costs

Rationale Product costing consists of adding up the costs of material, labor, and overhead for all components to determine the standard cost of the final product. Overhead, labor, and material costs

Orders for a specific assembly have been released over the last two weeks. Stockroom personnel have reported unplanned issues for one component and returns of another component. Which of the following is the most likely cause of this situation? Answers The master scheduling horizon is not long enough. An engineering change for the assembly is not in the bill of material. Material availability checking is not being performed before release of the orders. There are errors in the inventory records for the two components.

Rationale Product design engineers may have changed the components used in the product without updating the bill of material, resulting in the unplanned issue for one component and the return of the other component. An engineering change for the assembly is not in the bill of material.

A company with a product differentiation strategy is focused on: Answers customer-valued product features. low cost of quality. high productivity. mass customization.

Rationale Product differentiation is a strategy of making a product distinct from the competition on a non-price basis such as availability, durability, quality, or reliability. customer-valued product features.

A make-to-stock company produces 15 product families of small appliances and fulfills orders from both stock and production. Each product family has a large number of configurations to accommodate multiple uses, features, and options. What is the most difficult to plan in this environment? Answers Backlog Mix Volume Capacity

Rationale Product mix will be the most difficult to plan, due to the large variety. Mix

Product positioning refers to a product's relationship: Answers in the distribution network based on its customer base. to other products based on total sales. in the marketplace based on its features. in the production facility based on similar products.

Rationale Product positioning is the marketing effort involved in placing a product in a market to serve a particular niche or function. in the marketplace based on its features.

Market feedback suggests that a product is entering the decline stage of its life cycle. The vice president of manufacturing suggests a reassessment of the current make-to-stock supply strategy to learn if it is mismatched with current market requirements. What is this assessment an example of? Answers Product profiling Demand planning Product positioning Demand time fence

Rationale Product profiling uses a graphical device to ascertain the level of fit between a manufacturing process and the order winning criteria of its products. Product profiling

Feedback of production information in a company using kanbans is most likely to exclude: Answers number of units that were reworked. scrap by quantity and operation. quantity produced in excess of target. production quantity completed.

Rationale Production beyond what is needed to complete a kanban quantity is not allowed. quantity produced in excess of target.

There are four production kanban cards for part A, two for part B, and then two more for part A. Quantity per kanban is 50 units. Safety stock is equal to one kanban quantity for parts A and B. What production occurs based on this information? Answers 200 part A, 100 part B, 100 part A 250 part A, 150 part B, 150 part A 300 part A, 100 part B 350 part A, 150 part B

Rationale Production occurs in the exact sequence and quantity specified by the kanban cards. 200 part A, 100 part B, 100 part A

Which of the following statements about utilization of resources is true? Answers The objective should be 100% utilization of all resources. Increasing the utilization of an operation increases throughput. A bottleneck is a pacing operation. Utilization is the minimum number of hours expected from the work center.

Rationale Production should be paced using the throughput of any bottlenecks. A bottleneck is a pacing operation.

Which term is defined as the actual output of production compared to the actual input of resources? Answers Utilization Efficiency Productivity Input/output control

Rationale Productivity is an overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources. Productivity

A supplier provides 100% acceptable quality products. This is: Answers quality function deployment. quality at the source. statistical quality control. perceived quality.

Rationale Quality at the source is a producer's responsibility to provide 100% acceptable quality material to the consumer of the material. quality at the source.

Quality function deployment (QFD) is an example of: Answers quality at the source. reduction of variability. the cost of quality. total employee involvement.

Rationale Quality at the source is the responsibility to provide 100% acceptable quality material to the consumer of the material. QFD provides a benchmark for determining what is considered acceptable quality. quality at the source.

Which of the following techniques provides the most comprehensive evaluation when designing a new product? Answers Prototyping Quality function deployment Benchmarking Consumer surveys

Rationale Quality function deployment helps ensure that the wants, needs, and expectations of the customer are reflected in the design of the product. Quality function deployment

Quality can be defined as: Answers conformance to requirements. six sigma. within one standard deviation of the mean. zero defects.

Rationale Quality is conformance to requirements or fitness for use. conformance to requirements.

An organization's demand management professionals indicate that there will be a sales promotion at the end of the month for one of the organization's products. The product is in maturity. A substitute product was just introduced by a subsidiary, and marketing mentions something about potential for product cannibalization. What should operations professionals ask more about? Answers Likely impact on demand of the product cannibalization Amount of dollar spend on the sales promotion Likelihood of convincing the subsidiary to retire their harmful product Timing of when to retire the mature product

Rationale Questions could include the likely impact of the product cannibalization and of the sales promotion. Asking about the dollar spend would be less useful because it is demand management's responsibility to estimate this impact. Likely impact on demand of the product cannibalization

In a job shop environment, which lead time element is typically the longest? Answers Setup Wait Run Queue

Rationale Queue time is typically over 90% of the manufacturing lead time in a job shop. Queue

A part has a historical yield of 99%. What quantity should be started in order to produce 1,000 parts? Answers 990 1,000 1,010 1,011

1,011

An operation's actual run time is 300 minutes and its planned run time is 400 minutes. The operation's actual quantity produced is 900 units but its target quantity produced is 1,000 units. Of the 900 units produced, 810 were produced right the first time and 90 required rework. What is the overall equipment effectiveness (OEE)? Answers 6.75% 54.68% 60.75% 76.67%

A * P * Q 300/400 = .75 900/1000 = .9 810/900 = .9 .75 * .9 * .9 = 60.75% 60.75%

Which of the following is true of a company's core competency? Answers It is tied to a measure of production efficiency. It is associated with a task in the company's value chain activities. It is related to a company's product quality. It could be the company's product innovation capabilities.

A core competency is a proficiently performed internal activity that is central to a company's strategy and competitiveness. 3M has a core competency in product innovation. Its record of introducing new products goes back several decades, and new product introduction is central to 3M's strategy of growing its business. It could be the company's product innovation capabilities.

A master production schedule should be loaded to a level that is: Answers equal to sales orders. capable of fully utilizing available capacity. equal to the sales forecast. no greater than can be realistically produced.

A master production schedule should be loaded to a level that is: Answers equal to sales orders. capable of fully utilizing available capacity. equal to the sales forecast. no greater than can be realistically produced. no greater than can be realistically produced.

Which of the following statements defines required capacity? Answers Limits or levels of capacity in order to execute all manufacturing schedules Capacity of a system or resource needed to produce a desired output in a given time period Output in comparison to the capacity plans and adjusted for corrective action Amount of released or planned work assigned to a specific operation

Capacity of a system or resource needed to produce a desired output in a given time period

When defining product families, which of the following is most important? Answers How the product is made Product load profile Market strategy Package size

Product families are ideally based on how the product is made and market strategy. If there is not alignment between these, then the dominant choice is the market strategy. How the product is made is an attractive choice, but market strategy is the best answer. If product groupings do not line up with the resources used in production, non-aligned resources are created. The other answers are incorrect because package size alone and product load profiles do not influence the determination of product families. Market strategy

"The voice of the customer" refers to identifying customer wants through which two of the following mechanisms? Answers Working to resolve customer complaints and listening to requests from potential customers Listening to requests from potential customers and producing reliable products consistently Listening to requests from potential customers and conducting in-depth qualitative customer interviews Producing reliable products consistently and conducting in-depth qualitative customer interviews

Rationale "Listening to the voice of the customer" refers to the information marketing and product design need when creating new products. The idea is to design new products that reflect what the customer actually wants versus what marketing thinks they should have. Listening to requests from potential customers and conducting in-depth qualitative customer interviews

Which of the following can be considered a customer service measurement? Answers Percentage of orders completely satisfied Inventory turns Order fill percentage Throughput percentage

Rationale "Percent of orders completely satisfied" is the correct answer. Throughput and order fill percentages are incorrect because they are warehouse operations measurements. Inventory turns is incorrect because they are an inventory management measurement. Percentage of orders completely satisfied

In a company with a 12% internal rate of return, a capital budget item costs $18,000 and has annual savings of $2,500 in labor and $500 in annual power use. What would be the simple payback period in years? Answers 5 years 6 years 8.3 years No enough information is provided to calculate the payback period.

Rationale $18,000/$3,000 = 6 years. The internal rate of return is not needed to calculate this answer. 6 years

Using the information provided below, what is the product cost based on process costing? Units per period: 10,000 Direct labor at actual: £160,000 Direct material at standard: £600,000 Overhead: £400,000 Margin per unit: £50 Scrap units per period: 100 Answers 76 77 116 117

Rationale (160,000 + 600,000 + 400,000)/10,000 = 116 116

If the annual demand is 50,000 units, the ordering cost is $100 per order, the carrying cost is 20%, and the unit cost is $5, what is the annual ordering cost for an order quantity of 2,500? Answers 100 500 2,000 2,500

Rationale (50,000/2,500) x 100 = 2,000 2,000

A production facility is capable of producing 1,000 units per shift. Planned capacity is 7.2 hours per eight-hour shift, one shift per day, five days per week. Customer demand is 800 units per day. What is the takt time? Answers .43 minutes per unit .50 minutes per unit .54 minutes per unit .60 minutes per unit

Rationale (7.2 hours x 60 minutes per hour)/800 units = .54 minutes per unit .54 minutes per unit

Based on the information provided below, what is the standard cost to produce one unit based on a batch quantity of 1,000? Internal setup time: 1 hour External setup time: 2 hours Queue time: 8 hours Run time per 1,000 units: 8 hours Move time: 2 hours Standard cost per hour: £60.00 Standard material cost per unit: £10.00 Standard allocated overhead per hour: £30.00 Answers 10.54 10.81 10.9 11.53

Rationale (8 x 60 + 1 x 60 + 8 x 30 + 1 x 30)/1,000 + 10 = 10.81 10.81

If a smoothing constant is 0.1, the old forecast was 150, and actual demand was 170, what is the forecast for the next period? Answers 152 155 160 187

Rationale (alpha * actual) + (1 - alpha) * forecast (0.1 x 170) + (0.9 x 150) = 152 152

Using the information provided below, what is the forecast error for the previous week? 12 tubes per case 50 cases per pallet Current mean absolute deviation (MAD) = 100 Previous week:Forecast = 5,000 casesSales = 100 palletsScrap loss = 500 Answers -500 0 5 500

Rationale 100 pallets x 50 cases = 5,000, so the error is 0. 0

A parent item has a net demand of 100 units in period 6. Its lead time is two periods. One of the components is used in quantities of 4 per unit, and it has 0 in inventory and a lead time of 1 week. It is purchased in 1,000-unit order quantities. Which of the following planned order receipts would be the result of the explosion process for the component? Answers Quantity of 400 units in period 3 Quantity of 400 units in period 4 Quantity of 1,000 units in period 3 Quantity of 1,000 units in period 4

Rationale 100 units x 4 = 400 units; period 6 - 2 periods = period 4; order quantity = 1,000 units Quantity of 1,000 units in period 4

Which of the following is likely true of a virtual company? Answers It will have few operational resources and few suppliers. It will have many operational resources and few suppliers. It will have many operational resources and many suppliers. It will seek to integrate vertically whenever possible.

Rationale A company providing customer end-item products that is organized as a virtual company will likely have few operational resources and few suppliers. It will have few operational resources and few suppliers.

When seeking long-term stability in market share, a company has many alternatives, such as adding features and functions, keeping costs stable, or reducing costs and functionality. Each alternative has pros and cons. This type of company has likely: Answers adopted overcoming tradeoffs as an operations strategy. accepted a lower margin with hopes for a future price increase. considered whether its products are candidates for outsourcing. increased product features with hopes of spreading higher costs over more products.

Rationale A company seeking market stability would likely adopt overcoming tradeoffs as an operations strategy. adopted overcoming tradeoffs as an operations strategy.

If a company's design cycle is shorter than that of its competitors, which of the following statements will most likely be true? Answers The product's life cycle will be longer. The competitor's product will have more features. The forecasting horizon will be shorter. The company's products will reach the market sooner.

Rationale A company that gets products to market faster than competitors has a strong competitive advantage. This can be accomplished through activities such as concurrent engineering. The company's products will reach the market sooner.

Which of the following statements about production planning is true? Answers Production planning is a process that a company uses to plan its resources to change either backlog and/or finished goods inventory. Production plan families are broken down into material requirements planning items and the time frame changed to days or weeks. The production plan should be frozen for at least the cumulative lead time of the product. Production planning should be processed on a weekly basis and in detail by unique end items.

Rationale A company uses production planning to plan its resources to change either backlog and/or finished goods inventory. Production planning is a process that a company uses to plan its resources to change either backlog and/or finished goods inventory.

Well-conceived policies and procedures facilitate strategy execution in which of the following ways? Answers By enabling total quality management, facilitating regulatory approvals, and helping to avoid defects from entering the marketplace By articulating the strategy in simpler terms, enabling low-skilled workers to become productive quickly, and always being reflective of current work practices By providing detailed work instructions, helping ensure compliance with ISO 9000, and promoting a positive work environment By providing top-down guidance, helping ensure consistency, and promoting the creation of a work climate that facilitates good strategy execution

Rationale A company's policies and procedures can either support or hinder good strategy execution. Well-conceived policies and operating procedures facilitate strategy execution in three ways: By providing top-down guidance as to how things need to be done By helping ensure consistency in how critical activities are performed By promoting the creation of a work climate that facilitates good strategy execution By providing top-down guidance, helping ensure consistency, and promoting the creation of a work climate that facilitates good strategy execution

Which of the following environments would have the most predictable throughput? Answers Intermittent Assembly line Job shop Continuous process

Rationale A continuous flow would have a predictable, steady throughput. Continuous process

A company is going to evaluate the quality performance of several suppliers over a 120-day period, and the initial measure will be the acceptance rate of each incoming lot. Which of the following would be most appropriate to use to track the suppliers' performance? Answers Control chart Scatter diagram Histogram Flowchart

Rationale A control chart is a graphic comparison of process performance data used to detect assignable causes of variation in the process. By using control charts, the company can evaluate the average acceptance rates, any trends, and whether the acceptance rates vary or remain stable for each supplier. Control chart

When a company's competence in performing a certain task reaches the level of a competitively superior strength, this is a: Answers core competency. technical advantage. strategic imperative. candidate for KPI monitoring.

Rationale A core competency is a proficiently performed task that is central to a company's strategy and competitiveness. core competency.

Early due diligence concerning a backward integration initiative includes an analysis of both companies': Answers supplier relationships. cash flows. corporate cultures. balance sheets.

Rationale A corporate culture includes a set of assumptions and values that members of the company share. These common assumptions influence the way the company operates. corporate cultures.

Supplier rationalization and single sourcing to build dollar spend pave the way for a solid: Answers reduction in component variability. improvement in quality. customer-supplier partnership. vendor-managed inventory operation.

Rationale A customer-supplier partnership is a long-term relationship between a buyer and a supplier characterized by teamwork and mutual confidence. Single sourcing is a common customer-supplier partnership result. customer-supplier partnership.

A distribution channel is defined as: Answers the routes between the production facility and the distribution centers. the distribution route, from raw materials through consumption, that a product travels. the path a product travels through the distribution center from receipt to shipment. the distribution route from the production facility to the consumer.

Rationale A distribution channel is the distribution route, from raw materials through consumption, along which products travel. the distribution route, from raw materials through consumption, that a product travels.

A favorable purchase price variance occurs when the standard cost is based on a 10-piece order quantity and: Answers 1 is ordered and inventoried at standard cost. 10 are ordered and regular freight is paid. 10 are ordered and premium freight is paid. 20 are ordered and there is a price break at 15.

Rationale A price break at 15 means that 20 are purchased at less than the standard cost of a quantity of 10. 20 are ordered and there is a price break at 15.

A fault tree analysis may also be described as which of the following types of analyses? Answers Operations resilience Risk mitigation Potential cause Post-failure

Rationale A fault tree analysis is a logical approach to identify the probabilities and frequencies of events in a system that are most critical to uninterrupted and safe operation. This analysis may include failure mode and effects analysis (determining the result of component failure interactions toward system safety) and techniques for human error prediction. As a method to understand why a failure has occurred, it would be used in post-failure review. Operations resilience is used to gauge how resilient an operation is in the face of potential risks. Potential cause review is a form of risk management. Risk mitigation is the process of determining alternative paths in the face of a potential risk. Post-failure

What is a typical first step in assessing a company's overall advantage or disadvantage as contrasted with its competitors? Answers Segregate the company's operations into different types of primary and secondary activities. Identify all competitors and hypothesize their various strengths. Reverse-engineer products from the top 20% of all competitors. Outsource all non-core-competency tasks.

Rationale A first step in evaluating a company's economic advantage or disadvantage relative to its competitors is to segregate the company's operations into different types of primary and secondary activities. Segregate the company's operations into different types of primary and secondary activities.

What are the goals of a five Ss program? Answers Reduce or reuse before resorting to recycling, reclaiming, or disposal. Keep things clean and organized for good worker morale. Reduce waste and variation while improving productivity. Promote hard work and attention to detail while empowering worker variations.

Rationale A five Ss program of sort, simplify, scrub, standardize, and sustain has the goals of reducing waste and variation and improving productivity. Reduce waste and variation while improving productivity.

A product line has become so widely popular that the company has built a new facility dedicated to manufacturing it. What is this an example of? Answers Outsourcing policy Tax inversion Supplier alliance Focused factory

Rationale A focused factory is a facility established to focus the entire manufacturing system on a limited set of products, technologies, volumes, and markets. Focused factory

Which of the following is an objective of a focused factory? Answers Worker specialization Simplified routings Emphasis on end-product throughput All of the above

Rationale A focused factory is centered on worker/machine specialization, simplified routings, and maximum output. All of the above

A sales forecast for a product in a certain period is defined as the company's: Answers sales quota. expected sales. desired sales. shipments to customers.

Rationale A forecast is the expected level of sales, not the quota. Desired sales may exceed the expected sales, and customer shipments may not consume the forecast in the same period. expected sales.

Forecasts for products that are subject to promotional demand are most useful if they are based on Answers quantitative factors only. both quantitative and qualitative factors. qualitative factors only. neither qualitative nor quantitative factors.

Rationale A forecast should take both factors into consideration. The other answers are incorrect because, while forecasts generally are quantitative, this is not the only method of determining anticipated demand; forecasts may be based on qualitative factors, but this should not preclude the use of quantitative factors as well; and there are no other methods for forecasting other than using qualitative or quantitative factors. both quantitative and qualitative factors.

The gateway work center performs the operation that: Answers feeds a bottleneck. is just prior to final assembly. is first in a routing. consumes the most capacity.

Rationale A gateway work center performs the first operation of a particular routing sequence. is first in a routing.

Which of the following is true of the capability index? Answers The higher the capability index, the greater the number of rejects. The higher the capability index, the fewer the number of rejects. The higher the capability index, the greater the upper specification limit. The higher the capability index, the lower the upper specification limit.

Rationale A higher capability index results in more of the normal curve falling within the limits, meaning fewer rejects. The higher the capability index, the fewer the number of rejects.

Two suppliers for a new part have responded to a request for quote based on annual usage projections. The buyer is evaluating the suppliers on total cost criteria. With all things being generally equal otherwise, which of the following reasons best explains why total cost is higher for one supplier? Answers Transportation has been included in the total cost. The supplier has included a one-time charge for tooling. Shipment frequency is weekly as opposed to monthly. The buyer has not evenly weighted each supplier's pricing.

Rationale A higher shipping frequency will incur higher transportation costs that would need to be offset by lower carrying or other costs. Shipment frequency is weekly as opposed to monthly.

What is the term for an alliance between two companies to share the risk of equity capital in a business opportunity? Answers Limited partnership Line of credit Marquis partnership Joint venture

Rationale A joint venture is an agreement between two or more firms to risk equity capital to attempt a specific business objective. Joint venture

Which of the following may be used as a measure of manufacturing process flexibility? Answers Work center efficiency Skills per employee Output per employee Low overhead costs

Rationale A key component in manufacturing process flexibility is the ability of operators to perform multiple processing tasks. Multiple skilled employees can be moved around in the plant to tackle bottlenecks. Skills per employee

A company that chooses to see reduced revenue while postponing increases in existing manufacturing capacity is following: Answers a non-innovator strategy. a lag capacity strategy. a revenue-neutral strategy. good manufacturing practices (GMP).

Rationale A lag capacity strategy is one in which capacity is added after demand is realized. a lag capacity strategy.

The traditional understanding of managing risk typically identifies which of the following strategic risk responses? Answers Prevention, mitigation, recovery Proactive, reactive, semi-reactive Simulation, discovery, mitigation Find, fix, repair

Rationale A simple structure for controlling risk uses three strategic approaches: prevention, mitigation, and recovery. Prevention, mitigation, recovery

Which characteristic is more desirable for controlling production in a lean control system? Answers Flexible capability Periodic inventory checks Management performance check Cycle counts

Rationale A lean pull system must be flexible. Workers and equipment must be versatile in order to respond to the demands of the system. Workers must be able to move from task to task with ease. Cycle counts and periodic inventory checks are not as important as flexible capability in lean systems; inbound and outbound inventory are in small lots and move quickly through production to customers. Management performance checks are incorrect, because the emphasis is on empowered workers and self-directed work teams. Flexible capability

Which of the following statements is true of a lean system? Answers The needs of warehouses are considered within a lean system. Priority is not inherently established within a lean pull system. A work center takes its cue to produce output from the previous work center. It can operate autonomously and has low data-processing and communication expenses.

Rationale A lean system responds directly to customer demand and uses a cellular layout in which flow is continuous and production lead times are short. Once production begins in response to a customer demand, priorities in terms of resource contention are not an issue. In a kanban system the work center takes its cue from the downstream work center. As lean production assumes very little finished goods inventory and production is in small lots and flows quickly to customers, the needs of the warehouse do not need to considered. It can operate autonomously and has low data-processing and communication expenses.

A production leveling strategy refers to: Answers matching demand at any given time. producing to average levels. matching demand somewhat and using inventory to meet demand. producing a minimum level and matching demand through subcontracting.

Rationale A level production method maintains a stable production rate while varying inventory levels to meet demand. producing to average levels.

A discrete manufacturer's marketing strategy is to be the low-cost, high-quality, high-volume, rapid-delivery supplier. Which of the following manufacturing processes would best fulfill this marketing strategy? Answers Jobbing Batch Line Cellular

Rationale A line process has high volume and high quality but usually narrow effective variety. Line

Tailoring the company's competitive approach and product offering to fit specific market conditions in each host country would be an example of: Answers a focused differentiation strategy. a broad differentiation strategy. a focused low-cost provider strategy. a localized multicountry strategy.

Rationale A localized or multicountry strategy is one in which a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions. a localized multicountry strategy.

Long-term agreements with suppliers may include which of the following types of special arrangements? Answers Additional complexities to paperwork systems Clauses preventing either party from early contract exit A supplier's certification of the buyer's use of the product Specially designed returnable containers

Rationale A long-range supplier contracts could specify collaborative tools such as reusable bins. Contracts should have exit clauses. Paperwork should be simplified. Supplier certification certifies that the supplier meets certain predetermined standards. Specially designed returnable containers

An organization is looking to meet its sustainability goals but has budget constraints. Which is the best sustainability option for this organization? Answers Install solar panels on the roofs of all facility buildings. Minimize total inventory investment by ordering efficiently. Match inventory turnover with the product life cycle. Change products to use only recyclable plastics.

Rationale A lower inventory investment aligns with organizational sustainability objectives by avoiding excess inventory that may otherwise enter the waste stream if it becomes obsolete. Minimize total inventory investment by ordering efficiently.

Which of the following statements is true of the check step in PDCA? Answers It is commonly regarded as a pilot or test step. It makes temporary fixes to enable full-scale implementation. It suggests changes needed before full-scale implementation. It takes permanent countermeasures to improve outcomes and process results.

Rationale A major purpose of the check step is to analyze and determine the changes that might need to be made after pilot implementation. Permanent countermeasures and temporary fixes are incorrect as they are part of the act step. Pilot and test are descriptive of the do step, whose objective is to test or pilot a proposed countermeasure. It suggests changes needed before full-scale implementation.

Which of the following performance measures is of no use to the management of a make-to-stock company with regard to master scheduling and sales and operations planning? Answers Order completion per the master schedule Adherence to the inventory plan Achievement of the backlog plan On-time shipment per the promise date

Rationale A make-to-stock environment uses an inventory plan, not a backlog plan. Achievement of the backlog plan

A large manufacturer/distributor is working to reduce water use in its production processes and to improve the water supply in emerging supply markets. What is this an example of? Answers Regulations working for the greater good Design for sustainability Getting in front of an issue that is likely to affect corporate image Migrating environmental standards

Rationale A manufacturer/distributor working to reduce the water intensity of its production processes and to improve water resources in developing countries is focused on design for sustainability. Design for sustainability

A min-max system is a variation of which of the following lot-sizing techniques? Answers Period supply Lot for lot Economic order quantity Reorder point

Rationale A min-max system is a type of order point replenishment system where the minimum is the order point and the maximum is the "order up to" inventory level. Reorder point

The purposes of a modular bill of material include which of the following? Answers Providing for easier material requirements planning processing Facilitating forecasting Minimizing inventory for unique components Translating the sales and operations plan to the master production schedule

Rationale A modular bill of material is a type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features. Facilitating forecasting

Which organization is pursuing a multidomestic strategy? Answers A manufacturer enters into distribution agreements with dealer networks in multiple foreign market to sell goods produced in the manufacturer's country. A cereal manufacturer buys similar businesses in other countries. The manufacturer invests in improving the acquisitions' costs. Products remain the same. A manufacturer makes multiple foreign acquisitions and produces components in different countries with standard processes, but products are assembled locally to appeal to local market preferences. A services provider acquires similar businesses around the world, changes their names to reflect the provider's brand, and standardizes policies and services sold.

Rationale A multidomestic strategy allows for integration of capabilities and customization to local practices and tastes. A manufacturer makes multiple foreign acquisitions and produces components in different countries with standard processes, but products are assembled locally to appeal to local market preferences.

A company produces a product family of electronic games. The supplier lead time for all components is less than eight weeks, except for one, which has a lead time of 16 weeks. Which of the following master schedule formats is best for this situation? Answers Single-level Cumulative Two-level Multilevel

Rationale A multilevel format enables the component with the long lead time to be master-planned in advance of demand being exploded with material requirements planning. On-hand and on-order inventory can then be used during the normal planning process. Multilevel

Which of the following describes a new facility designed to be dedicated to providing just one family of product? Answers It will likely be difficult to staff due to the boring, repetitive nature of a focused factory. It is risky, because when a quality issue occurs, all product is affected. It allows operational efficiencies to rise and costs to fall. It discourages the improvement of operational efficiencies, thus negatively impacting costs.

Rationale A new facility dedicated to providing just one family of product allows operational efficiencies to rise and costs to fall. It allows operational efficiencies to rise and costs to fall.

Which of the following situations is most likely to require a forecast of future demand? Answers Phase-in of a new product family and options Sole-source supplier using allocations by customer Change from functional to flow manufacturing Introduction of a new manufacturing technology

Rationale A new product family has no history, so forecasts are used to prepare for expected market demand. Phase-in of a new product family and options

Which of the following statements is most true of a one-card kanban system? Answers It can use a visual signal instead of a card. The card quantity is equal to a one-day supply. The two operations are not in line-of-sight. It uses one combination move/production card.

Rationale A one-card kanban system typically has close operations, so the signal may be an empty spot for the next units. It can use a visual signal instead of a card.

An item is being replaced on a BOM. The effectivity of the original item ends when the new item's effectivity date begins. What does this action illustrate? Answers Parent-child relationship Engineering change process Phantom bill of material Horizontal dependence

Rationale A parent-child relationship exists between items at different levels on the BOM, making this answer incorrect. Horizontal dependency exists between two items on the same level in the BOM; thus, this answer is incorrect. A phantom BOM rarely is stocked and has a lead time of zero; its parent consumes it during manufacture, and is therefore also an incorrect answer. Engineering change process

A work center has a tool crib with a full set of metric wrenches from 12 mm to 18 mm. The equipment in the work center requires the 12, 15, and 18 mm wrenches for maintenance. The wrenches sometimes get lost in the bin. What should be done? Answers Create wall spaces for the 12, 15, and 18 mm wrenches and remove the rest from the work center entirely. Create wall spaces for the 12, 15, and 18 mm wrenches and store the others in the bin. Create clearly marked wall spaces for each of the seven wrenches in an orderly progression from smallest to largest. Get a smaller tool holder made just for the wrench set.

Rationale A partial definition of workplace organization is as follows: "The arrangement of tools, equipment, materials, and supplies according to their frequency of use. Those items that are never used are removed from use, and those that are used frequently are located for fast, easy access and replacement." (APICS Dictionary, 16th edition) Create wall spaces for the 12, 15, and 18 mm wrenches and remove the rest from the work center entirely.

For which of the following situations would the periodic review system be most appropriate? Answers A variety of goods in a retail store that are supplied by a single distributor A variety of goods in a distribution center that are purchased from the manufacturers A component that is purchased directly from the manufacturer by an assembler Work-in-process that is controlled by a pull production system

Rationale A periodic review system is a form of independent demand management in which inventory levels are reviewed and an order is placed at specific intervals. Order quantities may vary but typically replace items consumed during the time period. The periodic review system is advantageous in retail settings stocked with many different items from a central location, because it consolidates deliveries and reduces shipping and handling costs. A variety of goods in a retail store that are supplied by a single distributor

The information determined by a perpetual inventory system when an issue transaction is processed is the: Answers issue quantity. issue location. beginning balance. ending balance.

Rationale A perpetual inventory system maintains the current/ending balance on a transaction-by-transaction basis. ending balance.

A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. What does this allow the company to do? Answers Reduce the costs associated with an entire echelon, thus driving its profit margins up. Increase its hold on the farmers by eliminating an echelon. See that the true suppliers of raw material realize a higher price for their efforts. Promote the farmers to tier one suppliers, facilitating tighter controls.

Rationale A popular coffee roasting company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This has allowed the company to see that farmers realize a higher price for their efforts. See that the true suppliers of raw material realize a higher price for their efforts.

First come, first served and shortest process time are examples of which of the following techniques? Answers Dispatching rules Operation splitting Input/output rules Bottleneck management

Rationale Both are methods of sequencing work within a work center. Dispatching rules

Which of the following most fully describes the analyze phase of DMAIC? Answers It documents the current processes. It develops the data collection and analysis plan. It designs alternative remedies. It develops a list of proven root causes.

Rationale A primary deliverable of the analyze phase is a list of proven root causes based on a root cause analysis. Developing the data collection and analysis plan and documenting the current processes are key activities of the measure phase. Designing alternative remedies is an activity of the improve phase. It develops a list of proven root causes.

A strategy to attain technology superiority in product development may lead to: Answers market domination during the early stages of a product's life cycle. unnecessary complexity in the manufacturing process. overly complex products containing unnecessary features. copycat manufacturers who have no regard for intellectual property rights.

Rationale A principal offensive competitive strategy includes leapfrogging competitors by being the first to market with next-generation products. For example, with its Xbox, Microsoft led the market by 12 months, until Sony's PlayStation was released. market domination during the early stages of a product's life cycle.

A presentation of the flow of materials that shows equipment and inventories in a process industry is a Answers process organization structure. process layout. process sheet. process train.

Rationale A process train is the presentation of the flow of materials through a process industry manufacturing system that shows equipment and inventories. process train.

Which of the following production layouts will most likely contain dedicated lines? Answers Fixed position Product Functional Cellular

Rationale A product layout is typically used for only one product or similar products. Product

At which of the following levels should inventory be held to better serve the consumer market for a retail commodity product? Answers Raw/component parts Partially assembled products Packaged finished goods Work in process

Rationale A product that is a commodity and is sold through retail would be stocked in the completed packaged state for purchase. Packaged finished goods

What term is used for the sales and operations planning process of dividing products or services into families, brands, and subfamilies for various planning levels? Answers Product/service hierarchy Product configuration Product load profile Product positioning

Rationale A product/service hierarchy is an approach to dividing products or services into families, brands, and subfamilies for various planning levels. Product/service hierarchy

How can value chain analysis provide a cost improvement/advantage? Answers By increasing batch sizes to spread setup costs over more product By identifying and outsourcing the highest-volume activities to suppliers with low labor rates By providing the ability to rationalize product lines by eliminating low-volume sellers By identifying where on the value chain the company has a strategic advantage and exploiting it

Rationale A proven approach to gaining a cost advantage is to identify where on the value chain the company has a strategic advantage and to then exploit it. By identifying where on the value chain the company has a strategic advantage and exploiting it

A small group of people who normally work as a unit and who meet frequently to uncover and solve problems concerning the quality of items produced, process capability, or process control is most likely called a Answers business process quality team. cross-functional team. self-directed work team. quality circle.

Rationale A quality circle, also called a kaizen circle or a workforce team, is a small group of people who normally work as a unit and who meet frequently to uncover and solve problems concerning the quality of items produced, process capability, or process control. Quality circle members typically select the problems and are given training in problem-solving techniques. The other answers are incorrect because a cross-functional team includes members from different departments; business process quality teams are cross-functional teams that improve the quality of cross-functional processes; and self-directed work teams are permanent teams that have operational responsibilities and a much higher level of autonomy than quality circles. quality circle.

Reductions in which two of the following production variables form the best performance measure of a material requirements plan (MRP)? Answers Setup time and number of action messages Number of action messages and average queue Number of action messages and component shortages Average queue and component shortages

Rationale A reduction in the number of action messages implies that the MRP system is working efficiently. The primary role of the MRP is to ensure that there are no shortages of components for manufacturing. Number of action messages and component shortages

Seasonality is demand that shows which of the following patterns? Answers Repetitive pattern over some time interval General movement up or down over time Repetitive pattern based on economic conditions Repetitive pattern based on promotional activity

Rationale A repetitive pattern over some time interval is the correct definition of seasonality. General movement up or down over time is the definition of a trend; therefore, this answer is incorrect. "Repetitive pattern based on economic conditions" is incorrect because this is the definition of economic cycle. A repetitive pattern based on promotional activity is not related to seasonality, and therefore incorrect. Repetitive pattern over some time interval

A large multinational retailer allows suppliers to see point-of-sales data using proprietary software. What does this facilitate? Answers Accurate forecasting for the suppliers' products Wide variety of low-cost supplier-based IT systems being capable of capturing and using this point-of-sales data Complex shipment route planning Use of experienced consultants at each of the suppliers to help manage all the detail

Rationale A secret to picking the right strategic framework is assessing how your resources relate to each other. For example, a U.S.-based market-dominating big-box retailer's low-cost strategy in the U.S. depends heavily on its physical resources (often rural locations) and sophisticated IT, which helps them maximize selling space and quickly replenish inventories. They provide point-of-sale (POS) data to all of their suppliers at a very high frequency, thus allowing suppliers to have very accurate product demand history and facilitating the suppliers' ability to "replenish today what was sold yesterday." Accurate forecasting for the suppliers' products

A product can be produced at a rate of two per minute. This is known as: Answers cycle time. delivery time. cumulative lead time. lead time.

Rationale Cycle time is the time between completion of two units. cycle time.

Which of the following actions provides visibility of flow in a lean production environment? Answers Displaying performance measures over time in the work areas Installing lights to warn people of approaching robotic vehicles Attaching large parts identification tags to containers Posting customer complaints

Rationale A smooth flow of materials, information, and people in an operation is central to lean production. High visibility of flow aids in recognizing potential improvements. Displaying performance measures over time in the work areas

A work center needs to process units more quickly in order to get up to takt time. What tool can be used to specify work elements, their sequence, and how long each step should take, including walking to get parts and so on? Answers Production capacity chart Standardized work analysis chart Standardized work combination table Job element sheets

Rationale A standardized work combination table is used to identify work elements and their required sequence. It can show walking, automatic, and manual steps. It considers takt time. Standardized work combination table

The flow of received purchased parts is from receipt at the dock to receiving/inspection and then to receipt at the stores, at which time the quantity received is entered in the enterprise resources planning (ERP) system. Which of the following statements about this situation are true? Answers A supplier delivery performance measurement should be based on actual receipts at the dock, and purchase orders should be manually updated when parts are received at the stores. A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. Purchase orders should be manually updated when parts are received at the stores, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. A supplier delivery performance measurement should be based on actual receipts at the dock, purchase orders should be manually updated when parts are received at the stores, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule.

Rationale A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule.

Which of the following conditions is typically a prerequisite for a successful partnership with a supplier? Answers The supplier is a source of items that are critical to the customer. The customer represents more than a third of the supplier's business. There are many potential partners that can supply the items. Both companies are willing to make a long-term commitment to the partnership.

Rationale A supplier partnership is a working relationship that requires both companies to make a long-term commitment. Both companies are willing to make a long-term commitment to the partnership.

What is an accurate description of effective supplier evaluation systems? Answers They are not commonly used because they promote an atmosphere of distrust. Suppliers are not informed about specific evaluation criteria. Their primary purpose is to enforce contracts by detecting and penalizing errors. They should provide objective, measurable, and actionable data.

Rationale A supplier rating system should provide quantitative data that helps both the supplier and the company evaluate their mutual performance. Subjective data is inconsistent and provides different results when the same data are assessed by different people. The intent of the rating is to promote continuous improvement, not enforce contracts and penalize errors. When done fairly, providing timely and accurate feedback to the supplier should increase trust between buyer and seller. They should provide objective, measurable, and actionable data.

Which component control strategy can help mitigate the bullwhip effect? Answers Using backward horizontal integration Imposing strict territorial boundaries between retailers Using vendor-managed inventory processes Extending the forecast horizon

Rationale A supply chain coordination activity that can help mitigate supply chain instability is to increase channel alignment via vendor-managed inventory (VMI) processes Using vendor-managed inventory processes

A synchronous pull system controls the velocity of flow through processes by using takt time. What does this result in? Answers Overall reduction of lead time Overall increase of lead time No change to lead time Volatile changes to lead time

Rationale A synchronous pull system controls the velocity of flow through processes by using takt time, which results in an overall reduction of lead time. Overall reduction of lead time

Analysts must be aware of which of the following when assessing potential points of weakness in a risk assessment for a technology-based business? Answers A solidly composed patent will give the business many years of competitive protection. Colleges and universities are often available for cutting-edge research and development. Outsourcing is a viable alternative to increase capacity and provide flexibility to customers. At any moment, a competitor may experience a breakthrough and take market share.

Rationale A technology-based supplier of high-tech coatings was caught by surprise when its competitor introduced a new coating technology, enabling it to produce product at significantly better levels of cleanliness. At any moment, a competitor may experience a breakthrough and take market share.

A company's core competency is product design. They choose to outsource 100% of their prototyping, manufacturing, and distribution. This company is best defined as a: Answers virtual organization. alliance entity. focused factory. marketing miracle.

Rationale A virtual organization is a short-term alliances between independent organizations in a potentially long-term relationship to design, produce, and distribute a product. Organizations cooperate based on mutual values and act as a single entity to third parties. virtual organization.

A work center is best described as a set of machines and/or operators that: Answers perform related processes. perform tasks in a sequence. produce at the same rate of output. produce the same products.

Rationale A work center is a specific production area consisting of one or more people and/or machines with similar capabilities. perform related processes.

Demand that comes from a new customer or is outside the limits established by management policy is known as: Answers a divergent point. random variation. a trend. abnormal demand.

Rationale Abnormal demand is demand in any period that is outside the limits established by management policy. abnormal demand.

What is the best way listed for a planner to be proactive in a production environment that has high throughput? Answers Monitor buffer status frequently but make changes only when needed. When a buffer is depleted, make its replenishment a top priority. Monitor buffer status periodically and make frequent small corrections. When a buffer is depleted, promptly increase the buffer size to reduce recurrence risk.

Rationale Abnormality control is a concept from lean that can apply to production monitoring in any environment. The concept is that when things are going smoothly, there is little need for correction, but the planners need to frequently check the status of operations so they can spring into action when needed. Regular monitoring of buffer status is an important example. The buffers need to be refreshed but in a way that does not de-prioritize actual customer requirements. Monitor buffer status frequently but make changes only when needed.

In which costing method is fixed manufacturing overhead cost included in the cost of goods sold? Answers Throughput costing Absorption costing Variable costing Target costing

Rationale Absorption costing includes in the cost-per-unit calculation all variable direct costs plus a share of fixed overhead costs for the period. Variable costing includes only variable costs. In throughput costing, only direct materials are assigned to inventory cost. Other costs are assigned to periods. Target or standard costing uses direct materials and labor and fixed overhead. Absorption costing

Which statement about process costing is true? Answers Process costing focuses on processing department costs. Process costing requires more reporting than job-order costing. Process costing involves determining actual costs for each individual part. Process costing uses an order number.

Rationale According to the APICS Dictionary, 16th edition, process costing is "A cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. This system can be used with either actual or standard costs in the manufacture of a large number of identical units." Determining the actual costs for each individual part and costing using an order number are characteristic of job-order costing. Job-order costing requires more reporting than process costing, so that answer is also incorrect. Process costing focuses on processing department costs.

A press is used to stamp left- and right-hand door panels simultaneously from a roll of sheet metal. What is the relationship between the two parts? Answers By-product Co-stamped Co-product Co-produced

Rationale According to the APICS Dictionary, co-products are those that are "usually manufactured together or sequentially because of product or process similarities." Co-product

A manufacturer of building supplies decides to improve its competitive advantage by buying sand and gravel suppliers near its factories. What type of strategy is this? Answers Disintermediation Forward integration Horizontal integration Backward integration

Rationale According to the APICSDictionary, backward integration is "the process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers." When an organization is able to produce raw materials, parts, or services with at least the same efficiency, reliability, and quality as its suppliers, then backward integration may make sense. Backward integration

Which of the following describes core competencies? Answers Not directly related to the company's products or markets Directly related to the company's products or markets Ideal candidates for cost improvement initiatives including outsourcing Quantifiable and dollarized in financial reporting

Rationale According to theAPICS Dictionary, core competencies are "bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth." Directly related to the company's products or markets

What are three of the broad areas necessary to address how well the strategy execution process is performing? Answers Customer, backorder/backlog, critical ratio Quality, financial, employee turnover Operations, financial, schedule Financial, customer, employees

Rationale Accurate and timely information about daily operations is essential if managers are to gauge how well the strategy execution process is proceeding. Information systems need to cover five broad areas: Customer data Operations data Employee data Supplier/strategic partner data Financial performance data Financial, customer, employees

Which of the following considerations of a supplier rating system would be most critical for the supplier? Answers Performance reporting by month Accurate drawings for unique customer parts Clearly prepublished lead times Ability to compare suppliers with each other

Rationale Accurate drawings will improve the supplier's pricing and quality. Accurate drawings for unique customer parts

A company has identified a cost-based competitive advantage using value chain analysis and benchmarking. Which of the following is true? Answers Every effort should be made to keep this advantage secret. This advantage should be used as a superior differentiator in all future marketing campaigns. The value chain activity may be a candidate for continuous cost reduction efforts. This activity must be exploited by designing it into all new products.

Rationale Achieving a cost-based competitive advantage requires a determined management efforts to be cost-efficient in performing these tasks. The goal must be continuous cost reduction. The value chain activity may be a candidate for continuous cost reduction efforts.

Which of the following describes how capacity planning provides feedback to material planning for scheduling operations? Answers Capacity requirements planning performs availability checks based on material dates. Load profiles designate time periods and work centers where load exceeds capacity. An aggregate load report is used for each work center to identify required order due dates. Available load is determined, and then material requirements planning dates the orders.

Rationale Action messages identify specified the order-related actions that are necessary. Load profiles designate time periods and work centers where load exceeds capacity.

Which of the following cost accounting methods identifies profitable products based on cost drivers? Answers Activity-based Value-added Standard activity Actual market

Rationale Activity-based costing is a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products. Activity-based

Which of the following inventory classifications most contributes to cycle time? Answers Inactive Active Excess Obsolete

Rationale Cycle time is the time from receipt to the time of shipping. Active

How does activity-based costing differ from absorption product costing? Answers In activity-based costing, variable costing techniques are used. Activity-based costing assigns some non-manufacturing costs to product costs. Activity-based costing allocates cost using a single measure, such as direct labor costs. In activity-based costing, fixed factory overhead directly related to products is excluded.

Rationale Activity-based costing is an alternative costing method that assigns some non-manufacturing costs to product costs. The other answers are incorrect because factory overhead costs might be assigned as product costs in activity-based costing if relevant to a specific product or product family; variable costing does not include fixed overhead costs, whereas, if considered relevant, activity-based costing will use some overhead cost as part of product cost; and activity-based costing uses multiple cost drivers and not just one single driver such as direct labor costs. Activity-based costing assigns some non-manufacturing costs to product costs.

Which of the following is least likely to focus on throughput? Answers Theory of constraints Activity-based costing Lean manufacturing Total quality management

Rationale Activity-based costing is focused on the actual costs incurred for one item. Activity-based costing

Which of the following is true of activity-based costing? Answers It is used when the company has many identifiable production activities that may also be costed. It is used to solve the problem of distorted product costs resulting from the use of traditional methods of assigning overhead costs to products. It is used when production is relatively simple and just a few well-defined activities are used in the transformation process. It is used primarily in labor-paced environments in which employee activities are identifiable by granular job classifications.

Rationale Activity-based costing is used to solve the problem of distorted product costs resulting from the use of traditional methods of assigning overhead costs to products. It is used to solve the problem of distorted product costs resulting from the use of traditional methods of assigning overhead costs to products.

If actual demand is higher than the forecast over several periods, what will be the result? Answers Excess inventory Lower mean absolute deviations Larger smoothing factors Larger requirements for safety stock

Rationale Actual demand that is greater than the forecast will drive the mean absolute deviation higher, which in turn will show a need for more safety stock. Larger requirements for safety stock

To detect when a work center's output might vary from the plan, the planner should compare: Answers actual input to actual output. planned output to planned input. actual output to planned output. actual input to planned input.

Rationale Actual input is compared to planned input to identify when a work center's output might vary from the plan. actual input to planned input.

Which of the following labor reporting elements is most important to a continuous improvement program in a standard cost environment? Answers Actual setup hours Actual run hours Standard production order hours Standard internal setup hours

Rationale Actual run hours can be compared to the standard to determine any variance. Actual run hours

An adaptive company that frequently experiments with developing potentially disruptive products experiences a new product failure. How will the company likely view this failure? Answers As a reason to never revisit this niche market As an opportunity to observe competitive responses As an activity inhibiting future variations of this type of behavior As a valuable knowledge-gathering experience

Rationale Adaptive companies use experimentation far more broadly than their rivals. While experimentation necessarily produces failure, adaptive companies are very tolerant of failure, viewing it as a learning opportunity. As a valuable knowledge-gathering experience

In which form of exponential smoothing is the smoothing constant automatically adjusted as part of forecast error measurement? Answers Double smoothing Second-order smoothing Capacity smoothing Adaptive smoothing

Rationale Adaptive smoothing is a form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement. Adaptive smoothing

A piece of equipment is incapable of maintaining process control for longer than four hours and has become a bottleneck due to unforeseen tooling wear. Tool sharpening requires two hours. Which of the following corrective actions should be done first? Answers Loosen the product standards or tolerances. Change the material specification and a supplier. Replace the old equipment with new. Obtain a second set of tooling.

Rationale Additional tooling means that the process stays in operation. Obtain a second set of tooling.

Which of the following is a technique for analyzing and planning logistics and manufacturing during short, intermediate, and long-term time periods? Answers Production planning Master scheduling Sales and operations planning Advanced planning and scheduling

Rationale Advanced planning and scheduling (APS) deals with the analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods. Advanced planning and scheduling

A logistics company surveying customers asks how well the company performs against a set of important/non-important attributes. Assuming that appropriate action is taken in response to the survey, this is an example of putting a system in place to: Answers increase value in product delivery. justify price adjustments for superior performance. identify poor-performing groups or services for discipline. use in future marketing promotions.

Rationale After plotting the results of a survey like this, a company would be able to see where their improvement emphasis should be applied. increase value in product delivery.

It is determined that the key to success in a particular market is the company's ability to deliver a variety of high-quality products in less lead time than the industry standard. The operational emphasis should be on the operation's: Answers quality. utilization. cost. agility.

Rationale Agility is the ability to successfully manufacture and market a broad range of low-cost, high-quality products and services with short lead times and varying volumes that provide enhanced value to customers through customization. agility

What is the most compelling reason for establishing a supplier partnership? Answers To improve quality and delivery reliability To simplify the overall purchasing process To replace individual orders with scheduled releases To reduce the need for purchasing paperwork

Rationale All are desired results, but improved quality and delivery reliability have the most payback. To improve quality and delivery reliability

Material requirements planning (MRP) indicates that safety stock will be dipped into in period 2. The next order will be received in period 3 due to a component availability issue at the supplier. Which of the following actions will most likely occur? Answers Action message to reschedule order from period 3 to period 2; planner temporarily reduces safety stock quantity. No action message from MRP; buyer attempts to expedite order from supplier. Action message to reschedule order from period 3 to period 2; planner allows safety stock to be used. No action message generated by MRP, so no action from planner.

Rationale An action message will be generated to reschedule the order. However, as the order cannot be expedited, safety stock should be consumed. Safety stock is in place for this very purpose. Action message to reschedule order from period 3 to period 2; planner allows safety stock to be used.

Compared to infinite capacity planning, the advanced planning and scheduling technique: Answers validates the master production schedule. uses a longer planning horizon. limits the plan to critical resources only. bases schedules on achievable operations within a set time period.

Rationale An advanced planning and scheduling tool uses priority rules to determine what orders will be produced in what time periods, and it takes capacity constraints into account. bases schedules on achievable operations within a set time period.

A company introduced a new product five months ago, and it is selling at twice the rate projected by marketing. What is the best alpha factor to use in order to make the smoothed forecast as responsive as possible? Answers 0.7 0.2 0.1 0

Rationale An alpha factor of 0.7 weights the most recent period's usage the greatest, because in exponential smoothing a high alpha factor reacts more quickly to a trend and a low alpha factor reacts more slowly. 0.7

Workloads between work centers might be redistributed by: Answers a substitution. an alternate routing. a temporary routing. subcontracting.

Rationale An alternate routing is usually less preferred than the primary routing but results in an identical item. an alternate routing.

An effective appraisal and rewards program Answers looks to the future. All of the above involves many appraisers. uses group and individual appraisals and rewards.

Rationale An effective appraisal and reward program has the characteristics noted in all three options. All of the above

Engineering has suggested that a company's products would provide more value to customers if the products were capable of identifying and automatically reporting problems to service and repair associates. What would be the most likely effect of this strategy? Answers Increasing customer uptime, reducing customer repair costs Facilitating a move to higher selling prices More frequent on-site service, thus increasing costs overall Enhancing the product's order-qualifying features

Rationale An elevator company has diagnostic capabilities built into each system so that a worldwide 24-hour remote electronic monitoring system can detect any one of 325 problems with an elevator or escalator installed at a customer's site. After notification, the system can analyze and diagnose the problem. It then may make the call to a company service person at the nearest location and assists the mechanic in identification of the part(s) in question. This system helps keep outage times to less than three hours. Design is in the loop too, so that they can assess and update as necessary for recurring problems (continuous improvement). Customers also have access to the performance history of each of their elevators and escalators. Increasing customer uptime, reducing customer repair costs

Which of the following objectives typically characterizes an employee involvement program? Answers Avoiding problems Involvement authorization forms Centralized decision making Providing a forum for communication

Rationale An employee involvement program will be successful if it is focused on solving problems, provides a forum for communicating, and is characterized by decentralized decision making. Providing a forum for communication

When a supplier is selected for a partnership, the most important selection criterion is the supplier's: Answers return policy. prices. quality practices. location.

Rationale An essential element in a supplier relationship is the elimination of quality inspection by the buyer. Even if the supplier delivers the right items in the right quantities and on time, if the items lack perfect quality, the entire delivery is faulty. quality practices.

Improving forecast accuracy contributes to which of the following actions? Answers Increasing productivity Decreasing delivery lead times Decreasing sales and operations planning frequency Increasing inventory turnover

Rationale An increase in forecast accuracy means more of the correct product is available to fill customer orders when they arrive. Decreasing delivery lead times

An overstated forecast results in an overestimate of which of the following elements? Answers Load and inventory Inventory and capacity Capacity and backlog Backlog and load

Rationale An overstated forecast will show an overestimated load on production and will drive component, subassembly, and finished goods inventory to be ordered or produced. Load and inventory

A disagreement between sales and production when modifying the sales and operations plan is most likely to be caused by which of the following? Answers No capacity for a two-week shutdown in July Sales not considering production's overdue orders Sales volume being consistently overstated Product mix sales always being inaccurate

Rationale An overstated sales plan will result in an overstated production plan, causing production to overplan resources. Sales volume being consistently overstated

An effective quality process for product design includes which of the following activities? Answers Analyzing the product's or service's sensitivity to the environment Determining the split of appraisal costs vs. prevention costs Aligning design features with demographic data for sales information Ensuring that the design is complex enough that it cannot be duplicated by competitors

Rationale Analyzing the materials and processes used and their sensitivity to the environment will help the company achieve sustainability goals. Simple, standardized process designs are best. Analyzing the product's or service's sensitivity to the environment

Which production environment lends itself to lean principles but not the use of kanbans? Answers Assemble-to-order Make-to-stock Engineer-to-order Make-to-order

Rationale Any environment can apply lean principles. However, it would be difficult to implement kanban in an engineer-to-order environment since there may not be any repetitiveness.

Which of the following is true of internal initiatives that enhance existing order qualifiers? Answers They should be driven by the voice of the customer. They will likely increase business. They are unlikely to provide much competitive benefit. They are most appropriately prioritized using customer feedback.

Rationale Any further improvement in qualifying factors above the qualifying level is unlikely to gain much competitive benefit. They are unlikely to provide much competitive benefit.

Infinite loading will indicate which of the following situations when comparing a gateway work center to a non-gateway, non-bottleneck operation? Answers Either may be in multiple routings. Gateway capacity is higher. Either may precede the other. Either may be overloaded.

Rationale Any operation may be overloaded, which will be shown using infinite capacity. Either may be overloaded.

What is an advantage of the lead capacity strategy? Answers Low unit cost of production Risk of permanent overcapacity High plant utilization Maximizing of revenue potential

Rationale As capacity will lead demand, utilization will be lower and production costs per unit will be higher than in a lag strategy. The risk of permanent overcapacity is high, so it is not an advantage. Maximizing of revenue potential

What is the difference between a co-product and a byproduct? Answers Byproducts are incidental to the production process while co-products are central to it. Byproducts have no value while co-products are materials of value. Co-products are beneficial while by-products are toxic. There is no difference; these terms are synonyms.

Rationale As defined in the APICS Dictionary, a byproduct is "a material of value produced as a residual of or incidental to the production process. The ratio of by-product to primary product is usually predictable. By-products may be recycled, sold as-is, or used for other purposes." Byproducts are incidental to the production process while co-products are central to it.

A make-to-order company is in the process of implementing lean manufacturing techniques, making equipment layout changes and standardizing the designs of their highest-value products in order to transition to assemble-to-order. They begin building the options that the customers will select. Which of the following actions should also be taken? Answers Gradually reduce marketing's quoted lead time as the changes reduce the backlog. Work overtime until the backlog has been reduced so the changes can be permanent. Don't take orders for the assemble-to-order products a time to enable the backlog to go to zero as the changes come into effect. No action is required, since the backlog will reduce automatically.

Rationale As product design and production improvements shorten cycle time, the backlog will be reduced as well. However, if the quoted lead time is not reduced, customers will continue to order too far in advance. Gradually reduce marketing's quoted lead time as the changes reduce the backlog.

An organization is working to earn the ASCM Enterprise Certification. What can make it more difficult to satisfy the certification's checklist related to plan, source, make, deliver, return, and enable? Answers The organization has a locally adaptive approach to globalization and supply chain management. The organization has a highly complex supply chain. The organization's culture places high value on sustainability and so has high expectations for its supply chain. The organization is at the "civil" stage of corporate social responsibility maturity.

Rationale As the supply chain grows more complex, it becomes more difficult to know with certainty suppliers' and distributors' social and environmental conditions. Maintaining a sustainable supply chain may require use of third parties to assess and monitor supplier conditions. The organization has a highly complex supply chain.

Using both a master production schedule and a final assembly schedule is most likely to achieve the highest on-time customer performance level for which of the following environments? Answers Engineer-to-order Make-to-order Make-to-stock Assemble-to-order

Rationale Assemble-to-order promises product within a window of time and typically has a shorter lead time than engineer- or make-to-order, which have less flexibility and more variance. A final assembly schedule is typically not used in a make-to-stock environment. Assemble-to-order

A company pursues a chase production strategy during holiday peaks. Which of the following elements is most likely to cause variability if rated capacity is recalculated on a period-by-period basis for capacity requirements planning? Answers Efficiency Available hours Demonstrated hours Utilization

Rationale Available hours will change based on responding to holiday peaks. Efficiency and utilization should remain about the same. Available hours

Due to a quality problem, only 85% of the master schedule for a finished good has been produced. A decision to service all customers who have submitted orders according to their percentage of total orders is called: Answers allowance. assigned material. allocation. reserve stock.

Rationale Available inventory is allocated among all customers, so each gets part of their order. allocation

A company has not been able to provide customers with information when a make-to-stock item is out of stock. Which of the following actions would be beneficial in this situation? Answers Increase safety stock levels to reduce stockouts. Implement forecast accuracy measures. Provide available-to-promise information to customer service. Increase sales and operations planning frequency.

Rationale Available-to-promise is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer order promising. Provide available-to-promise information to customer service.

A company had a cost of goods sold of $500,000 and net sales of $800,000 in one year. Beginning inventory was valued at $50,000 and ending inventory at $60,000. What was the inventory turnover for the year? Answers 8 times 9 times 10 times 14 times

Rationale Average inventory = ($50,000 + $60,000)/2 = $55,000 $500,000/$55,000 = 9 times per year

Which of the following types of processes best supports the widest range of production volume and permits a company to most easily adjust its capacity to match demand? Answers Batch Jobbing Continuous Line

Rationale Batch production is a manufacturing technique in which parts are accumulated and processed together in a lot. Batch processes also enable companies to easily adjust resources to produce different products. Batch

Orders that provide the supplier with forward visibility of the requirements for a component are called: Answers blanket orders. firm planned orders. open orders. planned orders.

Rationale Blanket orders provide the supplier with long-term requirements, sometimes for the year or life of a contract. blanket orders.

A diversified company is typically a collection of businesses. Which of the following is a strategy-making challenge for such a company? Answers Gathering local marketing data for each industry and for the businesses within that industry Assessing multiple industry strategies, one for each industry arena in which the company operates Becoming a decentralized organization that allows each business to formulate its own corporate strategy Making small incremental changes in individual business units based on current market direction

Rationale Because a diversified company is a collection of individual businesses, the strategy-making challenge involves assessing multiple industry strategies, one for each industry arena in which the company operates. Assessing multiple industry strategies, one for each industry arena in which the company operates

A company is using absorption costing. If the actual demand and the resulting actual production are significantly less than forecasted for the year, reported product costs will: Answers increase. decrease. be variable. not be impacted.

Rationale Because all costs, including fixed overhead, are applied to production under absorption costing (based on unit forecasts), variations in unit product cost may result solely from variations in product volume. increase

A store orders and receives weekly shipments, made up of 20 line items, from a distributor. Which customer service measure is of most value to the store? Answers Transportation costs On-time shipment Correct items shipped Line items shipped complete

Rationale Because it is getting only one shipment each week, the store is concerned that all the items are included. Line items shipped complete

A company's high-volume products are produced on an automated manufacturing line, and its low-volume products are produced using a labor-intensive method. The use of a cost accounting system in which overheads are allocated to product cost as a percentage of direct labor hours will have which of the following results? Answers High-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions High-volume products will be undercosted and cost reduction efforts will be biased in favor of material cost reductions Low-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions Low-volume products will be undercosted and cost reduction efforts will be biased in favor of material cost reductions

Rationale Because overhead costs are allocated by a percentage of labor hours, the actual usage of production by high-volume items will be understated. In a high-volume environment, the cost of labor is very small, perhaps as low as 5%, making overheads difficult to accurately calculate. Because labor is the only cost driver, cost reduction efforts will focus on reduction of labor costs, and, because the labor content will be higher in the low-volume products, they will be overcosted. High-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions

A labor-intensive production line that requires specific skills is trying to increase its flexible capacity. How can this best be achieved? Answers By establishing a focused factory By cross-training workers in various skills By hiring temporary staff with the necessary skills By automating the equipment to do some of the work

Rationale Because the line is labor-intensive, additional skills are needed. The best way to handle this would be to cross-train individuals, which provides flexibility as demand changes. By cross-training workers in various skills

The complexity of an environment has contributed to late orders and excessive work in process. To provide a long-term solution, which of the following steps would be taken first? Answers Document part and assembly flows. Implement pull system logic. Reduce work in process. Simplify the product structure.

Rationale Before any changes to the production environment can be undertaken, it is essential that improvement teams understand the nature and flow of the production inventory and assembly processes. Mapping the process will enable improvement teams to identify redundancies, process gaps, and inefficiencies. With this information in hand, teams can then make informed decisions to simplify the product structure, reduce work in process, and implement a pull system. Document part and assembly flows.

A company with customer-specific configurations can minimize the impact of demand changes by achieving flexibility in: Answers changeovers. delivery lead times. inventory levels. lot sizes.

Rationale Being able to change over from one configuration to another will increase the ability to meet changes in demand faster. changeovers.

Which of the following is a disadvantage of being an innovator in product design and technology? Answers Competitors may make poor-quality copies and destroy the market by making customers believe that all such products have poor quality. A lengthy learning curve will be required of customers for correct product operation. Early adopters will not aware of the product's unique features. Higher research and development expenses may not increase market share or margins.

Rationale Being an innovator in product design and technology is more costly than using previous designs or existing technology, so the increased research and development expense needs to be offset by higher market share or higher margins per sale or the organization will not be as profitable as competitors that spend less on innovation. Higher research and development expenses may not increase market share or margins.

What is a benefit of an effective work cell layout? Answers Reduced setup time Reduced process variability Simplified materials handling Increased utilization

Rationale Benefits of the use of work cells (also called cellular layout) include that it minimizes material-handling distances and factory floor space requirements. Other benefits include reduced queue times, simplified control needs, and immediate feedback. Simplified materials handling

When would the buyer consider the use of blanket orders? Answers For large orders When dealing with short-term commitments When a known quantity of components is required To minimize clerical work

Rationale Blanket orders are an effective means to minimize many frequent and low-volume orders over time. The other answers deal with unique purchases. To minimize clerical work

Which of the following most limits the effect of changes on a supplier? Answers Creation of order quantity stability through the use of fixed quantities Use of blanket orders and scheduled releases Establishment of due date reliability through the use of standard lead times Relaxation of drawing specification tolerances

Rationale Blanket orders provide long-term stability. Use of blanket orders and scheduled releases

Customer relationship management supports total quality management because: Answers they are both part of the manufacturing/customer supply chain. both philosophies are focused on customer satisfaction. each philosophy focuses on the strategic supply/demand relationship. between the two, all external and internal customers are included.

Rationale Both customer relationship management and total quality management are customer-satisfaction-oriented. both philosophies are focused on customer satisfaction.

When are job-order and process costing methods used? Answers When work orders are being processed When many different products must be produced over time When many units of a product are produced over a period of time When direct labor, materials, and factory overhead costs must be accumulated

Rationale Both job-order and process costing accumulate direct labor, material, and factory overhead. The other answers are incorrect because only job costing and not process costing methods would be used when many different products are produced in the same period; only process costing methods would be used when many units of a product are produced over a period of time; and work orders would be used in job-order and not process costing methods When direct labor, materials, and factory overhead costs must be accumulated

In a company that regularly has a past due order condition, backward scheduling in material requirements planning and forward scheduling in an assemble-to-order environment have what in common? Answers Both techniques use the same required dates. Both techniques use the same lead times. Both techniques calculate the same critical path. Both techniques identify the same start dates.

Rationale Both will use either a standard or calculated lead time. Both techniques use the same lead times.

What is a method for increasing throughput? Answers Increasing order sizes to minimize setup Delivering materials to point-of-use Using group technology Relieving bottleneck work centers

Rationale Bottleneck work centers determine throughput time for the entire product line. Relieving bottleneck work centers

What is a method for increasing throughput? Answers Increasing order sizes to minimize setup Using group technology Relieving bottleneck work centers Delivering materials to point-of-use

Rationale Bottleneck work centers determine throughput time for the entire product line. Relieving bottleneck work centers

Which of the following bottleneck performance measures is as meaningful in a make-to-order environment with a functional layout as it is in a make-to-stock environment with a flow layout? Answers Lot size Utilization Setup time Efficiency

Rationale Bottlenecks in any environment need to be fully utilized. Utilization

An assemble-to-order environment using a mixed-model production schedule has a bottleneck work center. What is the best rough-cut capacity planning approach for determining the feasibility of the master production schedule? Answers Define capacity as 85% of rated capacity to provide 15% to accept additional customer orders. Define capacity as some percentage less than 100% of rated capacity by management policy. Define capacity as rated capacity times utilization times efficiency to factor the engineering standard. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it.

Rationale Bottlenecks should be scheduled at the rated capacity if there is sufficient business volume to justify it. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it.

Which of the following methods is the most effective way for the supervisor to help a group generate new ideas? Answers Root cause analysis Pareto analysis Brainstorming Flowchart of process

Rationale Brainstorming is a technique that teams use to generate ideas on a particular subject. Each person on the team is asked to think creatively and come up with as many ideas as possible. Brainstorming

In a kanban facility, production consists of machining or subassembly departments, with one final assembly line. A unit takes five days to complete. Department production is most likely reported: Answers at statistical process control operations. where there is planned buffer in the flow. when the product ships or enters finished goods. at each non-pseudo bill-of-material level.

Rationale Buffering decouples one department from another and is a logical reporting point. where there is planned buffer in the flow.

An organization converting from a process-focused facility to work cells will most likely experience which of the following? Answers Increased in-process inventory Reduced manufacturing lead times Reduced excess capacity A less focused, unstable workforce

Rationale Building products in smaller lot sizes will reduce process lead times. Reduced manufacturing lead times

Which of the following situations is a result of anticipation inventory? Answers Lower inventory carrying costs Higher required capacity Higher subcontracting costs Lower overtime costs

Rationale Building up inventory in advance of an anticipated need would lower the need for overtime, subcontracting, and additional capacity later. It would also raise inventory costs. Lower overtime costs

Which of the following actions will a company most likely take as a primary focus of its level production strategy to deal with demand peaks while meeting standard lead time delivery? Answers Subcontract. Work overtime. Level load demand. Produce ahead.

Rationale Building up inventory is used to buffer peak demand. Produce ahead.

Which of the following is useful for businesses in becoming virtual supply chains in order to reduce costs and improve due-date performance? Answers Business-to-business commerce (B2B) Business continuation plan (BCP) Business process reengineering (BPR) Business-to-consumer commerce (B2C)

Rationale Business-to-business commerce (B2B) is business between companies conducted over the internet. Business-to-business commerce (B2B)

The integration effort of cable companies to diversify into providing internet and telephone services is an example of: Answers strategic fit in R&D and technological activities. the need for more government regulations. a larger company restraining industry opportunities. a company seeking to become a monopoly.

Rationale Businesses with a strategic fit in R&D or technology activities perform better together than apart because of potential cost savings. strategic fit in R&D and technological activities.

The process that targets reducing defects and errors in existing products and services is: Answers DMAIC. DOE. B7. SPC.

Rationale DMAIC identifies problems in existing products, determines root causes, and provides solutions.

Corporate goals identified using a top-down and bottom-up approach should be prioritized by using: Answers a Delphi forecast process where a panel of experts are engaged for this specific purpose. a Pareto analysis revealing that 80% of the potential gains will come from 20% of the opportunities. an activity-based costing process applied to each goal. a strengths, weaknesses, opportunities, and threats analysis involved with each goal.

Rationale By developing a strengths, weaknesses, opportunities, and threats (SWOT) analysis involved with each goal, the most important goals should move to the top. a strengths, weaknesses, opportunities, and threats analysis involved with each goal.

A firm's marketing strategy directly impacts the production plan by which of the following actions? Answers Increasing after-sale service options Increasing customer service functions Changing capacity Increasing demand

Rationale By increasing demand from the customer base, marketing will directly impact the existing production schedule created by production management. Increasing demand

Which two of the following approaches to product design most positively impact manufacturing performance? Answers Reducing parts complexity, and organizing design processes. Reducing parts complexity, and integrating product and process design. Organizing design processes, and debugging during the manufacturing cycle. Organizing design processes, and integrating product and process design.

Rationale By reducing parts complexity and closely integrating product and process design, the manufacture of products is more rationalized and simplified, thereby improving performance. Reducing parts complexity, and integrating product and process design.

Collaborative planning, forecasting, and replenishment (CPFR) is typically most effective when: Answers a few trading partners are involved in the supply chain. many trading partners are involved in the supply chain. a firm has few significant competitors. there are many echelons in the supply chain.

Rationale CPFR is a collaboration process whereby supply chain trading partners can jointly plan key supply chain activities. CPFR is more powerful when a few customers, rather than many, represent a large portion of a supplier's business. The number of a firm's competitors is not an important criterion for how effective CPFR will be. a few trading partners are involved in the supply chain.

Which of the following is a key principle of collaborative planning, forecasting, and replenishment (CPFR)? Answers Joint meetings between customers and suppliers Exchange of information between trading partners Integrating enterprise resources planning systems Using the internet to exchange information

Rationale CPFR is a process where supply chain trading partners jointly plan key supply chain activities, from production and delivery of raw materials to production and delivery of final products to end customers. Exchange of information between trading partners

A firm that produces a wide variety of goods to order for commercial and industrial customers is implementing customer relationship management (CRM). The most likely benefit the firm will realize from effective implementation is that it will be able to: Answers increase the markets it serves. make more realistic delivery commitments. recognize shifts in customer preferences. capture a great deal of information about competitors.

Rationale CRM is a marketing philosophy based on putting the customer first. Information is collected and analyzed to understand and support existing and potential customer needs. Collection of such information can provide early warnings of shifts in design and mix preferences. recognize shifts in customer preferences.

Which of the following best defines the process of CRP? Answers Determining the quantity of all components and materials Determining in detail the amount of labor and machine resources required to accomplish the requirements schedule Establishing the overall objectives and goals of the MPC system Determining the date on which the components and materials are required

Rationale CRP determines in detail labor and machine resources required to accomplish production tasks. The other answers are incorrect because CRP must be consistent with the overall objectives of the MPC system; determining the date required and quantity of components refer to material planning as opposed to capacity planning. Determining in detail the amount of labor and machine resources required to accomplish the requirements schedule

What is the primary output of the capacity requirements planning (CRP) process? Answers Load profile for each work center List of past-due manufacturing orders Planned and firm planned orders Final assembly schedule

Rationale CRP generates a load profile for each work center showing the load versus the available capacity. Load profile for each work center

What information does capacity requirements planning (CRP) provide to production activity control (PAC)? Answers Materials to purchase and their lead times Shop floor load information Planned and released orders CRP is done by the point PAC starts, so no information is needed.

Rationale CRP is used to calculate load on work centers based on planned and released orders from material requirements planning (MRP). Past-due orders, rework orders, and work in process are also inputs to the load calculation. This information on load is a key input to scheduling in PAC. It should be clear that MRP and CRP need a great deal of accurate data (both static and dynamic) from the shop floor to determine load. Shop floor load information

Rated capacity is more essential for which of the following techniques? Answers Master production scheduling (MPS) Material requirements planning (MRP) Capacity requirements planning (CRP) Rough-cut capacity planning (RCCP)

Rationale CRP uses rated capacity. Capacity requirements planning (CRP)

A company is going to begin an aggressive sales promotion for a new make-to-stock product line that will affect most work centers. Capacity requirements planning (CRP) can best be used to determine: Answers whether material storage can handle the expected volume. the number of units that can be made. whether the company is capable of meeting the forecast. the timing and impact of the forecasted load.

Rationale CRPA new product has been introduced, and it has a fairly stable production schedule. Which of the following actions is the best use of capacity requirements planning? Answers Assessing the need for overtime or inventory buildup to support a sales promotion Identifying available load so material planning can increase the forecast to consume it Evaluating available load over time to identify projected capacity increases or decreases Helping material planning identify which customers to delay at bottleneck work centers will help determine when the inventory buildup will have to start to prepare for the sales promotion. the timing and impact of the forecasted load.

Which of the following describes central point scheduling? Answers It uses both forward and backward scheduling, starting from the scheduled start date of a particular operation. It automatically or manually interrupts the process to allow the scheduler the opportunity to review. It proceeds sequentially from the initial period to the final period while observing capacity limits. It requires every piece in a lot to be finished at one work center before any piece in the lot can be processed at the succeeding work center.

Rationale Central point scheduling employs both forward and backward scheduling, starting from the scheduled start date of a particular operation. It uses both forward and backward scheduling, starting from the scheduled start date of a particular operation.

By implementing a supplier certification program, a company should be able to eliminate: Answers receiving paperwork. safety stock. incoming inspection for parts from the supplier. quality audits of the supplier.

Rationale Certifying a supplier means that parts would not have to be inspected. incoming inspection for parts from the supplier.

After reviewing production for a particular product family over the past six months, the master scheduler is recommending that the demand time fence be moved out one period. Which of the following sales and operations planning team members could be excused from the discussion and decision making? Answers Production Sales Purchasing Senior management

Rationale Changing the demand time fence does not impact purchasing lead times or purchase orders. Purchasing

Resource availability must be checked in order to prevent which of the following? Answers Due date accuracy Decreased throughput time Increased queues Lead time validity

Rationale Checking resource availability before work is released to the shop floor will produce, not prevent, a decrease in throughput time, an increase in due date accuracy, and an increase in lead time validity. Increased queues, on the other hand, is likely to prevent longer queue times by preventing WIP from building up at work centers due to lack of resource availability. Increased queues

An organization is forming a strategic partnership with three other organizations in its supply chain. They all use different enterprise resources planning (ERP) systems, some of which are overdue for upgrade or replacement. What solution could help them get real-time visibility into demand or supply issues very quickly? Answers Cloud computing Data analytics Agreement to adopt the partner ERP system that is most up to date Agreement to adopt the partner ERP system that is most in need of an upgrade

Rationale Cloud computing is the only option that could be completed very quickly. With cloud computing, supply chain partners could easily sign up for the same service and participate to gain real-time visibility into demand or supply issues. Cloud computing

Collaborating with customers to provide forecast information results in: Answers higher customer ratings. improved forecast accuracy. shorter lead times. elimination of safety stock.

Rationale Collaborating with customers to get their schedules eliminates the need for some of the forecast, which in turn improves accuracy. improved forecast accuracy.

A certified supplier has begun making late deliveries. What is the first action the buyer should take? Answers Communicate with the supplier to help identify the reason and resolve the problem. Increase the purchasing lead time. Change the supplier status from certified to non-certified. Start sourcing the goods from a different supplier.

Rationale Communicating with the supplier to determine if this is a process, quality, or transportation issue, in addition to whether it is a long- or short-term issue, would be the first step. Communicate with the supplier to help identify the reason and resolve the problem.

Under a high volume and low variety strategy, products usually compete with: Answers high prices. low prices. manufacturing flexibility. skilled labor.

Rationale Companies serving high volume and low variety markets usually have a competitive position that values low prices. low prices.

Which of the following statements is true of companies that begin to automate before implementing lean production? Answers They tend to spend more money on material handling. They find that the conversion to lean production goes faster. They find that the conversion to automation goes faster. They tend to have a higher success rate.

Rationale Companies that automate before moving to lean will normally be using technologies to solve process problems. This will result in the addition of unnecessary technologies. The success of an automation project will be greater if lean is implemented first. They tend to spend more money on material handling.

Which of the following is likely to be the most important order winner for a producer of custom-designed, low-volume products? Answers Delivery speed Design capability Image Price/cost

Rationale Companies that build custom-designed products normally will be competing based on the special capabilities or attributes of the product made to a specific customer specification. Design capability

What will likely happen when a company adds a selling option to its own website? Answers It will see growth in its market share. It will experience no change in its market share. It will risk disintermediating its traditional retailers. It will find its net profits increasing year over year.

Rationale Companies that use a traditional model of selling product through retail stores may consider adding a selling portal to their own website. This will likely risk disintermediating their traditional retailers. It will risk disintermediating its traditional retailers.

Which of the following is a downside associated with linking corporate financial incentives to specific performance objectives? Answers While achieving their goals, executives may not communicate deep enough into the organization. Executives always prioritize financial goal achievement over sustainability goals. Since executives always focus on long-term strategies, there are typically few downsides. If the objectives are not long-term, executives may follow risky strategies, hoping to increase short-term earnings.

Rationale Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests. If the objectives are not long-term, executives may follow risky strategies, hoping to increase short-term earnings.

In hopes of achieving strategic goals, executives may: Answers initiate a public relations organization to advertise the company's strategic objectives. pit one department or group against another in hopes of instilling competition. engage specialists to lobby the government in hopes of attaining special tax breaks. provide resources for only those projects that facilitate accomplishing strategic goals.

Rationale Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests. provide resources for only those projects that facilitate accomplishing strategic goals.`

A company produces make-to-stock products that are stocked and shipped from distribution centers, to which deliveries are made weekly. No safety stock is carried, and inventory shows available when it is placed into stock at the distribution center. Which of the following statements is most true of a performance measure based on units completed within the master-scheduled weekly period? Answers Any order completed is considered on time any day of the week. On-time completion is measured relative to the day of shipment to distribution. Master scheduling performance is secondary to distribution customer service. Performance is more accurate if products are aggregated into families.

Rationale Completion must be on time to meet the weekly shipments since no safety stock is carried. On-time completion is measured relative to the day of shipment to distribution.

A company that transitions from sequential product development to concurrent engineering typically experiences which of the following outcomes? Answers Better fit of products to production capabilities, and increased influence by manufacturing engineering over design decisions. Better fit of products to production capabilities, and reduced variety of product components. Increased influence by manufacturing engineering over design decisions, and reduced variety of product components. Better fit of products to production capabilities, increased influence by manufacturing engineering over design decisions, and reduced variety of product components.

Rationale Concurrent engineering enables the entire organization to be continuously and simultaneously involved in new product development. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs. Better fit of products to production capabilities, and reduced variety of product components.

When designing a new part, a company can contract with one or more suppliers in a competitive bidding situation or perform concurrent engineering with one supplier. Which of the following situations would most support concurrent engineering? Answers It is too difficult to manage multiple suppliers for a single part design. Concurrent engineering places the cost of part design on the supplier. The part design is not well defined and will affect the product design. One supplier will ensure lower prices, shorter lead times, and higher quality

Rationale Concurrent engineering enables the part design to be done in parallel, with shared knowledge. The part design is not well defined and will affect the product design.

What is the best definition of concurrent engineering? Answers Increasing time to market to decrease risk of poor launch Doing several development tasks in parallel Relying on a single engineer to perform all development Taking a serial approach to product development

Rationale Concurrent engineering focuses on parallel processes in order to reduce time to market and changes later in the process. Concurrent engineering is not a serial approach, nor an approach intended to increase time to market. All involved departments and key suppliers participate. Doing several development tasks in parallel

Pulling together a cross-functional team to drive new product design is an example of Answers concurrent engineering. good manufacturing practices (GMP). backward integration. project management.

Rationale Concurrent engineering is the simultaneous participation of all functional areas in the product design activity. concurrent engineering.

In order to better serve its customers' needs, a manufacturer wants to change the design of one of its products while minimizing time to market. This could best be accomplished with: Answers sx sigma. concurrent engineering. research and development. new product design.

Rationale Concurrent engineering uses the strategy of product and process design happening simultaneously through the involvement of all parties to speed up the time to market. concurrent engineering.

Which two of the following conditions describe an environment that most likely will support change successfully? Answers The chief executive officer spearheads the change process, and major projects are tackled first to achieve maximum benefit. The chief executive officer spearheads the change process, and experimentation is accepted as a part of the change process. The organization is under considerable internal or external pressure to improve, and major projects are tackled first to achieve maximum benefit. The organization is under considerable internal or external pressure to improve, and experimentation is accepted as a part of the change process.

Rationale Conditions that lead to support of successful change efforts in an organization include internal or external pressure to improve and acceptance of experimentation as part of the change process. The organization is under considerable internal or external pressure to improve, and experimentation is accepted as a part of the change process.

Which of the following takes place in group consensus building? Answers Each member supports the decision whether or not they agree with it. The members have reached 100% agreement on the decision. There was 100% participation in the agreement. The majority of the members agree with the decision.

Rationale Consensus is a group decision-making process where everyone agrees to support the decision whether or not they voted for it. Each member supports the decision whether or not they agree with it.

A supplier has placed goods at a customer location but does not receive payment until after the goods are consumed. What is this an example of? Answers Leasing Floor stock Point-of-use inventory Consignment

Rationale Consignment is the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold. Consignment

A company has limited resources in some work centers and bottlenecks that move around based on product mix. Salespeople must be notified of overloads so schedule changes can be made with customers. Which of the following scheduling techniques should be considered by management? Answers Constraint-oriented finite loading Finite master production scheduling Resource requirements scheduling Rough-cut capacity scheduling

Rationale Constraint-oriented finite loading is a technique that plans orders around bottleneck work centers. The objective is to maximize total production throughput. Constraint-oriented finite loading

A company has limited resources in some work centers and bottlenecks that move around based on product mix. Salespeople must be notified of overloads so schedule changes can be made with customers. Which of the following scheduling techniques should be considered by management? Answers Rough-cut capacity scheduling Constraint-oriented finite loading Resource requirements scheduling Finite master production scheduling

Rationale Constraint-oriented finite loading is a technique that plans orders around bottleneck work centers. The objective is to maximize total production throughput. Constraint-oriented finite loading

Cost reduction objectives with suppliers can best be achieved by: Answers cost-volume-profit analysis. reengineering designs. volume purchasing. continuous improvement.

Rationale Continuous improvement activities will highlight areas on both sides of the partnership that can be beneficial in reducing costs. continuous improvement.

Cost reduction objectives with suppliers can best be achieved by: Answers volume purchasing. reengineering designs. continuous improvement. cost-volume-profit analysis.

Rationale Continuous improvement activities will highlight areas on both sides of the partnership that can be beneficial in reducing costs. continuous improvement.

Who must be involved with continuous improvement efforts? Answers Upper and middle management Upper management Production line workers All personnel

Rationale Continuous improvement must involve everyone, including managers and workers. All personnel

Which of the following features is characteristic of continuous process manufacturing? Answers Low-cost production Price as an order-winning criterion Narrow product range All of the above

Rationale Continuous manufacturing is defined as a type of manufacturing process that is dedicated to the production of a very narrow range of standard products. The rate of product change and new product information is very low. Significant investment in highly specialized equipment allows for a high volume of production at the lowest manufacturing cost. Thus, unit sales volumes are very large, and price is almost always a key order-winning criterion. All of the above

Continuous production processes would be most appropriate for which of the following? Answers Restoring furniture Generation of electric power Mining of semiprecious gem stones Assembly of low-cost consumer electronics

Rationale Continuous production is a type of flow manufacturing, used for the production of high-volume standard products made in a continuous flow (such as gasoline) rather than as discrete units (such as cars and appliances). Generation of electric power

Statistically determined lines on a control chart are called: Answers medians. standard deviations. axes. control limits.

Rationale Control limits are statistically determined lines on a control chart. control limits.

Why are information technology investment approvals and proof of payback uniquely difficult? Answers The purchase decision for IT systems is often a subjective process not based on reality. The people involved with the purchase are often not the people who need or use the system. Costs and benefits are uncertain, intangible, and often disbursed throughout the company. New IT systems are continuously being upgraded by the supplier, so training costs are difficult to identify.

Rationale Conventional financial evaluations used in conjunction with new IT systems are complicated because costs and benefits are uncertain, intangible, and often disbursed throughout the company. Costs and benefits are uncertain, intangible, and often disbursed throughout the company.

What will happen if internal setup tasks are converted to external tasks (for example, organizing tools and materials for setup while the machine is still running a batch)? Answers Setup time will be reduced and the operation's throughput and velocity will be increased. Setup time will be increased and the operation's throughput and velocity will be reduced. The complexity of the setup will be increased, thus increasing the lead time to make a product. The overall lead time for the product won't be affected.

Rationale Converting internal setup tasks to external tasks is one of the five steps for reducing setup time. Reducing setup time increases operations velocity and throughput. Setup time will be reduced and the operation's throughput and velocity will be increased.

Forecasting cash flow in a make-to-order business involves converting which of the following to dollars? Answers Final assembly schedule Carrying cost of finished goods Final assembly schedule and planned component purchase orders Final assembly schedule, planned component purchase orders, and carrying cost of finished goods

Rationale Converting purchased materials and final assembly of finished goods from inventory to cash is the cornerstone of cash flow in a make-to-order business. Final assembly schedule and planned component purchase orders

What is a primary advantage of lift trucks over conveyors? Answers Lift trucks move heavier loads than conveyors. Lift trucks do not occupy space continuously. Lift trucks move loads over long distances. Lift truck operators are indirect versus direct.

Rationale Conveyors are fixed in place and are often installed overhead to be out of the way of lift trucks, pedestrians, and so on. Lift trucks do not occupy space continuously.

The warehouse and procurement functions are working together to coordinate incoming shipments. This action will most likely improve the management of: Answers transportation costs. supplier quality. inventory levels. stockouts.

Rationale Coordinating the transportation of both incoming materials from suppliers and shipments between warehouses and logistics centers can lower transportation costs. transportation costs.

When outsourcing products or processes, a critical first step for all involved is identification of the company's: Answers patents. strategic plan. core competencies. existing capacity strategy.

Rationale Core competencies are the skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth. core competencies.

One of an organization's core values is that "we share bad news early." Which is necessary to see this value in practice? Answers The mandate comes from the top. Leaders and managers model the behavior. The value is included in the mission and vision. The value is published in the employee handbook.

Rationale Core values serve as business and ethical principles for all members in the business, but they function only when they are mirrored in the behavior of leaders and managers. Leaders and managers model the behavior.

Corrective actions are defined as: Answers adjustments to inventory balances based on cycle counts. the discipline of employees for nonconformance. changes to the general ledger to fix incorrect entries. the implementation of solutions to reduce or eliminate problems.

Rationale Corrective action is the implementation of solutions resulting in the reduction or elimination of an identified problem. the implementation of solutions to reduce or eliminate problems.

A supplier corrective action program should be used to: Answers help identify root causes of problems and correct them. process credit memos. provide a way for suppliers to communicate buyer issues to management. correct invoices that do not match their purchase orders.

Rationale Corrective action systems are in place to identify the root causes of problems and take action to correct them. help identify root causes of problems and correct them.

Why should caution be exercised in using value chain analysis alone in efforts to meet or beat top competitors' costs? Answers Value chain analysis often ignores purchasing. Competitors may spend more on sales and marketing; this is typically not revealed in value chain analysis. Financial and portfolio analysis are superior tools for cost reductions. Cost and price differences may emanate from supplier and distribution superiority.

Rationale Cost and price differences between competitors may have their origins in activities performed by suppliers or by distribution allies. Cost and price differences may emanate from supplier and distribution superiority.

The process of costing is commonly done in two steps. The first is cost accumulation. What is the second? Answers Valuation of labor and overhead for all jobs as they are completed Assignment of these costs to products Complete physical count of all work in process, semi-finished goods, and finished goods within the facility Totaling of all timecard-hour reporting at the order number level

Rationale Costing systems are used to collect costs and assign them to the cost object. This is essentially a two-step process: the measurement of costs that are applicable to manufacturing operations during a given accounting period and the assignment of these costs to products. Assignment of these costs to products

Which of the following data collection points serve two purposes in a pull environment that has machining and assembly lines and receives material directly to point-of-use areas? Answers Order start and completion dates Count points Operation start and completion dates Statistical process control points

Rationale Count points identify the number of units passing the point and can also be used to backflush the inventory consumed up to that point that has not already been issued. Count points

Which of the following best represents evidence of upper management leadership at the strategic level? Answers Attending quality meetings Inspecting and checking outgoing products Creating a vision of a total quality culture Conducting quality system audits

Rationale Creating a vision of quality is evidence of upper management leadership at the strategic level. All of the other options are at a tactical level. Creating a vision of a total quality culture

A company is developing which of the following when it is investing in resources that enhance its value chain proficiency with the goal of attaining industry-leading status? Answers Market share Core competency Strategic plan Competitiveness

Rationale Creating industry-leading proficiency for tasks within the company's value chain activities is a core competency enhancement. Core competency

What is one method for improving transportation responsiveness within the supply chain? Answers Minimize transportation costs by using common carriers. Create transportation partnerships with carriers. Maintain a private fleet for all deliveries. Increase lead times so shipments will not be late.

Rationale Creating transportation partnerships increases operational flexibility and enables long-term contracts and closer control. Create transportation partnerships with carriers.

Cross-trained workers are an important part of lean principles for which of the following reasons? Answers Skills are developed for internal hiring. Cross-training eliminates competition among workers. Compensation levels are flattened for easier management. Flexibility is increased because personnel can be moved around.

Rationale Cross-training enables employees to be moved around as needed, within work cells, production lines, and project teams. Flexibility is increased because personnel can be moved around.

What information from material requirements planning (MRP) can be used to sequence production orders? Answers Critical ratio Shortest processing time Customer order priority Required start date

Rationale Customer order priority is used by MRP. The others are sequencing rules used by production scheduling. Customer order priority

Which is an example of how customer participation can be used to reduce customer-introduced variability for a service? Answers Adding better scheduling tools and practices Extending service hours Adding automated kiosks Adding ability for the customer to customize the service

Rationale Customer participation is when a customer participates in some part of the service or sales process by helping themselves. This often takes the form of automated kiosks for self-help. It reduces the load on the service staff. Adding automated kiosks

Analysis shows that the top 22 percent of an organization's customers provide over 75 percent of the organization's revenues. What should be the top priority? Answers Shedding approximately the bottom 20 percent of customers Providing excellent service to top customers to increase their loyalty Focusing marketing on top customers to cross-sell and up-sell to them Continually trying to acquire new customers

Rationale Customer value usually starts out as negative and then grows over time as customers make repeat purchases. Customer lifetime value analysis can help show that maintaining customer loyalty is far cheaper than continually trying to acquire new customers. Therefore, rather than just using the knowledge of which customers are more valuable to market more things to these segments, it is important to determine how to develop greater loyalty from these segments. Providing excellent service to top customers to increase their loyalty

A make-to-order company is ready to introduce a new product family that has many of the criteria the market is demanding. Which of the following production strategies is most applicable for the introduction phase of the new product family? Answers Hybrid Level Chase Ramp-up

Rationale Demand is unknown, but the company believes that sales will be good. Some inventory buildup enables the company to be somewhat flexible for the actual timing and quantity of demand. Hybrid

In a company that has over 20,000 end items in stock, which of the following demand elements is likely to take the most time to assess for sales and operations planning? Answers Demand for hedge inventory Demand for a sales promotion Demand for a new product Demand for existing products

Rationale Demand must be determined for the product families in aggregate. Demand for existing products

A work center has a utilization of 90% and an efficiency of 95%. Over the past months, it has produced quantities of 600, 610, 640, and 630 per week. What is the demonstrated capacity of the work center? Answers 530 558 589 620

Rationale Demonstrated capacity is based on number of units/hours that are being produced. Utilization and efficiency are not included in the calculation. 620

What is an important transaction point in both push and pull environments? Answers Out-of-stock condition based on satisfying a customer order Cycle count adjustments based on a planned cycle Order completions at departmental boundaries Setup completion and start of production order

Rationale Departmental boundaries commonly act as costing points, regardless of whether pull or push is being used. Order completions at departmental boundaries

Which of the following performance objectives refers to the ability to keep promises to customers? Answers Dependability Speed Cost Speed

Rationale Dependability refers to keeping promises to customers. These promises can include factors such as time and volume, and the ability to delivery the correct amount in the required time frame. Dependability

Which quality management technique measures controllable and uncontrollable process variables and their effects on managing satisfactory outputs from the process? Answers Design for the environment Design of experiments Design for manufacturability Design for quality

Rationale Design of experiments is a quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes. Design of experiments

What is an effective way to improve the capability of production process equipment? Answers Using design of experiments Applying the drum-buffer-rope concept Performing 100% inspection on assemblies Moving internal setup to external setup

Rationale Design of experiments is a quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes. Using design of experiments

Which of the following is a preferable strategy for the prevention of pollution? Answers Design products that use fewer resources and cause less pollution. Plan for multiple energy sources to power critical resources. Ensure that all effluents emanating from a facility are monitored. Have at least one source of renewable energy in use at each facility.

Rationale Designing products that use fewer resources and cause less pollution is preferable and can reduce the overall cost of production. Design products that use fewer resources and cause less pollution.

Which of the following capabilities of finite loading is most important in an environment where routings use many of the same work centers? Answers Determining load Defining capacity Establishing sequence Maintaining priority

Rationale Determining sequence is most important due to shared resources. Establishing sequence

What are process capability studies based on? Answers Input/output control charts Analysis of form, fit, and function Comparisons between tolerances and variation Overall equipment effectiveness (OEE)

Rationale Determining the capability of a process is based on the ability of the process to stay within a set of tolerances and the measure of the variation. Comparisons between tolerances and variation

The following are valid activities of the plan step in PDCA except for Answers determining the use of level flow and standardized work. analyzing main and root causes of process and product variations. defining the gap between the current and future states. developing a measurement plan with SMART goals.

Rationale Determining the use of level flow and standardized work procedures is usually one of the activities of grasping the situation, which thinks critically about the big picture. determining the use of level flow and standardized work.

Which of the following is a key element of customer relationship management? Answers Handling customer requests for changes to due dates outside the system Promising from on-hand inventory and future supply Differentiating the company's customer experience from rivals by superior anticipation and responsiveness Setting filter limits at multiples of MAD

Rationale Differentiating the company's customer experience from rivals by superior anticipation and responsiveness is one of three important elements of customer relationship management. The others are to increase customer retention and loyalty and to provide insight into the timing and quantity of impending customer orders. Setting filter limits is incorrect because it is an element of demand filters, not customer relationship management. Handling customer change requests is incorrect because changes made by the customer for delivery must be entered into the system. Promising from on-hand inventory and future supply is incorrect because this is a characteristic of ATP, not customer relationship management. Differentiating the company's customer experience from rivals by superior anticipation and responsiveness

A supplier delivers books to electronic readers using 3G technology, eliminating distributors. What is this an example of? Answers Disintermediation Advances in Wi-Fi Large area networking (LAN) Extensible markup language (XML)

Rationale Disintermediation is the process of eliminating an intermediate stage in a supply chain. Disintermediation

Dispatching a production order results in: Answers balancing input with output at the work center. ensuring that required resources are available. changing the planned start date to the actual start date. sequencing the production order for work.

Rationale Dispatching sequences the orders. sequencing the production order for work.

What is the most difficult phase in a product's life cycle in terms of determining how to best arrange the supply chain, and why? Answers The growth phase is most difficult for supply chain design because the problem is how to meet profit and growth objectives given irregular demand. The decline phase is most difficult for supply chain design because the problem is how to meet profit objectives given irregular demand. The growth phase is most difficult for supply chain design because the problem is how to grow and protect market share despite competitors using some of the same supply chain intermediaries. The decline phase is the most difficult for supply chain design because the problem is how to protect market share despite competitors using some of the same supply chain intermediaries.

Rationale During the growth phase, the objectives are to grow the market and to produce an acceptable profit. Note that the most difficult part of how to arrange the supply chain is actually during the growth phase. This is because demand may be very irregular, especially considering that forecasts may lack reliable data. The growth phase is most difficult for supply chain design because the problem is how to meet profit and growth objectives given irregular demand.

Which of the following are training subject areas for managers who will use a new enterprise resources planning (ERP) system? Answers ERP principles and techniques Change in the behavior of the organization Application of the system to business problems All of the above

Rationale ERP project leaders must be fully conversant in ERP principles and techniques, be effective as change managers to overcome personnel and corporate culture issues, and be able to apply the ERP functionality to solve business problems. All of the above

Which of the following is most likely to occur in a company that does not use a formal sales and operations planning process? Answers Senior executives will develop the plans required for operation. The potentially available demand quantity will not be recognized. Conflicting processes will exist individually within the various departments. Inventory turns will be used to plan production for the next month.

Rationale Each department will have its own plan for tracking plan to actual, but the plans will not be integrated. Conflicting processes will exist individually within the various departments.

Which of the following statements best applies to the master production schedule (MPS)? Answers Each product is represented as a quantity per time period and is consistent with the production plan. Each MPS is directly translated into the product quantity and time period from the production plan. The MPS defines the daily quantities for production execution and control. The MPS is represented as a single aggregate line for all of a company's products.

Rationale Each product is a quantity within the MPS time period. Each product is represented as a quantity per time period and is consistent with the production plan.

The design of a product is improved by which of the following factors? Answers Patents to ensure process uniqueness Elimination of standard part attributes Complete design by the supplier Input from the supplier

Rationale Early input from the supplier enables better product design by ensuring component specifications, participation of the supplier in the design, and information about the capabilities of a supplier to supply components in the right quantities once production begins. Identifying process similarities helps in standardizing processes, removing overcomplexity, and reducing the number of components needed to produce the product. Input from the supplier

When two business units are merged in order to exploit the opportunity to exchange R&D resources or use common manufacturing or distribution facilities, the companies are said to be sharing: Answers design for manufacturability concepts. economies of scope. intellectual property. economies of scale.

Rationale Economies of scale are cost savings that accrue directly from a larger operation. For example, manufacturing costs may be lower in a larger plant than in a small plant. Economies of scope stem directly from strategic fit along the value chains of the related businesses. economies of scope.

The selection of a measure of customer service should include which of the following considerations? Answers Is the necessary data available? Can the results be affected by management decisions? Do the results have an impact on productivity and profits? All of the above

Rationale Effective customer service requires a 360-degree view of the customer and how the organization can achieve total customer satisfaction. As such, the right data and management decisions will enable the organization to not only reach customer service goals but also to achieve productivity, profit, and ROI goals. All of the above

The actual cost of an order can be different from the standard cost because of which of the following factors? Answers Efficiency and scrap Tooling and queue Efficiency, tooling, and scrap Tooling, scrap, and queue

Rationale Efficiency can affect actual cost because the actual production time will be impacted by how much time is actually spent producing a product. Scrap creates excess material, labor, and overhead costs. Efficiency and scrap

Which of the following situations is indicated if efficiency is consistently above 110%? Answers The standard was set too high due to not using an "average" operator. The operators have become more efficient at setting up and running orders. Setup improvements have reduced actual total setup times by approximately 80%. The work center is further on the learning curve than it was when the standard was established.

Rationale Efficiency varies based on experience. The work center is further on the learning curve than it was when the standard was established.

Which of the following actions by a company is most likely to lead to job enrichment and increased employee satisfaction? Answers Separating planning from execution Dividing jobs into specialized subtasks Controlling quality by inspection Increasing employee control over the process

Rationale Employee involvement and empowerment often results in employee pride, commitment, and a sense of ownership. Increasing employee control over the process

The concept of using the experience, creative energy, and intelligence of all employees by treating them with respect and involving them in decision making is: Answers an employee assistance program. an employee stock ownership plan. employee involvement. employee empowerment.

Rationale Employee involvement uses the experience, creative energy, and intelligence of all employees by treating them with respect, keeping them informed, and including them and their ideas in decision-making processes. employee involvement.

How can management show their support for small group improvement activities? Answers By encouraging ownership of the task by empowering the group with authority By rewarding individual results By highlighting the group's success in the annual report By providing management intervention when needed

Rationale Encouraging ownership and providing decision-making authority shows management's trust and respect for the group's accomplishments. By encouraging ownership of the task by empowering the group with authority

In which of the following production environments is it most unlikely that planning bills are used for master scheduling? Answers Engineer-to-order Assemble-to-order Make-to-stock Make-to-order

Rationale Engineer-to-order environments will have least consistency from one order to another, making it difficult to use planning bills. Engineer-to-order

Which of the following approaches to managing engineering changes is the most disruptive to manufacturing? Answers Establishing an engineering change committee Introducing changes during prototype runs Holding all changes until the product is in production Including the supplier in engineering change decisions

Rationale Engineering changes can be very expensive. They are best handled as they arise rather than as a complete overhaul after production has begun. Holding all changes until the product is in production

Customer-supplier relationships that focus on the future and long-term intercompany team building may be: Answers something that needs to be formalized using long-term partnership agreements. jeopardized by a failure to meet expected order qualifying characteristics. jeopardized by a failure to meet expected order winning characteristics. a major order winning factor.

Rationale Enlightened customer-supplier relationships that focus on the big picture and the longer term may be a major order winning factor. a major order winning factor.

Early customer involvement in the design process can result in: Answers a longer product life cycle. improved manufacturability. lower training costs. key performance indicators.

Rationale Ensuring that products are aligned with customers' requirements can lengthen the life cycle of the product. a longer product life cycle.

What is the primary use of environmental scanning? Answers To identify threats and opportunities To identify effective supply chains To understand current markets To understand competitors' strategies

Rationale Environmental scanning looks at external factors that represent either threats to the organization or opportunities for it. Identifying effective supply chains and understanding competitors and markets are not objectives of environmental scanning. To identify threats and opportunities

Buying from suppliers that manage waste to minimize the impact of their organization on the earth is known as: Answers six sigma. environmental scanning. green manufacturing. environmentally responsible purchasing.

Rationale Environmentally responsible purchasing is an objective of purchasing departments to minimize the impact the organization has on the environment. environmentally responsible purchasing.

The strongest threats relating to competition in an established industry are likely to come from: Answers mergers and acquisitions. existing competitors. angel investors. new technology innovators.

Rationale Established companies in an industry already have the resources to compete and are the most likely source of new competition. existing competitors.

Which of the following is true in a bottleneck situation? Answers Capacity and priority must be looked at independently. A bottleneck must be fed at a rate less than or equal to its capacity. Utilizing a non-bottleneck resource 100% of the time produces 100% utilization overall. Establishing a time buffer before the bottleneck minimizes flow disruption.

Rationale Establishing a time buffer prior to the bottleneck allows for any delay from the feeding workstation to be minimized. Establishing a time buffer before the bottleneck minimizes flow disruption.

What is the objective of sales and operations planning? Answers To provide a means for the master scheduler to validate the schedule To integrate the master schedule with the business plan To hold sales accountable for the forecast month to month To provide an integrated plan for sales and manufacturing

Rationale Even though S&OP may accomplish some of the other areas indirectly, its primary objective is to tie the sales, inventory, and production plans into one plan. To provide an integrated plan for sales and manufacturing

Which of the following performance measures is most appropriate for a lean enterprise? Answers Schedule attainment Inventory accuracy Management involvement Labor utilization

Rationale Even though all are necessary, attaining the schedule eliminates the most waste by making sure that the right amount of inventory is available at the right time for both internal and external customers. Schedule attainment

Which production environment is most likely to use actual cost? Answers Engineer-to-order Make-to-order Mass customization Assemble-to-order

Rationale Even though commonly used items may be valued at standard cost, many of the costs in an engineer-to-order environment are unique to the order and can be valued at actual cost. Engineer-to-order

The connection(s) between the execution and control of operations and the rest of the MPC system is (are) which of the following? Answers Capacity plan Material plan Capacity plan and business plan Capacity and material plans

Rationale Execution and control of operations is the execution end of the MPC system, and it deals with the execution of both capacity and material plans. Capacity and material plans alone would be insufficient. The business plan's interface is with S&OP. Capacity and material plans

A component stockout has occurred, and production has substituted a higher-priced alternate. What is the effect on cost variance? Answers The alternate is charged at standard cost, so there is a total cost variance. The alternate is charged at standard cost, so there is no variance. There is no cost variance due to the second part being a valid alternate. The alternate is charged at the original part's standard cost, so there is no variance.

Rationale Expected cost is based on the original lower-cost component. The alternate is charged at standard cost, so there is a total cost variance.

Exponential smoothing is generally used effectively under which of the following conditions? Answers Long-range forecasting Seasonal demand Low demand Stable demand

Rationale Exponential smoothing will detect trends but will lag actual demand. It works well with stable items and for short-range forecasting. Stable demand

What are four viable mitigation options for a situation in which a failure becomes external? Answers Apologizing, refunding, reworking, providing compensation Refunding, reworking, replacing, canceling all business Refunding, replacing, reworking, threatening a lawsuit Replacing, reworking, refunding, having a dinner meeting with purchasing agent

Rationale Failure recovery strategies can involve a wide range of activities such as apologizing, refunding monies, reworking the product or service, or providing compensation. Apologizing, refunding, reworking, providing compensation

A company maintains a stable workforce and has varied production rates. Overhead is allocated based on direct labor. Which of the following is true if overhead is under-absorbed in month 2 as compared to being over-absorbed in month 1? Answers Product unit cost is less. Direct labor is more efficient. Production volume is less. Overhead is less.

Rationale Fewer direct hours due to lower production volume will cause overhead to be under-absorbed. Production volume is less.

Which of the following departments is likely least affected by frequently overloaded work centers that lead to unrealistic master schedules? Answers Production Purchasing Finance Sales

Rationale Finance is more concerned with mid- to long-term financial issues. Finance

In addition to a financial evaluation, assessment of capital investments should include taking which of the following actions? Answers Reviewing available technologies Analyzing customer needs Reviewing organizational capabilities All of the above

Rationale Financial planners need to review all of these when assessing capital investments to ensure that the assets needed by the organization are available. All of the above

In an emerging market for a new product, financially strong companies pose which of the following risks to initial frontrunners? Answers Acquiring operations of weaker competitors Increasing the velocity of distribution channels Increasing the complexity of products Reducing the barriers to entry

Rationale Financially strong organizations have the ability to reduce competition by buying weaker marketplace rivals. Acquiring operations of weaker competitors

A company produces a variety of items with short manufacturing lead times. Which of the following capacity planning techniques would be most useful for bottleneck work centers? Answers Finite capacity planning Detailed capacity planning Infinite capacity planning Bottleneck capacity planning

Rationale Finite capacity planning maximizes what can be produced. Finite capacity planning

A firm planned order is used to: Answers manage target inventory levels. allocate material prior to the release of a customer or shop order. schedule a purchase order contract with a supplier. override the standard planning parameters that have been defined.

Rationale Firming a planned order can be used to change a particular lot size or lead time that has been defined as a standard and to prevent material requirements planning from manipulating the order. override the standard planning parameters that have been defined.

Which of the following elements is used to reduce system nervousness? Answers Safety stock Economic order quantity Planned orders Firm planned orders

Rationale Firming planned orders allows the planner to make decisions on whether small changes are important enough to react to as well as locking in order quantities and dates for various reasons. Firm planned orders

Which if the following performance objectives refers to an operation's ability to offer different configurations of a product and react to requests for changes from a customer? Answers Speed Quality Cost Flexibility

Rationale Flexibility has two dimensions: volume/mix and agility. That is, an operation's ability to produce different types and/or varieties of products or services, and also how quickly the operation is able to respond to requested changes. Flexibility

A company's products compete in a market with highly variable demand. Management agrees that a good way to win sales for these products is to add capacity, even though it may be underutilized. What is most likely the primary order winner for this product? Answers Cost Quality Flexibility Customization

Rationale Flexibility is the ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes. Having excess capacity allows for changeover flexibility so that the organization can react to customer demand changes. Flexibility

What does mixed-flow scheduling mean? Answers Each stage may use either processor or material-dominated scheduling. The first stage is scheduled first when demand is low. The last stage is scheduled first when the first stage is constrained by material supply only. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage.

Rationale Flow scheduling is an intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage. Low demand does not require the first stage to be scheduled first, whereas constrained supply probably would. While it is true that each stage may use either processor or material-dominated scheduling, it is not directly related to mixed-flow scheduling. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage.

In discrete manufacturing, capacity requirements planning (CRP) receives which two of the following items from material requirements planning (MRP)? Answers Due dates and order quantities Due dates and standard hours Order quantities and low-level codes Standard hours and low-level codes

Rationale For CRP to function successfully, it must receive the due dates and order quantities from MRP. Due dates and order quantities

In a service environment with a sufficient labor force, what is often still a labor scheduling constraint when attempting to balance supply and demand in the short term? Answers Overscheduling Skilled labor pool shortage Equipment capacity Cross-training

Rationale For service industries, assigning labor schedules is the primary way that supply and demand are balanced in the short term. Equipment capacity can still play a role (e.g., too many cooks in the kitchen), however. Equipment capacity

A satisfactory quality average used during sampling inspection is called the: Answers first pass yield. first article inspection. acceptable quality level (AQL). perceived quality.

Rationale For the purposes of sampling inspection, an acceptable quality level is the limit of a satisfactory process average. acceptable quality level (AQL).

Which of the following is an element of demand management? Answers Setting overall supply levels RCCP Customer Relationship Management (CRM) Master scheduling

Rationale Forecasting, order management or servicing, and customer relationship management (CRM) are the three elements of demand management. Setting overall supply levels is incorrect, because it is conducted during S&OP, which takes place after demand management has provided input. RCCP is incorrect because it is a supply management element. Master scheduling is incorrect because it takes place after S&OP, which takes place after demand management has provided input. Customer Relationship Management (CRM)

The sales forecast is disaggregated into individual forecasts at the distribution center level. What may this result in? Answers Decreases in safety stock levels Increases in the planners' need for involvement Inconsistency between the total forecast and the distribution center forecasts Forecast errors at the detail level

Rationale Forecasts are more accurate at the aggregate level. It is necessary to break the aggregate forecast into individual forecasts at the distribution center level, but the detailed forecasts will be less accurate. Forecast errors at the detail level

Which of the following methods would be most appropriate to use for developing forecasts as input to the strategic planning process? Answers Economic growth models Historical analogy Moving average Exponential smoothing

Rationale Forecasts as an input to strategic plans are highly aggregated estimates of general business trends over the long term. Such trends include economic indicators, such as the gross national product, which are included in economic growth models. Economic growth models

Which of the following flows is most likely used in a flow environment that is supply-constrained by the availability of a seasonal vegetable? Answers Mixed Finite Forward Backward

Rationale Forward flow is used when there is a defined starting point or when work can only begin upon receipt of supply. Forward

Acquiring elements of the finished goods distribution channel is called: Answers forward integration. a partnership. backward integration. alliance development.

Rationale Forward integration is the process of buying or owning elements of the production cycle and the channel of distribution forward toward the final customer. forward integration.

Forward integration occurs when a company: Answers expands on its supply side. expands on its demand side. expands into overseas (foreign) markets. insources a previously outsourced operation.

Rationale Forward integration occurs when a company expands toward the end user or customer side. expands on its demand side.

Which of the following scheduling techniques is used in an assemble-to-order environment for customer order promising? Answers Rate-based Mixed-model Forward Backward

Rationale Forward scheduling enables current orders to be accounted for when determining a new order's ship date. Forward

What is a significant advantage of using forward scheduling in a make-to-order environment? Answers Forward scheduling ensures that operations aren't scheduled in the past. Forward scheduling reduces idle time in production. Forward scheduling determines when orders could be completed. Forward scheduling minimizes the overloading of work centers.

Rationale Forward scheduling is a technique in which material procurement and operations scheduling start when the order is received. Operations are scheduled forward from this date. This method is used to determine the earliest delivery date. Forward scheduling determines when orders could be completed.

A matrix chart has been developed to compare supplier pricing for a new part so standard cost can be established. Which of the following costs should be included? Answers Supplier audit costs Outgoing material handling Supplier markup Freight cost

Rationale Freight cost is a variable. Incoming material handling would be included but not the organization's outgoing material handling. Supplier markup may not be known and the total price is what is important. Freight cost

The distribution center servicing a corner store chain initiated isolating food groups by storage temperature. This action represents competing on: Answers products at lower costs. varying product volumes. product speed. superior-quality products.

Rationale From a competitive perspective, isolating food groups by storage temperature facilitates the company's ability to deliver quality products. superior-quality products.

Which of the following describes the environment that exists when international competition has become significant? Answers Even small advantages in product and service specifications can have a significant impact on competitiveness. Offshoring becomes a necessary alternative. Operations must continuously apply cost-saving measures to all existing products to help increase market share. Mass customization is frequently used as a product differentiator.

Rationale From a market perspective, international competition has become increasingly intense. Even small advantages in product and service specifications can have a significant impact on competitiveness. Even small advantages in product and service specifications can have a significant impact on competitiveness.

What is a key question to ask concerning an enterprise resources planning (ERP) implementation? Answers Can we afford the monthly fees that the consulting team will charge? In which programming language is the source code written? Should the system be cloud-based? What technical or human skills are required to implement the technology?

Rationale From a resource perspective, the technical or human skills required to implement the ERP system must be determined. What technical or human skills are required to implement the technology?

What is the purpose of a gate review meeting? Answers Perform periodic reconciliation of project scope, schedule, and budget To identify and respond to signs of scope creep Determine if the project should continue based on prospects of success Secure initial senior management support for project goals

Rationale Gate review meetings, also called go/no go decision points, are used in long or complex projects to review that the project can be successful and that the initial benefit and risk profiles are still accurate. The other choices are incorrect because management support must be in place before the project begins; periodic reconciliation of project scope and identifying and responding to signs of scope creep are performed by the project manager at regular intervals throughout the executing phase. Determine if the project should continue based on prospects of success

The most common sequence for processing products in a supply chain is: Answers retailer, supplier, manufacturer. supplier, manufacturer, customer. manufacturer, customer, supplier. distributor, retailer, supplier.

Rationale Goods in a supply chain originate with the supplier, who provides the raw materials and components to the manufacturer. In turn, the manufacturer produces the end product, which is then sold to the customer. supplier, manufacturer, customer.

Greens is a fictional high-end gourmet shop that stocks and prepares unique foods for sale. Their clientele are a specific group of people who like to eat well, cook gourmet meals, or entertain guests. Greens offers a wide selection of gourmet products and focuses on excellence in customer service. They learn their customers by name, deliver products to their homes or businesses, and notify them when their favorites are available. Because of their business strategy, they have gained a loyal following with high customer satisfaction. What competitive strategy is Greens implementing? Answers Focused low-cost Focused differentiation Low-cost provider Broad differentiation

Rationale Greens' strategy is not broad differentiation because it is focusing on a niche group within the grocery store market. Focused differentiation

An important criterion for measuring a group's process is that the measurements should: Answers be linked to bonus compensation. be consistent with company objectives. chart the individual progress of each team member. be based on standard operating procedures.

Rationale Group objectives should always be consistent with company objectives. CORRECT be consistent with company objectives.

Group technology may be used to identify the physical similarity of manufactured parts. A major benefit of this would be to facilitate: Answers modularity. formation of a dedicated manufacturing cell. identification of obsolete parts. design modifications.

Rationale Group technology identifies the physical similarity of parts and establishes their effective production. formation of a dedicated manufacturing cell.

Which of the following outcomes are benefits of implementing group technology? Answers Reduced need for employee training, and reduced manufacturing lead time. Increased product variety, and Lower work-in-process inventories. Lower work-in-process inventories, and reduced manufacturing lead time. Reduced need for employee training, increased product variety, lower work-in-process inventories, and reduced manufacturing lead time.

Rationale Group technology is an engineering and manufacturing philosophy that identifies the physical similarity of parts (common routing) and establishes their effective production. It provides for rapid retrieval of existing designs and facilitates a cellular layout. Grouping products by family or some other attribute will streamline production, thereby reducing work-in-process inventories and production lead times. Lower work-in-process inventories, and reduced manufacturing lead time.

Which design method identifies the physical similarity of parts and provides for rapid retrieval of existing designs? Answers Design for the environment Taguchi methodology Group technology Design of experiments

Rationale Group technology is an engineering and manufacturing philosophy that identifies the physical similarity of parts. It provides for rapid retrieval of existing designs and facilitates a cellular layout. Group technology

How does the failsafe concept relate to equipment? Answers Improper internal setup actions cannot be taken. Defective parts cannot be released to the next operation. An action that will produce defective parts is prevented. Equipment shuts down automatically if a defect is detected.

Rationale Hard stops are used to eliminate adjustments as part of internal setup. However, even failsafe methods cannot guarantee that there will be no defects. Improper internal setup actions cannot be taken.

Practices or guidelines that minimize the impact of an operation on the environment are part of a company's policy on: Answers the reverse supply chain. hazardous material (HAZMAT). strategic diversity. sustainability.

Rationale Having a sustainability policy means that an organization's activities and operations will not compromise the needs of future generations. sustainability

In a job shop environment, which situation is optimal from a capacity planning perspective? Answers The required production rate is less than or equal to the production line design rate. Key work center available hours are less than or equal to material plan standards hours. All work centers are fully loaded and no orders are overdue per the materials plan. Bottleneck work center hours are scheduled at less than or equal to full utilization.

Rationale Having all work centers loaded and no orders past due is the best possible scenario. All work centers are fully loaded and no orders are overdue per the materials plan.

Which of the following is of most value to the master scheduler in developing a valid master schedule because it could help with evaluating alternate scenarios? Answers Quantification of constraints Availability of decision support tools Incorporation of business rules Having real-time feedback

Rationale Having decision support capability enables alternate scenarios to be evaluated in order to develop and then maintain a valid master schedule. Availability of decision support tools

In master scheduling, hedging refers to a practice that Answers provides safety capacity to protect against work center overload only provides safety lead time, and provides safety capacity to protect against work center overload only provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only

Rationale Hedging is a quantity of stock to protect against uncertainty of demand; it has the dimensions of timing and amount. The hedge may be either a mix hedge or a volume hedge. The other answers are incorrect because hedging is not related to safety capacity; hedging does use safety lead times to protect against late deliveries but does not use safety capacity; and hedging does provide safety inventory in case volume or option mixes are greater than forecast, but it also provides safety lead times to protect against late deliveries. provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only

A repair center is implementing a process improvement change to a work cell. This change represents which of the following steps in the Deming circle? Answers Plan Check Do Action

Rationale In the action stage of the Deming circle, the results of process problem analysis and decision making are implemented. Action

Which of the following quantitative techniques responds most quickly to trends? Answers Moving average Seasonal index High-α-factor exponential smoothing Expert opinion

Rationale High-α-factor exponential smoothing reacts more quickly; a low α factor will react more slowly to a trend. Moving average is incorrect because it does not respond well to trends. Seasonal index is incorrect because it is not used for trend evaluation. Expert opinion is incorrect because it is a qualitative technique. High-α-factor exponential smoothing

What is the significance of a higher inventory turn rate for finished goods? Answers Smaller risk of obsolescence Lower customer service Lower cost of goods sold Higher warehouse cost

Rationale Higher warehouse costs is incorrect because higher turns means goods move quicker through the warehouse. Lower customer service is incorrect because the opposite is likely to occur. Lower cost of goods sold is also incorrect because for higher inventory turns you would expect a higher ratio of cost of goods sold to average inventory value. Smaller risk of obsolescence

The relationship for all components at the same level in the bill of material to be available at the same time is: Answers a horizontal dependency. a parent-child relationship. component availability. a vertical dependency.

Rationale Horizontal dependency is the relationship between components at the same level in the bill of material. a horizontal dependency.

Which of the following key resources is most likely to be used to validate the production plan in a high-volume company that produces a number of families of windows, including standard and custom sizes and unique designs? Answers Labor hours Plate glass Housing starts Production rate

Rationale Hours is the common denominator given the variety of product families. Labor hours

The time when resources are not producing product is known as: Answers wait time. slack time. idle time. queue time.

Rationale Idle time is the time when operators or resources are not producing product because of setup, maintenance, or lack of material, tooling, or scheduling. idle time.

A company produces some of its 20 top sellers every day. It has a customer service policy of 99.5%, with next-day air shipments for each order. What is the most likely reason for not carrying safety stock on its highest-volume products? Answers Stockout duration will be short and few orders will be affected. Not carrying safety stock improves inventory turns. Producing some of each item every day guarantees no stockouts. It is acceptable to have stockouts because the service level policy is not 100%.

Rationale If a stockout were to occur, the inventory would be replenished within 24 hours. Shipments can still occur by the next day due to the daily production of top sellers, so this will be a delay of only one additional day. The organization must be operating under the assumption that a one-day delay will still result in satisfied customers. Stockout duration will be short and few orders will be affected.

What is a primary element for consideration when selecting a new supplier? Answers Close proximity to the manufacturing facility Capability and reliability to make parts to specifications Lowest price for the goods to be purchased Ability to perform all communication electronically

Rationale If a supplier is not able to provide goods to the specifications, no other elements should even be considered. Capability and reliability to make parts to specifications

A highly engineered product was introduced a few years ago, with standards defined, bills of material and routings finalized, and work centers set up to minimize material handling. Major improvements in cycle time have been made. What information is most likely to need to be changed? Answers Routings and work center capacity Bills of material and routings Engineering standards and work center output Cycle time and bills of material

Rationale If cycle time has improved, lead times and output are most likely to have changed. Engineering standards and work center output

The actual queue time of a job at a work center is most impacted by the: Answers efficiency of the work center. utilization of the work center. priority of the job. lot size of the job.

Rationale If dispatching rules push a job to the end of the sequence, the queue time will possibly be longer than planned. The inverse is true if an order is moved up in the sequence. priority of the job.

A company's suppliers are set up with specific delivery windows of days, weeks, or months within which they must deliver parts. The most likely information the supplier needs for each release is the: Answers delivery timing. required date. required quantity. delivery window.

Rationale If the delivery window is set, the window, date, and timing are known. The quantity will likely have some variation window to window. required quantity.

What needs to be part of a new product introduction strategy when the product is a replacement for a product in decline? Answers The new product strategy needs to coordinate most closely with the material requirements planning process. Plans must find a way to sell both the old and new products for a period of time. The old product's production equipment needs to be moved out of the prime shop floor locations while keeping its capacity available. Capital equipment changes need to be planned and executed.

Rationale If the new product introduction is a replacement for a product in the decline phase, there needs to be a transition strategy that provides enough time to build or acquire the production capacity. While some organizations will sell the old and new units at the same time, other organizations will have a cutoff from one to the other to reduce market confusion. Capital equipment changes need to be planned and executed.

Using a planning horizon shorter than the longest cumulative lead time may result in: Answers replenishment orders released with short lead times. a decrease in inventory turns. a reduction of work in process. increased throughput.

Rationale If the planning horizon does not extend far enough out for items with long lead times, the planned order release will fall in the current period, with a message that the release is past due. replenishment orders released with short lead times.

What should the length of the master scheduling planning horizon be for a make-to-stock product? Answers At least as long as the manufacturing lead time Equal to the delivery lead time At least as long as the cumulative lead time Equal to the sales and operations planning horizon

Rationale If the planning horizon is shorter than the longest cumulative lead time, there will not be enough time to order components. At least as long as the cumulative lead time

In the case where a customer is located far from the supplier and shipping costs and the potential for damage are creating problems, a plan to co-locate a customer's operation within the supplier's facility will: Answers always lead to backward integration. likely become a source of employee dissatisfaction when cross-company salaries and benefits are discussed off-site. likely give the supplier a chance to raise prices significantly, since they know that they have all of the customer's business. likely improve multiple customer performance metrics.

Rationale Improved supply reliability could reduce customer inventories (safety stocks and quarantined for return), improve customer performance to schedule and on time delivery to customers, and reduce expediting and downstream costs. This could result in improvements in multiple performance metrics for the customer. likely improve multiple customer performance metrics.

Which is the most practical way to reduce the bullwhip effect? Answers Improve forecasting. Apply disintermediation. Use point-of-sale information. Use forward integration.

Rationale Improving the forecast is not as effective as having real-time information. Forward integration and disintermediation will provide better visibility to downstream demand but are not everyday solutions to the bullwhip effect. Use point-of-sale information.

Which of the following actions is the first step in the theory of constraints (TOC) improvement process? Answers Examine the entire system to identify what is limiting output. Reduce the level of variability in production volume. Develop a value stream map of the entire system. Create time buffers of inventory in front of critical work centers.

Rationale In TOC, the first step of the five-step process for performance improvement is to identify the constraint. Examine the entire system to identify what is limiting output.

In a continuous flow manufacturing environment, such as a grain milling operation, what inventory type is most likely to require safety stock? Answers Semifinished products Raw materials WIP Finished goods

Rationale In a continuous flow process, amounts of WIP, product in a semi-finished state, and finished goods are known and would not require safety stock. Raw materials, however, might be subject to interrupted supply, which would seriously affect production. Raw materials

Continuous improvement measures are typically more important than traditional accounting measures in which of the following environments? Answers Intermittent Batch Job shop Continuous flow

Rationale In a continuous flow, labor cost is typically lower, and accounting costs are not associated with particular orders. Continuous flow

Production has determined that a particular order will be late due to a purchased part being past due. Which of the following scenarios is most likely to occur in a job shop environment? Answers The order is cancelled and re-created when the purchased part arrives. Another order takes its place in the dispatch sequence. Material planning delays the order due date by one week. The order is completed up to the point where the part is needed.

Rationale In a job shop, multiple jobs pass through functional departments in lots, and each lot may have a different routing. Multiple jobs would be using the same machinery, so if one could not be produced, another job would move ahead of it in sequence. Another order takes its place in the dispatch sequence.

Which of the following production strategies should show the most consistently high capacity performance? Answers Level Optimized Chase Hybrid

Rationale In a level strategy, the company controls both the planned load and the available capacity. Level

Management agrees that a good way to win sales for the organization's standard product, which competes in a highly variable demand market, is to switch from make-to-order to make-to-stock. The primary order winner for this product is most likely: Answers delivery lead time. design flexibility. cost. product quality.

Rationale In a make-to-stock environment, the delivery lead time would be from the time the order is received to the time the product reaches the customer. No manufacturing or assembly would be required, as there would be with a make-to-stock product. delivery lead time.

In a typical manufacturing company, production costs are allocated directly to the job or product. How are the costs of engineering/maintenance departments allocated? Answers The costs are allocated among the appropriate production departments as part of factory overhead. The costs are not be allocated among the appropriate production departments as part of factory overhead. All job activity is tracked daily and costs are applied to those specific jobs. The costs are divided proportionately between all major product groups.

Rationale In a manufacturing company with production (assembly/machining) and indirect service (engineering/maintenance) departments, the costs of the service departments would normally be allocated among the appropriate production departments as part of factory overhead. The costs are allocated among the appropriate production departments as part of factory overhead.

Which of the following is typically an advantage of implementing a multidomestic/multicountry strategy rather than a global strategy? Answers Plants can be located where total costs are lowest. Brand recognition is increased. Marketing can be adapted to the local culture. Economies of scale are achieved.

Rationale In a multidomestic/multicountry strategy, a company varies its product offering and competitive approach from country to country to be responsive to differing markets. In a global strategy, product variations are minimized from country to country. Marketing can be adapted to the local culture.

Which of the following conditions is typically necessary for a successful pull production system implementation? Answers Variation in demand is low. Specialized machinery and skilled operators are used. There are only assembly operations. Products are made to inventory.

Rationale In a pull system, items are produced only as demanded for use or to replace those taken for use, so pull systems are reactive and do not "look ahead." Therefore, the pull system works best when products are stable and predictable. Variation in demand is low.

In a push environment, operators produce panels consisting of electrical components wired together. A supervisor is most likely to maintain a queue at the assembly work center to: Answers maintain a high efficiency level. keep personnel fully occupied. keep equipment productive. maintain an on-time schedule.

Rationale In a push system, keeping personnel fully occupied is of primary importance to supervisors. keep personnel fully occupied.

In a supply network, the company is in the center, and it is surrounded by: Answers competitors, suppliers, and perhaps several tiers of customers. suppliers and their suppliers but never competitors. suppliers and perhaps several tiers of customers but never competitors. third- and fourth-party providers.

Rationale In a supply network, the company is surrounded by competitors, suppliers (and perhaps their suppliers), and perhaps several tiers of customers (e.g., distributors/wholesalers, retailers, and end customers). competitors, suppliers, and perhaps several tiers of customers.

In a continuous improvement environment, employee non-production time is acceptable for which of the following reasons? Answers It allows employees to use flextime. It shows management's trust that employees will find something to do. It allows time for employees to work on improvements. It is not acceptable, as 100% utilization should be the goal.

Rationale In a true continuous improvement environment, employees need time to address problems, find solutions, and implement them. It allows time for employees to work on improvements.

What does the five forces model of competition suggest will happen to rivalry between competitors when high exit barriers exist, such as job protection agreements, or in industries in which assets cannot be easily sold? Answers It will increase. It often results in backward integration. It will invite even more competition. It will diminish.

Rationale In a vertical market with many competitors, rivalry increases. It will increase.

An organization uses absorption costing and assigns overhead to products based on their direct materials costs. In quarter 1, direct materials cost for one family of products was $2,000,000 in total and fixed costs were $400,000. In quarter 2, fixed costs for the family of products remained the same but the materials manager reduced direct materials cost by 20% without altering total unit production. In the first quarter, the total direct materials cost was $4,000,000 for the family of products. In the second quarter, it was $3,600,000. Unit sales in both quarters for the family of products was 10,000 units. Which of the following best summarizes the impact of reducing these materials costs? Answers The change increases the fixed overhead rate and the total unit cost. The change decreases the fixed overhead rate and the total unit cost. The change increases the fixed overhead rate, but the total unit cost is reduced. The change decreases the fixed overhead rate, but the total unit cost is increased.

Rationale In absorption costing, fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or materials costs. In this case, the organization uses direct materials costs. The calculations are as follows: The fixed overhead rate is calculated by dividing the fixed overhead by the direct materials costs. In quarter 1, this was $400,000/$2,000,000 = 0.20. Reducing the direct materials costs by 20% would be a reduction of $400,000, resulting in $1,600,000 in direct materials costs. The quarter 2 fixed overhead rate is $400,000/$1,600,000 = 0.25. In quarter 1: ($4,000,000 x 0.2)/10,000 units = $80 unit fixed overhead. Unit direct cost is $4,000,000/10,000 = $400. The quarter 1 total is $480 per unit. In quarter 2: ($3,600,000 x 0.25)/10,000 = $90 unit fixed overhead. Unit direct cost is $3,600,000/10,000 = $360 per unit. The quarter 2 total is $450 per unit. Therefore, while the material cost reduction increased the fixed overhead rate (and the unit fixed overhead amount), the total unit cost went down. The change increases the fixed overhead rate, but the total unit cost is reduced.

An MTS company would like to cut its physical inventory from four to two months. If annual demand is 360 units, the production plan for this year should be how many units? Answers 480 units 360 units 420 units 300 units

Rationale In an MTS environment, the objective to decrease finished goods inventory by two months requires producing two months' less inventory than annual demand requirements. There are currently 4 months of physical inventory in stock (120 units) the objective is to reduce to 2 months (60 units). To do this, they must sell off 60 current inventory units to reduce backlog. Next year they need to sell 360 units, so they only need to produce 300 units as 60 units are already in inventory. 300 units

In an assemble-to-order environment, how can the execution and control function help ensure a valid material plan? Answers By maintaining bottleneck flexibility through utilizations of at least 85% By providing accurate efficiency and utilization factors for work centers By achieving on-time start and completion dates for production orders By identifying alternate routings if the primary routing is unavailable

Rationale In any environment, achieving start and completion dates best supports the material plan. By achieving on-time start and completion dates for production orders

Which of the following data elements is required to backward schedule work orders for component parts in a push production environment? Answers Sequence of operations and work centers needed Efficiency for required work centers Importance of the order for sales Current backlog for required work centers

Rationale In backward scheduling, the schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation. Thus, the sequence of operations and work centers needed must be known. Sequence of operations and work centers needed

What is a characteristic of a centralized organizational structure? Answers Dominance of headquarters in decision making and planning Development of functional silos poor at collaboration Poorly defined reporting lines and decision-making authority Empowering of low-level employees to make decisions about their work

Rationale In centralized structures, decision making and planning occurs at the top. Employee empowerment and poorly defined reporting lines are more characteristic of decentralized structures. Functional structure is a type of organizational structure. Dominance of headquarters in decision making and planning

Which of the following generic performance objectives should be considered first when trying to identify what to measure? Answers Bottom-line financial measures such as net profit or earnings before interest and taxes (EBIT) Quality, speed, dependability, flexibility, cost Only the major milestones as displayed in a project PERT or Gantt chart Cost, quality, schedule

Rationale In deciding what to measure in an organization, quality, speed, dependability, flexibility, and cost should be considered first. Quality, speed, dependability, flexibility, cost

What is a strengths, weaknesses, opportunities, and threats (SWOT) analysis best used for? Answers Helping formulate and update the company's mission and vision statements Initiating discussions within the monthly sales and operations planning (S&OP) activity Identifying whether the company is in a position to pursue attractive market opportunities and defend against external threats Convincing venture capitalists to invest in a new business proposal

Rationale In evaluating a company's overall situation, a key question is whether the company is in a position to pursue attractive market opportunities and defend against external threats to its future well-being. Identifying whether the company is in a position to pursue attractive market opportunities and defend against external threats

What change has resulted from the acceptance of computer systems in delivering products and services? Answers Performance data is distributed to a much wider audience, not just to executives. Computer-generated kanban reports are used rather than kanban cards. Pull systems are used, rather than push systems, in every aspect of the operation, both internally and externally. Monolithic, one-size-fits-all enterprise resources planning (ERP) systems are used instead of multiple smaller ERP systems.

Rationale In his discussion of systems, Tom Kotter contrasts 20th-century organizational characteristics with 21st-century characteristics. He finds the following changes: Dependence on a few performance information systems has changed to dependence on multiple performance systems, especially those focused on customers. Performance data is not only distributed to executives; it is now distributed widely. Management training and support systems are offered to many people, not just to management. Performance data is distributed to a much wider audience, not just to executives.

Which of the following types of processes would be most appropriate to use in a production facility where the work centers are organized by the function they perform? Answers Fixed position Continuous Repetitive Intermittent

Rationale In intermittent manufacturing, products are made in batches using general-purpose work centers organized by function.` Intermittent

For some companies, value chain analysis has led to support processes such as design for sustainability, which is exemplified by: Answers working to eliminate toxic chemicals from the supply chain. ensuring that multiple suppliers are qualified for sourcing key components. annual monitoring of the supply chain to ensure viability of parts and raw materials supply. supplier rating systems where all key suppliers are graded using common scorecards.

Rationale In its design for sustainability activities, Nestle, for example, is working to eliminate toxic chemicals from its supply chain. Pepsi and Coca-Cola are working to improve water resources in developing countries. working to eliminate toxic chemicals from the supply chain.

What is the most likely reason for a lean manufacturing company to have only one supplier that uses kanban and returnable packaging designed for a specific part? Answers Schedule and delivery are overly complicated with multiple suppliers. It is unlikely that multiple suppliers can be found for the same part. Lean manufacturing companies have only one supplier for most parts. Containers are owned by suppliers and must be returned to them.

Rationale In lean manufacturing, simplicity requires that there be only one supplier for a specific part. The use of kanbans and returnable packaging is best managed with a single supplier. Schedule and delivery are overly complicated with multiple suppliers.

Which of the following is true of strategy development in most corporations? Answers The CEO is the primary strategy architect, with little influence from others. Other senior executives help fashion major elements of the strategy. The business strategy is formulated first by department heads and then fine-tuned by the CEO and staff. Much "borrowing" through competitive benchmarking occurs.

Rationale In most corporations, strategy is the product of more than just the CEO's handiwork. Typically, other senior executives—business unit heads, the CFO, and the vice presidents of production, marketing, HR, and other functional departments—have influential strategy-making roles and help fashion the chief strategy components. Other senior executives help fashion major elements of the strategy.

What is the best way to monitor a project's time and activities? Answers With an online system With a spreadsheet maintained by the project manager With enterprise resources planning With a method that is simple and easy for everyone to use

Rationale In order for everyone to easily report time and activities, the solution must be easy to use and accessible. With a method that is simple and easy for everyone to use

To "roll up" a forecast refers to the process of: Answers combining the master production schedule quantities to meet the forecast demand. combining salespersons' forecasts into a total forecast for an item. making sure that the resource plan validates the sales and operations plan. generating detailed forecasts that aggregate to the total forecast.

Rationale In pyramid forecasting, detailed forecasts are aggregated to higher levels until a total number is generated. generating detailed forecasts that aggregate to the total forecast.

Valid reasons to keep safety stock for end products include which of the following? Answers Customer demand is unpredictable. The product has low cost and demand. Customer demand is unpredictable, and the process has high yield variability. Customer demand is unpredictable, the product has low cost and demand, and the process has high yield variability.

Rationale In situations that involve demand unpredictability and process variability, safety stock is required to cover inventory from the possibility of stockout. Customer demand is unpredictable, and the process has high yield variability.

For a make-to-stock company, what strategy would be appropriate for growth in an existing market when the organization doesn't want to increase its aggregate inventory levels and its products are still in the growth phase? Answers Product development Market development Market penetration Diversification

Rationale In the Ansoff product-market growth matrix, four quadrants are formed using existing markets and new markets on one axis and existing products and new products on the other axis. The company wants to grow in existing markets, and this could involve either market penetration or product development. Product development would expand aggregate inventory if new product lines are added. Replacement products are also not needed due to the current products being in the growth phase. Therefore, market penetration is the growth strategy. Market penetration

What can happen when management fails to articulate a concise operational strategy that is aligned with overall corporate strategy? Answers Departmental "specialists" will tend to optimize their own areas of control without consideration for the rest of the organization. Enterprise resources planning (ERP) system accuracy will continue to be reliable because employee training is part of ERP system startup. Company-wide solutions will become a viable substitute for the weak operational strategy. IT security will likely fall victim to corporate espionage.

Rationale In the absence of a more explicit operations strategy, specialists in areas such as inventory control or process technology will tend to develop their own "systems" protecting their own organizational positions. Departmental "specialists" will tend to optimize their own areas of control without consideration for the rest of the organization.

In which of the following zones can changes be made with relative ease? Answers Liquid Danger Frozen Slushy

Rationale In the liquid zone, extensive changes can be made without causing much disruption to the MPS. The other answers are incorrect because there is no zone called the danger zone; the frozen zone should be the most protected in terms of the amount of change permitted; and changes in the slushy zone must be reviewed for potential impact on existing supply and demand situations. Liquid

What should be included in the pre-S&OP meeting? Answers Solution for imbalances of supply and demand Discussion of customer service improvement plans Definition of product families to be used for planning Determination of reasons for quality problems

Rationale In the pre-S&OP meeting, decisions on demand and supply balance are made, problems are resolved, issues are identified, and alternatives are developed. Findings are then sent to the executive S&OP group. Solution for imbalances of supply and demand

Which workplace layout would be best for an organization that has each worker use a sewing machine to make a complete item, such as a backpack, as quickly as possible? Answers Connected islands Islands Cells Connected islands with full work control

Rationale In this case, each worker with a sewing machine can be an island. Workers in each island produce at their own pace and usually as quickly as they can. Since the workers are not dependent on other islands, there is no need to add conveyors or use cells. Islands

A training program is developed to ensure that powder-coating professionals know how to select the right chemical pretreatment for the given substrate and how to set the right curing temperature and dwell time for parts based on their density. Experienced powder coaters provide their input to the course developer, who also relies on the results of a design of experiments. The materials get to the specifics, especially as they relate to actual errors in the past, and include some hands-on training. The course is taught to new employees on their first day of work just after the basic powder-coating process is covered in a different training course. If this is the only time this course is offered, why might this training program still fail? Answers Poor method Poor timeliness Poor level of detail Poor participation

Rationale In this case, the course is being offered too soon, just after the new employees have been taught the basic process. The training is not being provided when the actual knowledge or skill will be used. It would be better to offer the course after the new employees have had some time to learn the basic process and get some practice under supervision. Poor timeliness

Inventory in excess of consumption that has not been used for a defined period is identified as: Answers inactive. hedge. safety stock. surplus.

Rationale Inactive inventory is stock designated as being in excess of consumption within a defined period or stocks of items that have not been used for a defined period. inactive.

As an organization becomes more horizontal, which of the following will occur? Answers Decreasing exposure to integration and culture risk Neutral risk, because many suppliers provide the same components Increased exposure to supplier risk Need to expand the supplier base with redundant suppliers to reduce overall risks to supply chain performance

Rationale Increased reliance on suppliers in the supply chain increases exposure to supplier risk. Also, if the horizontal integration involves entering new global markets, this may increase risks related to cultural differences. If the horizontal integration requires new business partnerships, mergers, etc., this will increase integration risk. However, horizontal integration can increase diversification, which reduces overall business risk. Increased exposure to supplier risk

Increasing lead times in an effort to get more work done and meet the schedule will most likely result in: Answers decreased planned order releases. decreased production lead time. increased queue times. increased capacity.

Rationale Increasing lead time will cause increased work in process, which will increase queues. increased queue times.

Increasing planned lead times will result in which of the following outcomes? Answers Planned order release dates will be earlier. Actual lead times will decrease. Load will be decreased. Work center capacity will increase.

Rationale Increasing lead times will cause material requirements planning to call for the release of the order earlier. This in turn will increase the actual lead time as the order becomes work in process. Planned order release dates will be earlier.

Which of the following is a method for improving customer responsiveness in a distribution environment? Answers Implementing electronic data interchange (EDI) Hiring additional sales representatives Increasing safety stock Using cross-docking

Rationale Increasing safety stock means less chance of stockouts and the ability to react to demand changes. Increasing safety stock

Which of the following changes is most likely to directly impact the master schedule? Answers Shortening the demand time fence by one-half Reducing the lot size quantity by one-half Extending the planning time fence by four periods Increasing safety stock from demand for one period to demand for two periods

Rationale Increasing safety stock will have the effect of pulling orders forward in the schedule, which may result in overload conditions or material shortages. Increasing safety stock from demand for one period to demand for two periods

A company that makes products with multiple options is experiencing a temporary increase in sales. Which of the following inventories should be increased? Answers Raw materials Subassemblies Work in process Finished goods

Rationale Increasing the subassemblies will allow flexibility to cover demand for various options and maintain lead times. Subassemblies

What would be an effective response for an established player when a competitor attacks with a disruptive business model or a product with features that are simpler and more affordable? Answers Immediately start an aggressive plan to acquire the upstart. Introduce a better product, and cross-sell and up-sell existing products. Offer temporary discounts for existing products. Wait to see if the competitor is successful.

Rationale Incumbents often fail to counterattack a competitor's disruptive advances. For example, Craig's List offers free classifieds, and in all but one of the top 50 U.S. metropolitan markets for classified ads, it dominates. What was different about that one metropolitan area? That company responded quickly to the business model threat by launching its own free classifieds site along with other significant changes. Lessons learned? When faced with a disruptive competitor, consider quickly matching the disruptive business model. Introduce a better product, and cross-sell and up-sell existing products.

After moving a low-margin product line to an outside supplier, the manufacturing group wants to add production hours to the facility. They could possibly work with marketing to find new products to fill the production-hour gaps, but a more short-term solution would be to: Answers find currently outsourced high-margin items and insource them. purchase a competitor and manufacture its items. integrate backward. lay off workers by attrition.

Rationale Insourcing is a make-or-buy decision that uses internal resources to provide goods and services. find currently outsourced high-margin items and insource them.

Variations in product design, process requirements, or order quantities require which of the following manufacturing processes? Answers Project Flow Intermittent Level

Rationale Intermittent processes work for those products that have variation in design, quantities, requirements, etc. Intermittent

Demand for a part that is produced by another plant or division within the same organization is known as: Answers internal demand. interplant demand. distribution demand. coupled demand.

Rationale Interplant demand is one plant's need for a part or product that is produced by another plant or division within the same organization. interplant demand.

Intrinsic techniques would be most appropriate for forecasting: Answers gross domestic product for a country. market share for a firm. total industry sales for an item. demand for an end item.

Rationale Intrinsic forecasting techniques use item-level historical data to forecast future demand. demand for an end item.

In a process industry, which of the following elements decouples the scheduling of sequential stages? Answers Queues Ropes Kanbans Inventory

Rationale Inventories decouple the scheduling of sequential stages within a process industry. Inventory

If suppliers and customers seek to reduce inventories and retain service, they will likely find success with: Answers the use of open bid auctions. increased customer involvement in the supplier's day-to-day planning and control. statistically calculating product lead time. long-term purchase agreements.

Rationale Inventories may be reduced in a supplier/customer partnership by increased customer involvement in the supplier's day-to-day planning and control. increased customer involvement in the supplier's day-to-day planning and control.

Which could increase the opportunity cost of holding inventory that is available for sale? Answers Substituting lower-grade raw materials as inputs to products for sale Buying and selling more lots of inventory in the year Diverting some funds from sold goods into unrelated financial investments Increasing the duration of the sales cycle

Rationale Inventory costs include opportunity costs, which is the value that the money invested in inventory could have produced if it had been invested in other value-producing activities. Opportunity costs grow larger the longer it takes to turn over inventory (convert it back to cash). Increasing the duration of the sales cycle will reduce inventory turnover and increase opportunity cost. Increasing the duration of the sales cycle

What inventory data is used by MRP? Answers Scheduled receipts Gross requirements Net requirements Planned order releases

Rationale Inventory data used by MRP are scheduled receipts and on-hand amounts. The other answers are incorrect because gross requirements come from the master production schedule or are calculated by MRP from higher level requirements; and because MRP calculates both net requirements and planned order releases. Scheduled receipts

Which is a major input to MRP? Answers Planned order receipts Action messages Master production schedule Available-to-promise

Rationale Inventory data, MPS, and BOM all are inputs for MRP. Action messages and planned order receipts are incorrect because they are outputs of MRP. Available-to-promise is incorrect because it is an output of master scheduling. Master production schedule

Inventory is typically maintained in a distribution system to reduce the delivery time to the end customer and to: Answers compensate for uncertainty in supply and demand. reduce transportation and warehousing costs. reduce inventory at the point of manufacture. allow plants to operate at different costs.

Rationale Inventory exists to provide availability for customer orders and to compensate for uncertainties occurring in demand and supply. compensate for uncertainty in supply and demand.

Why does distribution requirements planning have characteristics of a push system? Answers Inventory transit systems push the material between docks. Distribution centers push demand to a master production schedule. Customer orders push demand to the distribution centers. Inventory is pushed to distribution centers from a central location.

Rationale Inventory is pushed to where it is needed from a central location. Inventory is pushed to distribution centers from a central location.

What inventory valuation method would be used to decrease taxes and increase cash flow during an inflationary period? Answers Last in, first out (LIFO) First in, first out (FIFO) Moving average cost Standard cost

Rationale Inventory that costs more is issued first, meaning that taxes are paid on inventory with less cost and cash flow is increased. Rationale Inventory that costs more is issued first, meaning that taxes are paid on inventory with less cost and cash flow is increased.

A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy? Answers Capacity of current distribution centers Geographic location of new stores Existing store growth rate Finished goods inventory turns

Rationale Inventory turns affect finances, distribution center capacity, and operations. Finished goods inventory turns

A preventive maintenance program is being initiated at a company. The program should first be implemented for: Answers a work enter that has only one machine. the most expensive equipment. equipment that has the longest setup time. equipment that gates work center capacity.

Rationale It is critical that the gating work center capacity be available to feed downstream operations. equipment that gates work center capacity.

Which inventory transaction type is most likely found in an environment that produces to a forecast as opposed to an environment that produces to a customer order? Answers Raw materials Finished goods Service parts Work in process

Rationale Make-to-stock environments must receive, issue, and adjust finished goods inventory that has been produced mainly to a forecast. Finished goods

What is the most important reason for knowing and reporting throughput? Answers Throughput measures capability in addition to reporting production status. Throughput per hour can be used to monitor continuous improvement at a work center. Throughput can vary due to the time period being reported when capacity is underutilized. Throughput is a good measure for reporting to external stakeholders.

Rationale It is important not only to know throughput for current orders; it is useful for planning, scheduling, and continuous improvement prioritization. Throughput measures capability in addition to reporting production status.

What is an appropriate objective for a buyer in paying a visit to a potential supplier? Answers To verify the production and quality capabilities of the supplier To assess the compatibility of the supplier's enterprise resources planning system To determine the supplier's capability for vendor-managed inventory To obtain information about the supplier's financial stability

Rationale It is important to ensure that the supplier is capable of producing to the required specifications. An on-site visit to ensure that the capability exists and see the quality measures in place is often the last step in the supplier selection process. To verify the production and quality capabilities of the supplier

Which of the following approaches can streamline the sales and operations planning review process? Answers Delegate the reviews among the demand team. Generate reports that show full detail and associated aggregations. Add additional months to the rolling plan only when necessary. Report only out-of-tolerance conditions, with further detail available.

Rationale It is most important to identify and assess out-of-tolerance conditions. Report only out-of-tolerance conditions, with further detail available.

The input/output report for a work center in the current period is showing an input queue at the work center. What is the most appropriate action? Answers Decrease the work center input. Increase the work center output. Check the cumulative input/output report. Re-run capacity requirements planning.

Rationale It is necessary to check the cumulative report to determine if this is a one-period scenario or a trend occurring at the work center. Check the cumulative input/output report.

A fairly new organization has no subsidiaries. It is considering creating two product lines, one that is the cheapest option on the market and another that is a premium line with high cost but innovative differentiating features. What is an issue with this strategy? Answers The organization will need to develop a "dual operating system" for its functional areas to function effectively. The manufacturing functional area will need to generate synergy from the twin focus on cost control and quality. Both employees and customers will be confused by the conflicting brand identities. The organization will need to become a best-cost provider.

Rationale It is very challenging for one business unit to implement multiple strategies simultaneously. The brand identity will be difficult to overcome. Multiple marketing messages will confuse customers; different production and marketing goals will confuse employees. Both employees and customers will be confused by the conflicting brand identities.

The automaker Toyota turned societal concerns for fuel efficiency and automobile emissions into an industry-leading hybrid car strategy that enabled them to gain early market leadership. How does this strategy measure up against the Triple Bottom Line? Answers It sacrifices economic gain for social and environmental good. It demonstrates the tension that is created between the desire to deliver social and economic good. It delivers benefits in all three areas of the TBL. It focuses primarily on environmental and economic areas.

Rationale It produces benefits for people (interests in doing good for the environment), planet (lowered use of carbon-based fuels and emissions), and profit (increased company competitive advantage). It delivers benefits in all three areas of the TBL.

Purchasing several items together in order to lower ordering costs is known as: Answers economic order quantity. periodic ordering. concurrent replenishment. joint replenishment.

Rationale Joint replenishment is coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs. joint replenishment.

How is in-transit time accounted for in distribution requirements planning (DRP)? Answers Offset in gross requirements As safety capacity As safety stock Built into delivery time

Rationale Just as material requirements planning offsets the lead time from the planned order release by the lead time, DRP offsets the in-transit time. The planned shipment to the receiving warehouse is the gross requirement for the supply warehouse. Offset in gross requirements

Most organizations build a scorecard using key performance indicators (KPIs) to track and share information on transportation performance. What are some of these KPIs? Answers On-time delivery, delivery consistency, cost of service Delivery consistency, cost of service, units per transaction On-time delivery, delivery consistency, backorder rate Inventory turnover, delivery consistency, backorder rate

Rationale KPIs that are often used to measure transportation performance include on-time delivery, quality of service, cost of service, on-time loading, delivery consistency, claims for loss and damage, and freight bill accuracy. The backorder rate, units per transaction, and inventory turnover are not transportation metrics. On-time delivery, delivery consistency, cost of service

Which of the following is synonymous with kaizen? Answers Continuous improvement Waste Just in time Jidoka

Rationale Kaizen is the Japanese term for improvement. Continuous improvement

Introducing incremental improvements to an existing system is known as: Answers andon. heijunka. hoshin. kaizen.

Rationale Kaizen is the Japanese term for improvement—continuing improvement involving everyone. kaizen

Introducing incremental improvements to an existing system is known as: Answers andon. hoshin. heijunka. kaizen.

Rationale Kaizen is the Japanese term for improvement—continuing improvement involving everyone. kaizen

Which of the following techniques encourages suppliers to adopt lean principles? Answers Point-of-use Kanban Dedicated storage Random storage

Rationale Kanban is the only response that would impact suppliers; the others would be in-house.

A company purchases a high-volume commodity part from three suppliers. Which performance measure is most likely compared by the supplier rating system? Answers Incoming quality Price to cost ratio Quoted lead time On-time delivery

Rationale On-time delivery is probably the only variable. On-time delivery

At a minimum, a company's key success factors should include which of the following? Answers Generous portions of narrative from the company's mission and vision statements Company's targeted year-end stock price Internal rate of return stated as a percent of earnings Those attributes or strengths with the greatest impact on future success in the marketplace

Rationale Key success factors are the product attributes, organizational strengths, and accomplishments that have the greatest impact on future success in the marketplace. Those attributes or strengths with the greatest impact on future success in the marketplace

Which of the following techniques is used in a push system but not in a pull system to ensure that inventory is available for an order prior to release to a work center? Answers Kitting Point-of-use staging Point-of-fit staging Safety stock

Rationale Kitting is the process of constructing and staging kits to verify that parts are available. This would not be necessary in a pull environment, as parts would be pulled. Kitting

In developing sales forecasts for a new product, which of the following types of information about similar products would be most useful? Answers Seasonality patterns Cost of promotions Maturity stage sales trends Field service statistics

Rationale Knowing seasonality patterns would be beneficial in setting the new forecast; the other responses would be helpful later in the new product's life cycle but not at the onset. Seasonality patterns

A company monitors production by knowing what is in process and what the queue time is. Average run time is one hour, and queue times are kept fairly uniform by the planning and scheduling process. Jobs are produced in first in, first out sequence. Which of the following information is easiest for monitoring purposes in this scenario? Answers Sequence of jobs based on input/output control Number of jobs in queue, running and waiting Priority of jobs based on required date Number of days a job is in queue

Rationale Knowing the number of days a job is in queue is essentially the monitoring required by the company. Number of days a job is in queue

An action message indicates that a part needs to be de-expedited by one week, but the buyer opts to not notify the supplier. The supplier shipped to meet the original request date, and the part has a receipt tolerance of required date minus two days and plus zero days. When the supplier's performance is evaluated, the shipment will show as: Answers on time. two days too early. five days too early. This is irrelevant, as only quantity tolerances are rated.

Rationale Lack of notification to the supplier of the need for a delay means that the original required date is compared to the actual receipt date. on time.

What cost includes the product cost plus the costs of logistics such as warehousing, transportation, and handling fees? Answers Landed cost Activity-based cost Procurement cost Total line-haul cost

Rationale Landed cost includes the product cost plus the costs of logistics such as warehousing, transportation, and handling fees. Landed cost

The total cost tradeoff for distribution transportation costs compares the cost of transportation with the cost of Answers loading and unloading. carrying in-transit inventory. regulatory compliance for each type of transportation. dealing with multiple transportation nodes.

Rationale Larger shipments cause larger carrying costs but fewer transportation costs and vice versa. The tradeoff between these two elements must be considered. carrying in-transit inventory.

To demonstrate support for a quality improvement process, management should provide: Answers discipline. financial backing. consultants. leadership.

Rationale Leadership, encouragement, and recognition are included in the role of management. leadership

Which of the following statements about lean and material requirements planning (MRP) systems is true? Answers Lean is destined to replace MRP. Lean should be used for flow shop environments, and MRP should be used for job shop environments. Lean is a good substitute for MRP in an assemble-to-order environment. Lean and MRP are complementary.

Rationale Lean and MRP each provide separate but linked functions. The key role of MRP is to plan inventory requirements out into the future. The role of lean is to execute the demand-pull guiding the actual generation of purchase and manufacturing orders. Lean and MRP are complementary.

Initiating lean principles in distribution would include: Answers lot sizes that eliminate less-than-truckload shipments. moving obsolete inventory to a reserved area to clean up the area. reduction of waste in material-handling activities. overflow storage close to the shipping area.

Rationale Lean principles include eliminating waste. reduction of waste in material-handling activities.

Which quantitative forecasting technique applies past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family? Answers Concurrent forecasting Seasonality Life cycle analysis Trend

Rationale Life cycle analysis is a quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family. Life cycle analysis

Understanding the human and environmental aspects and impacts during the life of a product, process, or service is called: Answers life cycle appraisal. life cycle assessment. life cycle analogy. life cycle analysis.

Rationale Life cycle assessment (LCA) is defined by the APICS Dictionary as follows: "Understanding the human and environmental impacts during the life of a product, process, or service, including energy, material, and environmental inputs and outputs. Sometimes called cradle-to-grave analysis, LCA includes raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling." life cycle assessment.

What is a key purpose of life cycle costing? Answers To identify exactly where a product lies in contrast to its product launch To identify the point at which a sustained decline in demand develops To identify the total form, fit, and function over the entire history of the product To identify all environmental and social impacts generated from the production of a particular item

Rationale Life cycle costing attempts in part to identify all environmental and social impacts generated from the production of a particular item. To identify all environmental and social impacts generated from the production of a particular item

Which of the following types of manufacturing processes would most likely be characterized by a narrow range of standard products, low direct labor costs, and a high level of technical support for manufacturing? Answers Project Batch Line Jobbing

Rationale Line is a type of manufacturing process used to produce a narrow range of standard items with identical or highly similar designs. Production volumes are high, production and material-handling equipment is specialized, and all products typically pass through the same sequence of operations. Line

Companies that produce a narrow range of high-volume products will most likely choose which of the following types of processes? Answers Project Jobbing Batch Line

Rationale Line manufacturing is defined as repetitive manufacturing performed by specialized equipment in a fixed sequence. It is suited to situations that involve a narrow range of high-volume products. Line

Which of the following process choices is likely to simplify the sales and operations planning process? Answers Line Batch Lot-for-lot Functional

Rationale Lines produce at a rate that can be converted into a monthly supply quantity. The other responses may all have significant planning variation by month. Line

Loads in capacity requirements planning in a well-run company are fairly balanced in the short-term but are dropping off later in the planning horizon. What is the most likely reason for this? Answers Past-due orders are filling up the short-term capacity. Product demand needing the work center is dropping off. The master production schedule excludes forecasts. The capacity requirements planning horizon is too short.

Rationale Load dropping off is an indication that planned work is dropping off, product is being phased out, etc. The other responses infer that the company is not using the tools correctly, but the question states that the company is well run. Product demand needing the work center is dropping off.

What is the term for the amount of scheduled work ahead for a manufacturing facility expressed in terms of hours of work or units of production? Answers Load Load profile Open orders Released orders

Rationale Load is the amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time. Load

Load leveling has which of the following benefits for scheduling? Answers Workforce deployment and machine use are stabilized. Inventory levels are minimized due to schedule stability and reliability. Queue and move times, along with the number of setups, are minimized. Personnel requirements vary based on scheduled customer demand.

Rationale Load leveling creates a tradeoff between more stable workforce deployment and machine use while varying inventory levels to meet demand. Workforce deployment and machine use are stabilized.

Load smoothing at the production planning level to resolve an overload condition identified by resource planning is an example of: Answers a level production strategy. demand planning. supply planning. a chase production strategy.

Rationale Load leveling is an attempt to balance demand from period to period within supply constraints. a level production strategy.

"Getting the right goods or services to the right place at the right time and in the desired condition" best defines: Answers procurement. supply chain management. logistics. operations management.

Rationale Logistics is the process of obtaining, producing, and distributing material and product in the proper place and the proper quantities. logistics

Which is the best example of how a change to longer production runs with fewer changeovers at a make-to-order organization could result in a tradeoff with customer service objectives? Answers The quality of the product will likely be lower due to tool and die wear. The price to the customer may no longer be acceptable after the change. Fulfilling a customer's mix of goods for an order will require a longer lead time. Some ability to customize goods will be lost due to standardized runs.

Rationale Longer production runs with fewer changeovers will reduce production costs. If a customer order requires a mix of goods in an order, the various runs needed for the order will each need to be completed. Since each run is longer, the total lead time for the order will be longer in this method. Fulfilling a customer's mix of goods for an order will require a longer lead time.

A work order for an operation is divided into two lots and runs concurrently on two machines. Which of the following techniques is being used? Answers Lot sizing Lot sequencing Lot splitting Lot overlapping

Rationale Lot splitting divides a work order into two lots and runs it concurrently on two machines, which reduces manufacturing lead time. Lot splitting

Which of the following statements applies to the lot-for-lot batch sizing rule? Answers It generates orders equal to the net requirements for a given number of periods. It generates orders equal to the net requirements in each period. It may be used only with independent demand. It is used for serialized inventory to ensure traceability.

Rationale Lot-for-lot is a lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period. It generates orders equal to the net requirements in each period.

Which of the following order quantity techniques tends to most closely couple the master production schedule and purchasing performance? Answers Period Fixed Economic order quantity Lot-for-lot

Rationale Lot-for-lot is a one-to-one relationship. The other choices group requirements and may not be in the master scheduling period quantities. Lot-for-lot

A make-to-order company has typically employed the fixed-order-quantity approach for its commonly used components. This has resulted in excess inventory over time due to customer changes and new product configurations. The planner should consider which lot-sizing technique to get the problem under control? Answers Lot-for-lot Economic order quantity Fixed period Minimum

Rationale Lot-for-lot will minimize or eliminate any residual inventory. Lot-for-lot

Which of the following lean manufacturing environments is most likely to have the smallest number of subassemblies or semi-finished goods in stock to support ongoing operations and customer service levels? Answers Assemble-to-order Engineer-to-order Mass customization Make-to-stock

Rationale Make-to-stock goods should flow from raw materials to finished goods directly within a lean manufacturing environment. Make-to-stock

What happens when the planning horizon is shorter than an item's cumulative lead time? Answers Customer service improves. Higher level items cannot be planned. Lower level items cannot be planned. Item cumulative lead time shortens.

Rationale Lower level items cannot be planned because the sequence of lead-time offsetting adds up to a longer period than the planning horizon. Therefore, the low-level items, requiring the longest lead time into the future, are not planned. Because of lack of planning and the subsequent need for expediting, the customer service level will eventually worsen, not improve. Item cumulative lead time will not shorten automatically. Because MRP planning follows the BOM, higher level items, which are planned first, will receive timely attention. Lower level items cannot be planned.

A company packages product in units of 100 per carton. Production yield averages 99%. What is the order quantity transmitted from master production scheduling (MPS) to material requirements planning (MRP) for a period order quantity of 1,000 units? Answers 1,000 1,005 1,010 1,011

Rationale MPS will transmit the required quantity to MRP. MRP would then apply the yield to the order based on existing inventory or safety stock for release to production. 1,000

What should a planner use to override the material requirements planning (MRP) logic for the quantity or date of a planned order? Answers Scheduled receipts Firm planned orders Demand time fences Planned order releases

Rationale MRP automatically recalculates planned orders as requirements change. A firm planned order allows the planner to maintain a certain quantity and date to prevent MRP from recalculating. Firm planned orders

What is the most likely reason for schedules determined in material requirements planning (MRP) to be changed in production? Answers Schedules are based on often incorrect forecasts. Lead times are based on standards and not actuals. Work center capacity has changed since planning began. Infinite loading does not account for sequencing.

Rationale MRP does not account for sequencing at a work center but goes by due dates only. Infinite loading does not account for sequencing.

How does MRP handle safety stock? Answers Ignores safety stock in its calculations Provides safety stock for all items at all levels Generates planned order to maintain safety stock levels Uses safety stock to cover requirements when necessary

Rationale MRP generates planned orders to maintain safety stock levels. The other answers are incorrect because MRP creates planned orders to maintain safety stock levels; the net requirement calculation includes safety stock, MRP does not ignore it; and safety stock is normally maintained only for items with independent demand, not every item. Generates planned order to maintain safety stock levels

Which of the following is the best use of a material requirements planning (MRP) simulation capability? Answers Determining the effect of the master production schedule on a bottleneck Rescheduling orders to resolve a key work center overload problem Evaluating the number of standard deviations to protect via safety stock Determining the optimal order quantity required to maximize inventory turns

Rationale MRP modeling is for the purpose of establishing the best schedule possible within the given constraints of demand and supply. Rescheduling orders to resolve a key work center overload problem

Which of the following capacity planning (load) report characteristics can be attributed to material requirements planning (MRP)? Answers Load is based on both planned and open orders, and load reflects valid order priorities. Load is based on both planned and open orders, and load distribution is based on actual lead times. Load reflects valid order priorities, and load distribution is based on actual lead times. Load is based on both planned and open orders, load reflects valid order priorities, and load distribution is based on actual lead times.

Rationale MRP provides the capacity planning system with load based on released and planned orders. The start and due dates on the orders reflect the valid order priorities. Load is based on both planned and open orders, and load reflects valid order priorities.

What is the primary purpose of the bill of material in material requirements planning (MRP)? Answers To outline the production process in detail To generate a where-used list for all components To provide a structure for the explosion process To provide costing information

Rationale MRP uses the bill of material to multiply the requirements by the usage requirements throughout the product structure. To provide a structure for the explosion process

Which of the following types of orders remain unchanged during a material requirements planning (MRP) run? Answers Planned and firm Released and firm Released and planned None; all orders are changed to reflect a balance of supply and demand.

Rationale MRP will not automatically change released or firm orders but will still provide action messages if demand and supply are out of balance. Released and firm

Which of the following may cause errors in a sales forecast based solely on shipment history? Answers Machine downtime Changes in the demand time fence Changes in customer demand Exponential smoothing

Rationale Machine downtime may cause shipments to be missed even though they were part of customer demand. Machine downtime

which of the following actions to improve the validity of the master schedule is most under the master scheduler's control? Answers Aggregating capacity by flattening bills of material Identifying sources of demand problems Reducing sources of supply problems Improving the accuracy of the resource bills of material

Rationale Maintaining the resource bills of material to reflect current conditions has an ongoing impact on the validity of the master schedule. Improving the accuracy of the resource bills of material

What is the most accurate description of the make-or-buy decision? Answers Short-term needs should be the primary consideration. This type of decision should be revisited often. Current capacity should be excluded from the analysis. The decision should not consider workforce stability.

Rationale Make-or-buy decisions need to be re-evaluated as conditions that led to a particular decision change. Long-term costs, workforce stability, and capacity are all considerations, but not the primary. Short-term needs should be the primary consideration.

When product life cycle is a consideration, the production environment likely to have the most supplier partnerships is: Answers assemble-to-order. engineer-to-order. make-to-order. make-to-stock.

Rationale Make-to-stock environments have high volumes and the greatest need for single sources and strong relationships that focus on product life cycle improvements. make-to-stock.

Strategic continuous improvement activities facilitated by management include: Answers finding opportunities, acquiring capabilities, and delivering product. affinity groups in which a variety of products are assessed. pure market research. setting direction, developing resources, and deploying resources.

Rationale Management leadership provides a unity of purpose while also establishing the direction of the organization. As such, the responsibility of leadership consists of creating and maintaining the internal environment, including developing and deploying resources. setting direction, developing resources, and deploying resources.

Which of the following criteria would be essential for the use of rough-cut capacity planning in an engineer-to-order company? Answers Successful implementation of a material requirements planning (MRP) system Education of customers on capacity management concepts Accurate work-in-process inventory and finished goods Method of associating planned production with the amount of capacity required

Rationale Managers and planners (not customers) have to be knowledgeable about capacity management and the use of computerized systems to link planned production and capacity availability. An MRP system is not required to perform this level of capacity management. In an engineer-to-order company, production is usually for unique, one-of-a kind products. This means that work-in-process inventories will be small. Method of associating planned production with the amount of capacity required

While assessing market opportunities, successful companies: Answers view every industry opportunity as a possible industry disruptor, and they devote resources to investigate them. view every industry opportunity as tempting, but they will be constrained by their resources and capabilities. view every industry opportunity as a potential game changer, and they will be prepared to thoroughly pursue them. view every industry opportunity as an emerging market channel, and they prepare accordingly

Rationale Managers must guard against viewing every industry opportunity as a company opportunity. Rarely does a company have the resources to pursue all available opportunities. view every industry opportunity as tempting, but they will be constrained by their resources and capabilities.

A critical role that a shop floor supervisor can play in health, safety, and environment (HSE) compliance is ensuring ease of access to Answers safety data sheets. senior management for complaints. GRI sustainability reports. regulatory requirements.

Rationale Managing safe working conditions and practices is a primary HSE concern, and one of the most important responsibilities is to ensure ease of access to safety data sheets (SDS). safety data sheets.

Which of the following engineering groups is most involved with a process design quality initiative? Answers Quality Design Manufacturing Industrial

Rationale Manufacturing engineers can apply the proper lean principles, quality systems, and use of technology for the process. Manufacturing

Manufacturing is responsible for executing which of the plans that come from the sales and operations planning meeting? Answers Capacity Production Sales Backlog

Rationale Manufacturing is responsible for the production plan. Production

Which of the following tools would be most appropriate to use in the measure phase of the six sigma improvement methodology? Answers Process map Cost of poor quality analysis Implementation plan Regression and correlation

Rationale Mapping the process is used in the measure phase of the six sigma methodology for improving process effectiveness. Process map

When aligning capabilities with needs, the response could be extremely focused with little excess capacity or flexibility or be designed with excess capacity and more flexibility. What would be the more desirable strategy? Answers Aligning more tightly and continuously assessing and adjusting Aligning tightly initially and then expanding in a stepwise fashion Aligning with little excess capacity to better contain overhead costs Aligning or responding with excess capacity

Rationale Markets and operational capabilities must be aligned. The superior strategy here is to align more loosely (with excess capacity) rather than more tightly (with just the right level of capacity). Aligning or responding with excess capacity

Mass customization is the ability to produce: Answers products with multiple features. a large variety of individual products at a low cost. generic products that the customer can use in multiple ways. large quantities of customer-configured products.

Rationale Mass customization is the creation of a high-volume product with large variety so that a customer may specify an exact model out of a large volume of possible end items.

The role of master scheduling is to create a statement of planned output from production and to: Answers drive the distribution planning process. synchronize the plans with trading partners. determine the feasibility of the operations plans. provide information for coordinating production and sales.

Rationale Master scheduling provides information on when products will be available in the future, enabling sales to promise delivery to customers.` provide information for coordinating production and sales.

Based on the theory of constraints, the capacity of a work center can be managed most effectively by: Answers increasing utilization of bottlenecks. increasing utilization of non-bottlenecks. decreasing utilization of bottlenecks. decreasing utilization of non-bottlenecks.

Rationale Maximizing the utilization of constraints is the primary method of ensuring that the maximum capacity can be realized. increasing utilization of bottlenecks.

What is a key rule for operations performance measures? Answers They must align with the company's overall goals. They must be consistent year after year. They must focus on a department's positive performance. They must be easily viewed on charts.

Rationale Measurements must align with the company's goals; they must change as the needs of the organization change. They must align with the company's overall goals.

Which of the following tasks is the responsibility of purchasing? Answers Measuring supplier performance Determining order quantities to achieve price breaks Firming planned orders based on supplier shutdown times Designating due dates for blanket order releases

Rationale Measuring supplier performance is the responsibility of the purchasing department. Measuring supplier performance

Which of the following describes a workforce whose members are cross-trained and who can be assigned to different tasks? Answers Floating Allocated Flexible Modular

Rationale Members of a flexible workforce are cross-trained, and work rules permit assignment of individual workers to different tasks. Flexible

Which of the following statements about finite capacity loading is true? Answers It requires recalculating load when the schedule is missed. It does not require knowing the capacity available in each time period. It is a simpler process than infinite capacity loading. It does not require the ability to determine priorities when loading jobs.

Rationale Missed schedules result in load that must be accounted for when determining available capacity. It requires recalculating load when the schedule is missed.

An organization's goal is to reduce the workforce and invest heavily in cross-training the remaining employees. What process technology requirement would be the most valuable for this organization? Answers Equipment with significant mistake-proofing and visual signals Equipment with high throughput rates Equipment with flexibility to produce many different products Equipment with very little need for regular maintenance

Rationale Mistake-proofing and visual signals are examples of process technology features that would reduce the amount of time needed for cross-training because the equipment is intuitive. Equipment with significant mistake-proofing and visual signals

Which scheduling technique is effective for situations in which several bottleneck stages may exist? Answers Material-dominated scheduling Forward-flow scheduling Mixed-flow scheduling Mixed-model scheduling

Rationale Mixed-flow scheduling is a procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. Mixed-flow scheduling

A company produces lawn mowers that have many options to choose: three horsepower choices, three cut widths, manual versus self-propelled options, and four color choices. Product is produced in lot quantities for retail sales and assembled-to-order for direct sales. Which of the following types of bills of material is most likely used for the two-level master scheduling? Answers Multilevel Modular Single-level Common parts

Rationale Modular bills (also called planning bills) would allow a percentage to be applied to each of the various options. Modular

A company produces a line of handheld drills, various types of drill bits hardened to different levels, and a new fixture for different drills. These products are sold to customers through retail stores. Given the common use among these products, what is the best approach for the master scheduler to take for planning production? Answers Establish modular bills of material for the drills, the drill bits, and the fixture. Enter orders for the new fixture to material requirements planning until historical demand is available for forecasting. Plan and maintain separate bills of material for the drills, the drill bits, and the fixture. Add the fixture to the drill family group and plan using sales and operations planning.

Rationale Modular bills allow for similar products and percentages for options, which would work for each type of product. Establish modular bills of material for the drills, the drill bits, and the fixture.

Producing a consistently high-quality product requires which of the following actions? Answers Using automated inspection equipment Focusing on an error-free process Increasing the amount of sampling Implementing preventive maintenance

Rationale Monitoring and controlling the process prevents the production of defects by tracking assignable causes of variation and watching for trends toward out-of-control processes. Focusing on an error-free process

If an annual contract is in place, the supplier is notified of the delivery amount required by means of: Answers an advance shipment notification. a purchase order. a release. a blanket order.

Rationale Monthly, weekly, or daily quantities needed are communicated via releases, which may be in the form of a kanban. a release.

Which of the following is an advantage of multiple sourcing? Answers Upward pressure on price if there are few other buyers Less vulnerability to supply disruptions Greater economies of scale More cooperation of new product development

Rationale More suppliers means less vulnerability. Single sourcing is more likely to produce more cooperation because it is likely to be a reason for entering into a single source relationship. Greater economies of scale or leverage are likely to occur if purchasing is concentrated in a single supplier. If there were few buyers and multiple suppliers, the price pressure would be downward. Less vulnerability to supply disruptions

Adding warehouses to the distribution network typically results in which of the following cost changes? Answers Transportation costs stay the same. Costs of shipments to customers increase. Total transportation costs increase. Costs of shipments to the warehouses increase.

Rationale More warehouses means additional transportation costs to fulfill additional warehouse inventory. Costs of shipments to the warehouses increase.

Increasing the number of distribution centers usually results in a reduction in which of the following? Answers Cumulative lead time Shipping times to the customer Transportation costs Safety stock

Rationale More warehouses typically means less time, and therefore less cost, for shipping to the customer. Shipping times to the customer

Which scheduling technique assumes that there will always be sufficient capacity and computes the schedule starting with the due date for the order? Answers Infinite backward scheduling Infinite forward scheduling Finite backward scheduling Finite forward scheduling

Rationale Most systems attempt to backward schedule first, using infinite planning. Infinite backward scheduling

In order to inspire and motivate people, successful leaders will: Answers have charisma that naturally inspires people to follow. have their biography written. create the conditions that make goals achievable. use their political connections to further their goals.

Rationale Motivation is one thing, but competent strategic leadership is the necessary foundation for success. The job of the leader—the strategist—is to also create the conditions that will make the push possible, to ensure that the team has the resources they need. create the conditions that make goals achievable.

Which of the following generally applies to only a limited number of parts when determining the number of kanban containers and their quantities? Answers The number of production kanbans is reduced through continuous improvement efforts. The number of kanbans is a function of the work-in-process target. The quantity per kanban should ensure that move frequency remains constant. The quantity per kanban may be a range between a one-hour supply and a 20-day supply.

Rationale Move frequency is an issue only with long-distance moves where multiple parts are picked up and moved per a schedule and does not apply to kanbans in general. The quantity per kanban should ensure that move frequency remains constant.

Which of the following is not an advantage of multifunctional design teams? Answers Rapid problem solving Structured communication Improved manufacturability Iterative process of product improvement

Rationale Multifunctional design teams are an approach of concurrent engineering. They require much discussion and input as decisions on product design and rollout are made. However, the result should be a product that is easier to manufacture. Rapid problem solving

Adding a distributor as a channel between manufacturers and retailers will result in all of the following except Answers an increase in the number of transactions for manufacturers. a reduction in number of shipments from manufacturers. a decrease in the number of transactions for retailers. a decrease in transportation costs.

Rationale Natural results of reducing the complexity of transactions between manufacturers and customers include a decrease in the number of transactions for retailers, a decrease in transportation costs, and a reduction in number of shipments from manufacturers. Transportation costs will also decrease as manufacturers ship to fewer customers (the distributor) and retailers buy from fewer suppliers. an increase in the number of transactions for manufacturers.

Whether a company's internal weaknesses make it competitively vulnerable depends upon: Answers the importance of the liability and if it is negated by a strength. the competitor's strength in this area. customer perceptions. product, price, promotion, and place.

Rationale Nearly all companies have competitive liabilities. Whether a company's internal weaknesses make it competitively vulnerable depends upon how much they matter in the marketplace and whether they are offset by the company's strengths. the importance of the liability and if it is negated by a strength.

Negotiating purchase order prices is resulting in the delay of procured materials. What should the buyer do to minimize this problem? Answers Put together long-term contracts and purchase agreements with key suppliers. Increase order quantities so fewer orders are required. Increase purchasing lead times for future orders. Include negotiating capabilities as part of supplier performance measurements.

Rationale Negotiating purchase order pricing can be eliminated with purchase agreements and long-term contracts with suppliers Put together long-term contracts and purchase agreements with key suppliers.

Which of the following is a tool for reducing material requirements planning (MRP) system nervousness? Answers Pull signals Scheduled downtime Time fences Dynamic lot sizing

Rationale Nervousness in this context refers to instability when changes in higher-level records cause significant changes in lower-level schedules or orders. Devices such as time fences, which restrict changes, introduce stability into the master schedule. Time fences

Which is an example of design for sustainability? Answers Working with supply chain members to ensure that agricultural practices eliminate toxic chemicals Developing a subcomponent that can be attached using the same standard nuts and bolts used in the rest of the product Developing the next new solar panel so it can be released as the current model is starting to slow in sales. Deconstructing a competitor's new LED lighting fixture to determine how to build one just like it as a "me too" product

Rationale Nike is working to eliminate toxic chemicals from its supply chain, and this is an example of design for sustainability. While the other answers may have something to do with sustainability, designing for standard nuts and bolts would be better described as design for manufacturability. Deconstructing an LED lighting fixture is an example of reverse engineering. Developing a follow-on product for a product that is in decline is an example of product life cycle planning. Working with supply chain members to ensure that agricultural practices eliminate toxic chemicals

Which information could be evaluated prior to the end of the month in order to streamline the sales and operations planning process? Answers New product review Forecast accuracy Finished goods levels On-time performance

Rationale No history exists for new products, so the information can be reviewed any time. The other information is all dependent on end-of-period figures. New product review

By approving projects that improve performance with its order qualifiers, a company is: Answers spending its money wisely. likely using the 80-20 rule for project prioritization. likely selecting improvement projects based on the theory of constraints. not going to achieve high levels of competitive benefits.

Rationale No matter how well the company performs at its qualifiers, it is not going to achieve high levels of competitive benefits. not going to achieve high levels of competitive benefits.

A company uses a moving average to forecast on a monthly basis, and it has many customers with varied demand. Which of the following is the best example of a root cause of an outlier in the forecast? Answers Actual demand for a period that causes the next period's forecast to exceed the median Actual demand for a period that is three standard deviations greater than the forecast One customer order within a period that is 10 times larger than any other order Shutdown of the company for a month with no customer orders accepted

Rationale Not accepting orders for a period will artificially drive the forecast down for the following periods. Orders will always vary in size. Shutdown of the company for a month with no customer orders accepted

Inventory that has been superseded by a new model and will never be used or sold at full value is defined as: Answers surplus. obsolete. distressed. inactive.

Rationale Obsolete inventory includes items that have met the obsolescence criteria established by the organization. obsolete.

Which investment analysis tool accounts for the time value of money? Answers Residual income Return on investment Payback period Net present value

Rationale Of the choices, only net present value uses the discounted rate of the original investment. Return on investment does not reflect the time value of money. Payback period shows how long it will take for the initial investment to be recouped. Residual income uses a minimum required rate of return in its analysis of gain from capital investment. Net present value

Which of the following is the best performance measurement to use to obtain higher profitability? Answers On-time completion to schedule Volume production Utilization Productivity

Rationale On-time completion to schedule means that what is scheduled is available when it is required, at a quality acceptable to the customer. On-time completion to schedule

In the theory of constraints, which of the following actions best reduces work-in-process (WIP) inventory on the shop floor? Answers Elevating the constraint to the system Identifying the constraint to the system Deciding how to exploit the constraint Subordinating all else to the constraint to the system

Rationale Once a process constraint has been identified, WIP is reduced by reducing all load to be equal to the allowable capacity found at the constrained process. Any load released to the manufacturing floor that is greater than the constrained process capacity will simply end up as excess load. Identifying process constraints is the first step in WIP reduction. Maximizing the constraint means that planners will search for alternative methods for working around the constraint so that productivity can actually be increased. Subordinating all else to the constraint to the system

A product has moved from regular production to spare parts supply. Which of the following factors is likely to become least important? Answers Quality Price Customer service Delivery reliability

Rationale Once a product has moved from regular production to intermittent spare parts supply, customer service, delivery reliability, and quality must remain high. Service parts are usually critical to the customer and must be available at all times with perfect quality. Since the product is no longer considered "product," its price can become elastic and based on what the market will bear. Price, therefore, declines as an important factor, as customers will pay a premium when equipment goes down. Price

Which of the following steps completes the purchasing cycle? Answers Approving a supplier's invoice for payment Issuing a purchase order Requesting quotations Selecting suppliers

Rationale Once a purchase order has been received, quality is inspected, and the order marked as completely received, it is ready for accounts payable to pay the invoice. Approving a supplier's invoice for payment

At what point during the order cycle is inventory considered to become in-transit inventory? Answers After the carrier schedules a window for delivery After the driver signs the bill of lading After the items have been allocated to the order and the vehicle is loaded After order picking and packing are completed

Rationale Once the carrier vehicle is loaded, the driver signs the bill of lading that documents exactly what goods are being transported. At that point, the driver can start delivery to the desired location(s). What the carrier is now transporting is called in-transit inventory. After the driver signs the bill of lading

Which of the following is critical information that is required during the operations strategic planning process? Answers Overall objectives of the organization Human resources plan for future hiring Supply chain design Prior year's net income statement

Rationale One area's strategic plan must be aligned with the strategic plan of the overall company. Overall objectives of the organization

The most desirable initial attribute in suppliers for companies that adopt lean manufacturing is: Answers competitive pricing. kanban quantity. consistent quality. adequate capacity.

Rationale One of the central pillars of lean is the pursuit of superlative quality. consistent quality.

What is a primary shortcoming of using the simple payback period method to justify capital budgeting expenditures? Answers It is too simple to compute and therefore is subject to adulteration. It does recognize the time value of money and is therefore more exact and realistic than using the accounting rate of return (ARR). It does not recognize the time value of money. It will likely not remain stable over the time period used.

Rationale One of the primary shortcomings of using the payback period to justify capital budgeting expenditures is that it does not recognize the time value of money. The discounted payback period method does not have this disadvantage It does not recognize the time value of money.

Which statement about information and process technology is true? Answers The learning curve should not affect investment decisions. Technology should be selected on the basis of the competitive advantage it conveys. Information infrastructure requirements in push and pull systems are the same. ERP systems are more important to pull systems than push systems.

Rationale One of the selection criteria for technology should be whether it conveys an advantage that is significant and hard to copy. An ERP provides organizational benefit by providing access to accurate and current data. The learning curve should be a consideration since it will affect the payback analysis. Push and pull systems do require different types of technology. Technology should be selected on the basis of the competitive advantage it conveys.

During a discussion centered on lead and lag, a CEO approves a capital equipment expansion. This is an example of the CEO implementing the firm's: Answers capacity strategy. business acumen. approved budget. continuous improvement strategy.

Rationale One of the strategic choices that a firm must make as part of its manufacturing strategy is the capacity strategy, such as lead, lag, and tracking. capacity strategy.

An important component of analyzing the driving forces of an industry is to determine whether the forces will lead to an increase or decrease in which of the following? Answers Industry costs Technology change Competitive intensity Internal strengths

Rationale One step in analyzing an industry's driving forces is to determine whether the prevailing forces are acting to make the industry environment more or less attractive, including whether they are making competition more or less intense. Competitive intensity

Which two of the following are principal sources of load on work centers in a job shop? Answers Open orders and master production schedule Open orders and planned orders Master production schedule and shop load schedule Planned orders and shop load schedule

Rationale Open orders and planned orders are the principal sources of load on work centers in a job shop. Open orders and planned orders

Overlapping is used to compress lead time by: Answers starting the second operation before the first has completed the full quantity. grouping operations to run concurrently. consolidating setups. choosing alternate routings so that orders can run concurrently.

Rationale Operation overlapping may be used to reduce manufacturing lead time by moving pieces to the second work center before the first operation has completed the entire quantity on the order. starting the second operation before the first has completed the full quantity.

A company should implement which of the following in order to focus on customer needs? Answers Six sigma Lean manufacturing Concurrent engineering House of quality

Rationale The voice of the customer is documented and followed through the use of the house of quality tool. House of quality

Which of the following is likely true of a new product development strategy? Answers It will take a back seat to product volumes if operations are highly efficient. It will be more robust and aggressive if accompanied by heightened confidence that operations is capable of delivering a quality product. It will be downsized if operations continuously beats standard times. It will be used to augment manufacturing if there is significant uncertainty in operational delivery.

Rationale Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality). It will be more robust and aggressive if accompanied by heightened confidence that operations is capable of delivering a quality product.

The strategic management of any operation: Answers cannot be separated from how well operational resources are managed at the detail level. should not be constrained by past operational efficiencies or quality performance. is the key driver of operations, regardless of the operation's past performance. will be determined by the ability of the facility to react to short-term changes in schedule or product mix.

Rationale Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality). cannot be separated from how well operational resources are managed at the detail level.

Which is a decision at the operations strategy level related to planning and controlling the delivery of products and services? Answers Should the operation develop its products or services in house or outsource the design? What should be the size of the workforce and how much subcontracting should be used? How should operations adjust its activity levels in response to demand fluctuations? What aggregate levels of inventory should be maintained?

Rationale Operational strategies address detailed day-to-day planning. The adjustment of activity levels is one example of an operational decision related to planning and controlling the delivery of products and services. The other answer choices either relate to other areas of the operational plan or are tactical (more long-term) decisions. How should operations adjust its activity levels in response to demand fluctuations?

In a job shop environment, the technique that results in a short-term, planned set of projected completion times for operations and simulated queue levels is: Answers operations sequencing. Iinfinite loading. constraint-based scheduling. capacity requirements planning.

Rationale Operations sequencing is a technique for short-term planning of actual jobs to be run in each work center based upon capacity and priorities. The result is a set of projected completion times for the operations and simulated queue levels for facilities. operations sequencing.

A company's electromechanical products are used heavily in sometimes unanticipated ways, thus leading to emergency service outages. The on-site repair team suggests that the products be made to automatically assess, diagnose, and report status. The cross-functional product review team sees this as an opportunity to increase overall product value. What would likely be the most impactful outcome of implementing this strategy? Answers Providing data for continuous improvement Becoming a potential union problem if machine diagnostics replaces something a person could do Increasing the product's order-winning features Facilitating upstream integration

Rationale Order winners are competitive characteristics that cause customers to choose a firm's goods and services over those of its competitors. They are a competitive advantage for the firm. In this case, product design would be the order winner, ideally eliminating the expensive emergency service outages. Increasing the product's order-winning features

Which of the following actions would most likely be considered to address a missing part problem in a push environment but not in a pull environment? Answers Using an alternate part Partially completing an order Working overtime Using an alternate routing

Rationale Orders can be completed to the point of the missing part and then put aside until the part is available. Partially completing an order

Although a company has the capability to produce a strategically important item, a question has arisen about the wisdom of outsourcing the item. In most cases, the decision to outsource, when compared with the item's strategic importance, is: Answers inversely related. directly proportionally related. just a minor consideration in the overall make-or-buy decision. best left to marketing management.

Rationale Outsourcing and the strategic importance of the process, service, or product are inversely related: The outsourcing incentive is low when the strategic importance is high. inversely related.

An executive discussion centers on offshoring and outsourcing. Which of the following should participate in the outsourcing discussion? Answers Director of logistics Director of warehousing and transportation Director of strategic sourcing Director of facility development

Rationale Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. It involves substitution—the replacement of internal capacity and production by that of the supplier. Director of strategic sourcing

During a core competency analysis, it is discovered that the company has best-in-class capabilities in designing integrated circuits for their top-end products. A few multinational integrated circuit manufacturers have the potential to lower costs significantly. What should the outsourcing decision be? Answers To outsource to the chip manufacturer that comes closest to sharing the company's vision of the future To keep this technology in-house To weight the highest-quality outside supplier most heavily To outsource to the chip manufacturer whose technical design group is geographically closest to the company

Rationale Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. It involves substitution—the replacement of internal capacity and production by that of the supplier. To keep this technology in-house

Material requirements planning has overloaded a work center in a make-to-order company. What is the most easily adjusted factor? Answers Scheduled date/part Overtime hours/part Standard hours/person Setup hours/order

Rationale Overtime is the easiest to adjust and has the least impact on other orders. Overtime hours/part

Long-term agreements with suppliers may include which of the following? Answers Tactical buying Required cost of goods sold Supplier-held inventory that the buyer owns Ownership exchange points

Rationale Ownership exchange points may be specified in long-term agreements with suppliers. Suppliers may be required to hold inventory but the supplier would own that inventory until it is needed. A supplier's prices might be specified but not their costs. Tactical buying is for commodities and is the opposite of a long-term relationship. Ownership exchange points

Which would be a logical inventory policy for "C" items according to ABC classification? Answers Order in bulk as infrequently as possible. Order lot-for-lot from supplier. Phase out this inventory whenever possible. Avoid counting at all during periodic inventories.

Rationale Part of the APICS Dictionary, 16th edition, definition of ABC classification is as follows: "The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than to the high-dollar-volume class items." Since the cost of carrying this inventory is very low, ordering very infrequently will minimize ordering cost. Also, since there are fewer ordering points per year, there is a risk of stockout only at those few times. (A stockout of a low-cost component could be very expensive if it prevents completing an order.) Order in bulk as infrequently as possible.

Which of the following actions should a design engineering staff take to improve product performance and quality for a company adding new options for a product line? Answers Standardize major component parts for the new options. Purchase the new options as complete modules. Move the product to a transfer line. Implement leading-edge manufacturing process technology.

Rationale Part standardization assists in cutting costs and removing unnecessary complexity. Standardize major component parts for the new options.

Which of the following factors is most important when partnering with a supplier? Answers Geographic proximity Available capacity Cultural diversity Mutual trust

Rationale Partnering implies a long-term commitment between buyer and seller to achieve specific goals. The relationship should be one of mutual trust and cooperation. Mutual trust

Which of the following tools enables a planner to perform bottom-up replanning? Answers Pegging Backorder report Firm planned orders Demand time fence

Rationale Pegging allows the buyer to determine what the source of the demand is and what the impact would be if a change is made. Pegging

Pegging shows sources of which of the following? Answers Component lists Gross requirements Firm planned orders Scheduled receipts

Rationale Pegging is the capability to identify, for a given item, the sources of its gross requirements. Gross requirements

If a customer or service provider is given less leeway to customize a service, what is one tradeoff? Answers The perceived value of the service must be higher. The degree of contact between the customer and the service provider must be higher. Production efficiency is lower. The sales opportunity is lower.

Rationale Per the service design matrix, reducing opportunities for customization will reduce the likelihood of making a sale. However, production efficiency will be higher. The sales opportunity is lower.

When a service element is perceived as poor but also unimportant by customers, what is the most that should be done? Answers Whatever is required for the service element to be considered value-added Nothing Whatever is required to raise the service element to the level of a "slight irritation" Changes that are inexpensive to make

Rationale Per the service gap analysis matrix, a service that is perceived as low quality but is also relatively unimportant to customers falls into the "slight irritations" category. Slight irritations could be addressed, but only if the response is inexpensive to implement. Changes that are inexpensive to make

Perfect order fulfillment is used to measure which of the following categories? Answers Cost Reliability Responsiveness Flexibility

Rationale Perfect order fulfillment is the metric used to measure the reliability, or dependability and quality, category. Cost is incorrect because it is measured by total supply chain management cost. Responsiveness is incorrect because it is measured by order fulfillment cycle time. Flexibility is incorrect because it is measured by upside supply chain flexibility. Reliability

What is the best time to measure master scheduling performance? Answers Between the current period and the demand time fence to encompass released and firm planned orders Between the current period and the planning time fence to encompass the cumulative lead time Last period where actual production can be compared to company-planned targets Over the entire planning horizon to provide forward planning visibility to the organization

Rationale Performance can be measured only after production has occurred; the other responses do not have performance measures. Last period where actual production can be compared to company-planned targets

Which of the following guidelines should be used when selecting activities for performance measurement? Answers The activity has a significant effect on the performance of the overall system, and the activity is measurable (objective and quantifiable). The activity has a significant effect on the performance of the overall system, the activity has a high potential for improvement, and the activity is measurable (objective and quantifiable). The activity has a high potential for improvement, the activity falls within the responsibility of the organization, and the activity is measurable (objective and quantifiable). The activity has a significant effect on the performance of the overall system, the activity has a high potential for improvement, the activity falls within the responsibility of the organization, and the activity is measurable (objective and quantifiable).

Rationale Performance measurement should focus on important activities, and only measurable activities can be measured. The activity has a significant effect on the performance of the overall system, and the activity is measurable (objective and quantifiable).

What is needed to determine the gap between customer expectations and customer perceptions of a product-service package the organization sells? Answers Market research Market penetration Marketing Market development

Rationale Performed properly, market research provides background information on the gap between customer expectations and customer perceptions of a product or service. Market research

Which of the following is most directly affected by forecast inaccuracy? Answers Safety stock levels of dependent demand items included in the forecast Establishment of the firm planning time fence in the master schedule Leading indicators included in the extrinsic factors to determine the forecast Planned finished goods inventory level in an MTS environment

Rationale Planned finished goods inventory level in an MTS environment will cause levels to fluctuate based on degree and direction of inaccuracy. The other answers are incorrect for the following reasons: Establishing a firm planning time fence in the master schedule is incorrect, because this is not a criterion used to set time fences. S afety stock is not customarily set for dependent demand items. I nternal processes like forecast accuracy don't affect leading indicators. Planned finished goods inventory level in an MTS environment

Which of the following types of orders will production have the most of for planning and scheduling in an assemble-to-order environment? Answers Released orders Planned orders Work-in-process orders Customer orders

Rationale Planned orders extend through the planning horizon. Planned orders

What is the best reason for using planning bills of material in master scheduling? Answers Planning bills do not require actual engineering or manufacturing bills of material. Material procurement or production occurs prior to knowing actual end items. The company is make-to-stock, and planning bills match planned production levels. A single bill can be used no matter how many products are in a product family.

Rationale Planning bills are used to get necessary components on order prior to knowing the actual configuration. In other words, planning bills enable flexibility in what will be produced. Material procurement or production occurs prior to knowing actual end items.

A bottleneck workstation is loaded to 90% of available capacity, but one of the two machines is down for a two-week repair. Which of the following results is expected to occur at operations downstream from the bottleneck? Answers Plant capacity will be underutilized. Plant-wide queues will increase. Production will be in synchronous operation. No production orders will be overdue.

Rationale Plant capacity is sized for two bottleneck machines but only one is operational, meaning that half of the plant capacity will be underutilized. Plant capacity will be underutilized.

Failsafe work methods include which of the following activities? Answers Training workers to improve the work Installing poka-yoke Training workers to improve the work and designing products for greater simplicity Designing products for greater simplicity and installing poka-yoke

Rationale Poka-yoke is defined as the use of mistake-proofing techniques, such as manufacturing or setup activity, designed in a way to prevent an error from resulting in a product defect Installing poka-yoke

Which of the following is an example of using the poka-yoke technique in process design? Answers A rack system is designed to go in only one direction. Setup time is reduced by standardizing tooling. The number of types of fasteners is reduced from 20 to 5. A coupling is designed to eliminate incorrect insertion.

Rationale Poka-yoke tries to eliminate the occurrence of errors in a process by making the steps as foolproof as possible. A coupling is designed to eliminate incorrect insertion.

Which of the following is the least important objective of preventive and predictive maintenance? Answers On-time delivery Clean workplace Quality Preventing conflict with production for access to tools and equipment

Rationale Preventive and predictive maintenance will create some contention for access to tools and equipment. Quality, on-time delivery, and a clean workplace are important benefits of preventive and predictive maintenance. Preventing conflict with production for access to tools and equipment

Which is the best way listed for an organization to encourage suppliers to avoid use of hazardous materials when feasible? Answers Education Pricing incentives Supplier co-location Zero tolerance policy

Rationale Pricing incentives help promote voluntary compliance. Education would also be helpful but may not be as effective without the pricing incentives. A zero tolerance policy may result in losing suppliers who are valuable in many other ways. Working with the supplier in a more flexible way could lead to buy-in and eventual compliance. Pricing incentives

When assessing potential points of failure prior to an acquisition, it is critical to analyze manufacturing activities as well as: Answers the electronic data interchange capabilities of all suppliers. shop floor work instructions. operational strategies. the degree of manufacturing automation.

Rationale Prior to Daimler's acquisition of Chrysler, Chrysler had applied lean principles to its operations and modularized its designs within its operational strategy. They had trimmed new product development time from five years to two. When Daimler folded Chrysler's operations into theirs, Chrysler's rapid development process and lean profit formula were lost. operational strategies.

Which scheduling technique considers slack time to increase or decrease the calculated lead time of an order? Answers Probable scheduling Mixed-flow scheduling Forward-flow scheduling Constraint-based scheduling

Rationale Probable scheduling considers slack time to increase or decrease the calculated lead time of an order. Probable scheduling

Which of the following is not a step in establishing specifications for product quality? Answers Define numerical requirements. Define the supplier quality system. Determine appropriate contracting approach. Perform process capability analysis.

Rationale Process capability analysis is more relevant to qualifying the manufacturing process during supply chain planning. The other three options are key steps in establishing specifications for product quality. Perform process capability analysis.

Which of the following cost systems relies on costs for a period for determining product cost? Answers Process costing Job costing Product costing Standard costing

Rationale Process costing is a cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period. Process costing

Process costing is best applied to organizations that: Answers manufacture a variety of dissimilar products. are characterized by low volume and high variety. outsource the manufacturing of all products. continuously mass-produce similar units.

Rationale Process costing is most appropriate for companies that continuously mass-produce similar units. continuously mass-produce similar units.

A make-to-stock organization sells premium clothing that comes in a wide variety of sizes. What sort of inventory policy would be best for this organization? Answers Risk pooling Placement closest to point of customer demand Ordering far in advance Postponement

Rationale Products that have many different SKUs, such as sizes of shirts, will generate large inventories unless inventory is centralized. Risk pooling describes a method of centralizing inventory. Risk pooling

What factors are considered in determining industry attractiveness? Answers Supplier collaboration and cumulative competitive pressure Supplier collaboration and relative strength of seller versus rivals Profitability and supplier collaboration Profitability and cumulative competitive pressure

Rationale Profitability and cumulative competitive pressure are factors considered when determining an industry's attractiveness. Profitability and cumulative competitive pressure

What should cross-functional project teams receive training in? Answers Project management Group dynamics Dealing with difficult people Microsoft Project

Rationale Project teams are working together toward a goal and need to understand how teams work together successfully. Group dynamics

What is a benefit of using public warehouses rather than private warehouses for distribution centers? Answers Less inventory Better tax breaks More qualified personnel Lower capital investment

Rationale Public warehouses require less investment up front. Lower capital investment

Which of the following statements is a reason to simplify documentation in a pull system? Answers Detailed routing information is not necessary. Material and tooling availability are not visible. Production information is maintained at an inaccessible location. The system automatically reacts to mix considerations.

Rationale Pull systems simplify order release and documentation because, among other reasons, detailed routing information is not necessary. None of the other answers is a reason to simplify documentation in a pull system. Detailed routing information is not necessary.

Production orders are riskiest to dispatch without knowing: Answers purchased part availability. equipment availability. operator availability. information availability.

Rationale Purchased parts are from an outside source and are hardest to control. purchased part availability.

What is the most likely consequence of an overloaded master schedule with two weeks of past-due orders? Answers Utilization of the bottleneck resource is reduced. Available hours are reduced by a decrease in efficiency. Sales and operations planning needs to reduce demand. Purchased parts are received earlier than needed.

Rationale Purchased parts will be received on the required date, which is now two weeks early. Purchased parts are received earlier than needed.

What technique involves aggregating and disaggregating forecast demand? Answers Focus forecasting Trend forecasting Pyramid forecasting Demand forecasting

Rationale Pyramid forecasting enables management to review and adjust forecasts made at an aggregate level and keep lower-level forecasts in balance. Pyramid forecasting

In which of the following processes are qualitative techniques appropriately used? Answers Pyramid forecasting Determination of a seasonal index Extrapolation of essentially level data Detection of a demand increase or decrease

Rationale Pyramid forecasting is correct because, at the conclusion of the roll-up process, a qualitative decision can be made before forcing the result down. The other answers are incorrect because seasonal indexing is a quantitative technique; demand increases and decreases are detected mathematically, so this would be a quantitative technique; and going forward with essentially level data would be a quantitative process. Pyramid forecasting

Which design methodology most relies on the voice of the customer as well as cross-functional input from the organization? Answers Total quality management (TQM) Design for production Quality function deployment (QFD) Quality design

Rationale QFD ensures that all major customer requirements are identified and subsequently met or exceeded through the product design process and the design and operation of the supporting production management system. Quality function deployment (QFD)

Ensuring that all customer needs are identified in an effort to solidify the product design is an example of the: Answers quality function deployment (QFD) process. process flow analysis methodology. Delphi method. qualitative forecast technique.

Rationale QFD is a methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the product design process. quality function deployment (QFD) process.

Which of the following are goals of quality function deployment (QFD)? Answers Achieving statistical process control, and understanding customer needs and wants. Achieving statistical process control, and optimizing product and process designs. Understanding customer needs and wants, and optimizing product and process designs. Achieving statistical process control, understanding customer needs and wants, and optimizing product and process designs.

Rationale QFD is a methodology to ensure that all major customer requirements are identified and subsequently met or exceeded through the product design process and the design and operation of the supporting production management system. QFD can be viewed as a set of communication and translation tools. It tries to eliminate the gap between what the customer wants in a new product and what the product is capable of delivering. QFD often leads to a clear identification of the major requirements of the customers. These expectations are referred to as the voice of the customer (VOC). With these objectives in mind, QFD seeks to respond to customer needs and wants while optimizing product design. Understanding customer needs and wants, and optimizing product and process designs.

Which of the following tools is used to translate customer needs into product features? Answers Pareto chart Critical-to-quality characteristics (CTQs) Quality function deployment (QFD) Process map

Rationale QFD is a methodology to identify major customer requirements so that customer needs can be met by product features. Quality function deployment (QFD)

The main purpose of QFD is to Answers define the best way to gather market research. define statistical controls for product design. analyze competitors. carry the voice of the customer throughout product design and development.

Rationale QFD is a structured process to translate customer needs into product design. The other answers are incorrect because QFD does not define how to gather market research or set statistical controls, nor analyze competitors. carry the voice of the customer throughout product design and development.

Which of the following actions by purchasing would reduce a manufactured product's environmental impact? Answers Requiring suppliers to sign a statement that they do not use child labor Encouraging customers to reduce their carbon footprint Reengineering the purchasing processes to reduce time and costs Working with key suppliers to reduce product packaging

Rationale Reducing a product's packaging would reduce the environmental impact of the product by reducing packaging production and disposal. Working with key suppliers to reduce product packaging

Reducing lead time has which of the following results? Answers Increased fixed manufacturing costs Decreased fixed manufacturing costs Increased responsiveness to customer demand Shorter planning cycles

Rationale Reducing lead times, specifically setup times, allows for more frequent changes to adapt to changes in demand. Increased responsiveness to customer demand

Increased flexibility in order to meet customer demand changes can be achieved by: Answers increasing lot sizes. reducing lead times. reducing scrap. increasing component inventory.

Rationale Reducing lead times—specifically setup times—allows for more frequent changes to adapt to changes in demand. reducing lead times.

A company is expecting a one-year downturn in the economy that is likely to reduce customer demand as compared to past annual sales levels. Which of the following responses would be best in this situation? Answers Increase inventory levels to reduce lead times. Increase order demand satisfied from production. Reduce production output and inventory levels. Match competitors' responses to price and lead time.

Rationale Reducing output and inventory sustains the business strategy while addressing the effect of the economy. Increasing inventory ties up more capital in a bad economy. Matching prices may become necessary but is not implied in the question, and order demand is already being satisfied from production. Reduce production output and inventory levels.

Reducing the levels on the bill of material reduces: Answers production reporting activities. schedule flexibility. work in process. material costs.

Rationale Reducing the amount of subassemblies within the bill of material reduces the times reporting has to be done. production reporting activities.

Which of the following would have the most impact on reducing manufacturing lead time? Answers Reducing setup times Implementing input/output control Increasing component availability Increasing work center capacity

Rationale Reducing the time required for setup reduces the total lead time. Reducing setup times

What is the best way for a company to reduce the cost of quality and improve customer satisfaction? Answers Perform regular customer surveys. Reduce process variability. Establish a customer warranty program. Increase finished product inspection.

Rationale Reducing variability in products and processes decreases the probability of quality defects. The closer products and processes are to the standard, the greater the probability that they will not have quality defects. Reduce process variability.

A company uses a chase production strategy to schedule production. A product family consists of ten end items, produced every month. Four high-volume units comprise 70% of total production. The two lowest-volume units comprise only a very small percentage. How would sales and operations planning plan the items in this product family? Answers One line for the highest-volume units and one for the remaining six products Four lines for the highest-volume units, one for the two lowest, and one for the balance Separate line for each type of unit One line for the total number of units with no consideration for mix

Rationale Regardless of the number of end items, they are all one product family, so they are planned as one line, with consideration for volume. One line for the total number of units with no consideration for mix

Which of the following least applies to understanding the situation in the PDCA improvement cycle? Answers Reliance on the review of written reports Standing alone on the shop floor for a long period of time, observing and thinking critically Knowledge of the key principles of lean manufacturing such as standard work procedures, level flow, and on-time delivery of supplies Looking for root causes of undesired effects

Rationale Relying on written reports is given low priority in lean, though data are held in utmost regard. There is a premium placed on "going and seeing" what is happening in the factory, factory layouts that make production highly visible, graphically presented information, and evidence of key principles, as described in the three other option Reliance on the review of written reports

Which of the following are the desired results of removing a kanban card from between two steps of a smooth-flowing process? Answers Reduced inventory level and insertion of a kanban card to replace the one removed Reduced inventory level and exposure of problems Insertion of a kanban card to replace the one removed and exposure of problems Reduced inventory level, insertion of a kanban card to replace the one removed, and exposure of problems

Rationale Removing a kanban card from an inventory system that is in equilibrium will remove the inventory associated with the kanban and will throw the system into imbalance. The imbalance will enable the quality team to detect where the problems are arising due to less inventory in the system. These problems can then be attacked and the system returned to a state of equilibrium Reduced inventory level and exposure of problems

What is a benefit of a focused factory? Answers Increased supervisory involvement Increased machine utilization Reduced production lead time Reduced functional departments

Rationale Repetition of and concentration on a very limited product usually increases efficiency, which impacts lead time. Reduced production lead time

The process used to validate that adequate resources and capacity exist for the S&OP production plan is Answers resource planning. capacity requirements planning. bill of resources. rough-cut capacity planning.

Rationale Resource planning is the process that evaluates the availability of key resources and the feasibility of the production plan generated by the sales and operations plan. A bill of resources is incorrect, because it determines the amount of key resources used in the manufacturing process to produce a product and is a necessary input to the resource planning process. Rough-cut capacity planning is incorrect, because it is the process used by master scheduling to validate that capacity is adequate. Capacity requirements planning is incorrect because it is the process that validates the adequacy of capacity to execute the material plan. resource planning.

Why is resource planning difficult to apply in an engineer-to-order environment where a final assembly schedule is used in place of a master production schedule? Answers Because of dissimilarity among orders, there may be little or no order history upon which to base hours per key work center. The final assembly schedule applies only to final assembly, and that may not be where the constraining work centers are. Resource planning is an iterative process, but final assembly scheduling is performed only once for a customer order. Resource planning is designed to close the loop with master scheduling but not with final assembly scheduling.

Rationale Resource planning requires a resource profile, and lack of history may mean that one does not exist. Because of dissimilarity among orders, there may be little or no order history upon which to base hours per key work center.

The resource plan is typically stated in all of the following terms except: Answers item numbers. labor hours. machine hours. pounds.

Rationale Resource plans deal with the planning and managing of plant capacities. Pounds and hours are important capacity measurements. Item numbers are not relevant to capacity units of measure. item numbers.

Processes for identifying, assessing, and managing the environmental, social, and ethical risk in the supply chain are elements of: Answers green reverse logistics. fitness for use. risk response planning. responsible procurement.

Rationale Responsible procurement is ensuring the use of ethical sources of goods and services to bring about a positive impact and minimize the negative impact on society and the environment. responsible procurement.

Which technique can be used by manufacturers and retailers that experience high variability in demand for their products to buffer the overall burden of having to deploy inventory for each product? Answers Risk pooling Bundling Consolidation Value chain initiative

Rationale Risk pooling is a method often associated with the management of inventory risk. Risk pooling

An organization is attempting to break into a market that already has several competitors who have significant market share. Which action would increase the level of competition and pressure on these established competitors? Answers Imitate the competitors' products features and price closely. Choose specific products to produce where the cost of switching brands is high for the consumer. Introduce a daring but risky strategic innovation. Start with products that already have steadily increasing demand.

Rationale Rivalry tends to be weaker when the rival (the company trying to break into the market in this case) pursues a "me too" strategy and there are no daring strategic innovators. Therefore, daring innovations are an opportunity that could pay off. Introduce a daring but risky strategic innovation.

An organization wants to reduce the cost of its order processing systems by automating help provided to customers who have common ordering problems. What would be the best technology solution for this organization? Answers Sensors and telematics Augmented reality Robotic process automation Internet of Things

Rationale Robotic process automation does not refer to actual robots but instead to the use of software "bots" to automate repetitive interactions with customers or other automated systems. Robotic process automation

Which of the following is defined as the process of converting the MPS into the load for critical resources? Answers RCCP ATP Multilevel master scheduling Resource capacity planning

Rationale Rough-cut capacity planning (RCCP) is defined as the process of converting the MPS into capacity needs for critical resources: workforce, machinery, warehouse space, vendors' capabilities, and, in some cases, money. Essentially, it is a validity check for the MPS. ATP is incorrect, because it is the uncommitted portion of a company's inventory and planned production, maintained in the MPS to support customer order promising. Resource capacity planning is incorrect, because it is used to determine the load placed on resources by product families in the production plan. Multilevel master scheduling is incorrect, because it is a master scheduling technique that enables any level in an end item's BOM to be master-scheduled. RCCP

Rough-cut capacity planning checks whether critical resources are available to: Answers support the preliminary master production schedules. establish the takt time of the work cells. create work center load capacity profiles. keep track of past-due orders.

Rationale Rough-cut capacity planning checks whether critical resources are available to support the preliminary master production schedules. Critical resources include bottleneck operations, labor, and critical materials. support the preliminary master production schedules.

Which of the following statements about capacity is true? Answers The master scheduler can schedule load above that indicated by rough-cut capacity planning. Resource planning capacity is more accurate than rough-cut capacity planning due to aggregation. The number of machines in a machine shop is the primary determinant of capacity. Common units such as quantities or hours are used at all levels for consistency.

Rationale Rough-cut capacity planning is a check of only critical resources. The master scheduler can schedule load above that indicated by rough-cut capacity planning.

What is a direct input into CRP? Answers Routing data Work center load report Dispatch list Preventive maintenance schedule

Rationale Routing data is an input to CRP and is used to determine work centers, load, and sequence timing. The other answers are incorrect because reports and schedules of order releases are outputs; and the preventive maintenance schedule may affect available capacity, but is not a direct input to CRP. Routing data

Which of the following areas of push system documentation is reduced by a pull system during the process design phase? Answers Planned and overload conditions Detailed routings by operation Calculation of start and end dates Material pick and shortage lists

Rationale Routings by operation are defined during the process design phase.

A company has few products but highly variable order quantities, and it uses forward scheduling. Why is it beneficial to use standard run hours as a basis for calculating completion dates? Answers It helps to prioritize orders in key work centers. It automatically balances the load across operations. It provides a more realistic completion date than using fixed lead times. It provides start times knowing queue and setup times.

Rationale Run time can be used to load operations based on standard hours per part times order quantity. It provides a more realistic completion date than using fixed lead times.

Safety lead time is most appropriate to use for an item in distribution center inventory to compensate for which of the following? Answers Changes in product configurations Forecast variability Customer order changes Fluctuations in replenishment lead time

Rationale Safety lead time is added to normal lead time to protect against fluctuations in replenishment lead time so that an order can be completed before its real need date. Replenishment lead time is the total period of time that elapses from the moment it is determined that a product should be reordered until the product is back on the shelf available for use. Fluctuations in replenishment lead time

The element of time added to normal lead time to protect against fluctuations is Answers wait time. safety lead time. queue time. buffer time.

Rationale Safety lead time is an element of time added to normal lead time to protect against fluctuations so that an order can be completed before its real need date. safety lead time.

Which of the following is the most likely reason for using safety lead time instead of safety stock? Answers Supply variability is the concern. Demand variability is too biased. The part stocks out too frequently. Carrying safety stock is too expensive.

Rationale Safety lead time is mostly used to deal with supplier variability. Supply variability is the concern.

Using safety lead time for manufactured items will result in: Answers an increase in work in process. an increase in customer service levels. a decrease in the planning horizon. a decrease in queue time.

Rationale Safety lead time will result in orders being released earlier, which will cause an increase in work in process. an increase in work in process.

Distribution and materials management should work together to determine which of the following? Answers Transportation budgets Utilization of personnel Safety stock policies Engineering changes

Rationale Safety stock policies are dependent on the customer service level desired, the cost of carrying the inventory, and the cost of stocking out. Safety stock policies

What is a valid reason for carrying safety stock of a manufactured item? Answers Yields are highly variable due to process control issues. Safety stock is being planned for the parent item of the manufactured item. Cumulative lead time is longer than the item's lead time. There are frequent engineering changes for this item.

Rationale Safety stock protects against the uncertainty of supply, which would be applicable to yield variability. Yields are highly variable due to process control issues.

A retailer sells seasonal items in addition to its year-round product lines. Three distribution centers service the stores. Seasonal items are not ordered by the stores but are distributed based on the percentage of the business the store typically averages. Which of the following safety stock techniques is most appropriate for these items? Answers Fixed Percentage Statistical Time period

Rationale Safety stock should be fixed at zero, since these items are not regularly stocked. Fixed

Which of the following is an activity included in the master planning of resources? Answers MRP Business planning Strategic planning S&OP

Rationale Sales and operations planning (S&OP), demand management, and master scheduling are the activities included in the master planning of resources. Business and strategic planning are incorrect because they take place before the master planning of resources begins. Material requirements planning (MRP) is incorrect because it is performed at a lower level. S&OP

Sales and operations planning accounts for inventory as part of the plan in order to determine production requirements. Which of the following is the first level at which existing inventory is accounted for in the planning hierarchy? Answers Master planning Detailed scheduling and planning Sales and operations planning Business planning

Rationale Sales and operations planning accounts for inventory as part of the plan in order to determine production requirements. Sales and operations planning

A product is subject to only a distributor sales channel. Which of the following is used to identify the necessity of providing feedback to distributors regarding the feasibility of meeting their demand as forecasted for a seasonal product? Answers Sales and operations planning Master scheduling of end items Aggregate forecast of all distributors Customer relationship management

Rationale Sales and operations planning provides a snapshot into how well the sales and operations plans are progressing. Sales and operations planning

A supplier receipt has been rejected due to a sampling inspection process. What should production ask the quality department to do in order to keep the material plan valid? Answers Perform 100% inspection on enough units to satisfy known demand. Accept the lot and perform 100% inspection to identify the rejected parts. Expedite new replacement materials to the original required date. Request that the material be replaced by material from another qualified supplier.

Rationale Sample inspection does not mean that all the parts are defective. Continuing to inspect may reveal that there are sufficient parts to satisfy production requirements. Perform 100% inspection on enough units to satisfy known demand.

Which of the following is a reason for basing incoming inspection on acceptance sampling? Answers To develop a quality history for each supplier part that can be used to evaluate performance To reduce part unit cost by eliminating the need for a supplier to inspect the part To infer lot acceptability from the sample and take defined actions per the quality plan To determine whether 100% inspection is required to separate defective parts from good parts

Rationale Sampling is for the purpose of determining lot acceptance or rejection; 100% inspection may be done if part of the quality plan. To infer lot acceptability from the sample and take defined actions per the quality plan

A company has redesigned its packaging and is saving a large amount of plastic annually. This helps the environment, lowers costs, and makes kit assembly easier for workers, so it is best understood as an example of: Answers cost improvement efforts. common sense. the sustainable "sweet spot." a Global Reporting Initiative (GRI) requirement.

Rationale Saving a large amount of plastic annually is a sustainable strategy to benefit the environment, the organization's economic interests, and helps make workers jobs easier, so it improves each area of the triple bottom line, which is called the sustainability "sweet spot." the sustainable "sweet spot."

When measuring shop floor performance, which method will encourage not producing unwanted product? Answers Schedule completion Productivity Efficiency Utilization

Rationale Schedule completion encourages performance to plan. Schedule completion

Which of the following are possible solutions for a master scheduler trying to resolve a short-term problem with an overloaded critical work center? Answers Schedule overtime or extra shifts and reduce the amount of subcontracting only Schedule overtime or extra shifts and hire temporary help only Reduce the amount of subcontracting and establish committees to reduce setup times only Reduce the amount of subcontracting and hire temporary help only

Rationale Scheduling overtime and hiring temporary help are both possible solutions for a master scheduler to resolve a short-term problem with an overloaded work center. Reducing subcontracting increases workload and therefore will not help an overload situation. Establishing committees to look at reducing setup times will not help correct an overload in the short term. Schedule overtime or extra shifts and hire temporary help only

Scipa Automotive is a reputable automotive parts supplier with declining profit margins in its home market because of declining automobile sales and high labor costs. Scipa is considering acquiring a midsize parts manufacturer in another country, where a large automotive parts market is emerging. Scipa would transfer all manufacturing to this country. The business being considered for acquisition has weak management and technical competencies compared with Scipa's home-country levels. Which factor will likely be most influential in Scipa's decision? Answers Creating economies of scale Protecting proprietary information Access to a growing market Cutting costs of operations in its home country

Rationale Scipa wants to move production entirely, so economies of scale and cost cutting at home are not issues. Proprietary information can be an issue in expanding into another country, but that probably is not an issue in this case. Scipa is looking for more customers and could use its expertise to improve its investment in purchasing the company. Access to a growing market

A company has a historical 2% failure rate at final test. The failed units cannot be reworked. Which of the following information should be used in material planning? Answers Safety stock of 2% should be statistically calculated for each part. Yield and scrap are basically irrelevant with a stocked item. Scrap is 2% and is accounted for as an addition to the order quantity. Yield is 2% and is accounted for as an inventory master field.

Rationale Scrap is "material outside of specifications and possessing characteristics that make rework impractical" (Dictionary). The scrap (failure) rate of this process is 2%, which needs to be factored into the bill of material for this item. If this is done correctly, there would be additional material added to the work order to account for the anticipated scrap. Scrap is 2% and is accounted for as an addition to the order quantity.

Which of the following is an integral part of the continuous improvement process in a pull production environment? Answers Scrap report Direct labor report Actual production to plan Product capability analysis

Rationale Scrap is an indicator that improvement is required. Scrap report

Which of the following production order transactions is used to update item information? Answers Work center hours Parts started Scrap quantity Order complete

Rationale Scrap is updated so material requirements planning can incorporate actual historical scrap values into the order quantity. Scrap quantity

A company's customer is implementing lean initiatives and has asked that the order receipt to ship time be reduced by 50%. This will have a significant impact on production and supporting departments. Which functional area should take the lead in evaluating this request and taking action? Answers Production Sales Quality Senior management

Rationale Senior management must be ready to commit and assign a core team and support personnel to work on lean initiatives. Senior management

A medium-sized make-to-order manufacturing company has three operating divisions and four locations, with three plants in one country and one plant in another country. The second largest division is a recent acquisition. There are three different software packages in use at the plants, and each plant has its own way of operating its business. The overall costs per transaction for the company are the highest in its industry. Senior management has decided that the plants should standardize on one software package and one approach to all major business processes to achieve some economies of scale. A new software package is selected and a project leader is named. The new project leader has assembled a team to perform the implementation. For the change to be effective, what should senior management do first? Answers Send out a memo to the plant managers explaining the decision. Build the project team from key members of each division. Create a vision statement about this new strategy. Create a sense of urgency among the company's leaders.

Rationale Senior managers should start the project by communicating a sense of urgency and the importance of the new implementation project to the project team and the company as a whole. Create a sense of urgency among the company's leaders.

Which of the following aspects of a job most determines the day and time when the job will be done? Answers Priority Queue Availability Sequence

Rationale Sequence determines in what order jobs are done. Sequence

Lean purchasing must include which of the following features? Answers Deliveries are made at least daily. Cost reductions are shared and purchase order paperwork is minimized. Cost reductions are shared and deliveries are made at least daily. Cost reductions are shared, purchase order paperwork is minimized, and deliveries are made at least daily.

Rationale Sharing of cost reductions and minimization of purchase order paperwork are essential features of lean purchasing. Cost reductions are shared and purchase order paperwork is minimized.

Which of the following performance measurements is likely to be the most important to operations managers of a product line with medium volume and a short life cycle? Answers Time to market Capacity utilization Number of schedule changes Standard error of the forecast

Rationale Short life cycle production is usually focused on products that need to get to market quickly. Production is medium volume, so the smaller lot sizes enable managers to quickly schedule and reschedule production. Time to market

Generating and rewarding short-term performance improvements within organizational change: Answers may be the only success within the entire project. should strike fear into the hearts of the naysayers. sidelines cynics and selfish resisters. proves that the project champion was right.

Rationale Short-term performance improvements help transformations. sidelines cynics and selfish resisters.

A company has a number of products that are similar but are subject to unstable demand patterns. The company wants to implement a program to reduce inventory investment while providing a maximum three-day customer order turnaround. Which of the following manufacturing environments will most likely meet that goal? Answers Make-to-order Make-to-stock Engineer-to-order Assemble-to-order

Rationale Since the products are similar, assemblies and options could be produced to a forecast and then assembled to a customer order. Assemble-to-order

Allowances for scrap/yield estimates in the manufacture of a component require overplanning of: Answers parent safety stock. parent planned releases. component planned releases. component planned receipts.

Rationale Since the scrap/yield occurs on the component level, bill-of-material issues will have to take this factor into account and over-issue component quantities. component planned releases.

Material requirements planning has calculated a gross demand of 50 units in period 4. The net requirement and the safety stock are 0 units. The order quantity is 100 units. Which of the following is true if the next net demand is 20 units in period 6? Answers The net demand in period 6 will be 80 units. A planned order receipt for 100 units will be suggested in period 4. The projected available balance will be 80 units in period 6. The projected available balance will be 100 units in period 5.

Rationale Since there is no net demand or safety stock in period 4, no action is required. The net demand of 20 units in period 6 will cause a planned order of 100 units to be ordered, leaving a projected available balance of 80 units. The projected available balance will be 80 units in period 6.

Which of the following supports the purchasing/supplier partnership concept? Answers Order acknowledgments Lot traceability Single-source supplier Acceptable quality level

Rationale Single-source supplier status shows commitment to the partnership. Single-source supplier

Which of the following types of causes of process variation indicates that the process is under control and subject only to uncontrollable everyday factors such as temperature and humidity? Answers Nominal cause Assignable cause Common cause Special cause

Rationale Small variations are likely to occur. Common cause

A make-to-stock company purchases parts that are unique to the company. What is the best reason for establishing a received quantity tolerance that closes a remaining open balance on a purchase order? Answers The parts are so inexpensive that dealing with a partial quantity is not cost-effective. The company does not want to pay transportation and setup costs multiple times. The company routinely carries safety stock of sufficient quantity to cover a shortage. The supplier may not produce the exact required quantity due to historical yields.

Rationale Small, inexpensive parts can be furnished with the next order and will be replanned by material requirements planning. The parts are so inexpensive that dealing with a partial quantity is not cost-effective.

A new product line consisting of many individual products is projected to experience low volumes for the foreseeable future. What would be the appropriate manufacturing strategy for this situation? Answers High involvement with people, low involvement with machines High involvement with machines, low involvement with people Highly scalable workforce Significant use of outsourcing for peak capacity seasons

Rationale Small-scale technologies combined with skilled staff or higher involvement of staff tends to be more flexible than investing in machines because higher involvement with machines requires more capital investment up front. The capital investment in dedicated machinery could be made later if demand increases. a large variety of individual products at a low cost.

Prior to constructing industrial power lines in a wilderness area, a company seeks input from various public groups. This company is exhibiting its: Answers social responsibility. public relations. product positioning. pro forma fiduciary responsibility.

Rationale Social responsibility is a commitment by management to behave ethically and to contribute to community development. social responsibility.

The IT function develops a strategy that calls for increasing use of cloud services. When this comes to the attention of the CEO, the CEO is unhappy. What is the most likely source of the problem? Answers There is no robust test plan. No proven project management tactics are used during implementation. Top management is not directly involved and is not monitoring progress. The functional strategy is not aligned with the business strategy.

Rationale Some report that the typical IT project failure rate is between 35% and 75%. Often reasons cited are connected to managerial, implementation, or organizational factors. One of the main strategic issues is the degree of alignment and integration between IT strategy and the general strategy of the firm. The functional strategy is not aligned with the business strategy.

After receiving criticism from environmentalists concerning the negative side effects of excessive packaging, a major retailer decides to improve the carbon footprint of its supply chain in part by mandating that suppliers use smaller packaging. This has the side effect of enabling the retailer to put more product on its shelves. Which is a likely result of this change? Answers The suppliers will be unwilling to comply with this mandate because it will cost them money in the long run. Reducing the supply chain carbon footprint will result in positive environmental press. The higher numbers of products carried and sold will result in a worse overall carbon footprint. The increase in profits from more inventory on shelves will offset the negative press that will likely continue.

Rationale Sometimes unintended consequences have positive outcomes. For example, Walmart is recognized for its efforts to reduce packaging and improve the carbon footprint of its supply chain following negative press on the subject. However, they are pursuing footprint reductions largely because doing so allows them to put more product on the shelf, which means more products to sell. Reducing the supply chain carbon footprint will result in positive environmental press.

Serialization of individual inventory lots for tracking location and cost is an example of: Answers earmarking. automatic identification and data capture. tagging. specific identification.

Rationale Specification identification keeps track of the units of the beginning inventory and the units purchased specific identification.

Which helps set boundaries around the type of work the company will pursue and indicates what is out of scope? Answers Project scope statement Vision Core values Mission

Rationale The APICS Dictionary, 16th edition, defines mission as "the overall goal(s) for an organization set within the parameters of the business scope." Mission

Managers must consider which of the following basic types of risks? Answers Risks that cannot be avoided and risks that can be avoided Risk that have been fully defined and those that have been historically documented Risks with losses that difficult to quantify and risks that are variable due to a number of unknowns Risks associated with only negative results and risks that may have either negative or positive results

Rationale Speculative risk differs from pure risk in that pure risk is associated with only negative results while speculative risk sees opportunity for both negative and positive outcomes. Risks associated with only negative results and risks that may have either negative or positive results

At what point in a product's life cycle is the generic performance objective of speed most likely to be a primary consideration? Answers Introduction Growth Maturity Decline

Rationale Speed, one of the five generic performance objectives, might be measured as the time from system order to shipment. During the product growth phase, the sooner the products get to distributors, the sooner they can be sold, since demand is often greater than supply in this phase. This performance objective tends to be less important in other life cycle phases, although there can always be exceptions depending on the type of product or service. Growth

What is the best reason for an engineer-to-order company to use standard hours in a production plan? Answers One unit is unlike the next, even within the same product family. Complex units cross multiple production months and skew results. Standard hours are a common denominator among products. Subassembly departments cannot relate to end products or systems.

Rationale Standard hours are a better indicator of workload than the number of dissimilar units, no matter how many months are required to build a unit. Standard hours are a common denominator among products.

Which of the following measurements remains the same regardless of what is reported for performance? Answers Standard hours Actual hours Efficiency Utilization

Rationale Standard hours are based on a work center and production quantity. Standard hours

Which of the following approaches will facilitate the smooth integration of a new product to production? Answers Prototyping Standardization of components Quality function deployment Statistical process control

Rationale Standardization of components and processes shortens the prototyping time and learning curve, getting products to market faster. Standardization of components

Which of the following targets for effective scheduling does a dispatcher have the most control over with respect to improving performance? Answers Planned versus actual direct labor hours Planned versus actual start date Planned versus actual work in process Planned versus actual completion date

Rationale Start dates are based on priority and job sequence, which are the responsibility of the dispatcher. Planned versus actual start date

Statistical forecasting provides the best solution in which of the following situations in an MTS environment? Answers When sales volume is low and forecast variance is high When sales volume is high and forecast variance is low When sales volume is low and forecast variance is low When sales volume is high and forecast variance is high

Rationale Statistical forecasting works best in an MTS environment when sales volume is high and forecast variance is low. The other answers are incorrect because, although statistical forecasting can be used, when volume is low the benefit of the forecast is not as great, and perhaps the company should think of an MTO strategy; when sales volume is low and forecast variance is high, the company should definitely consider making to order; and statistical forecasting would work only when forecasting at the aggregate level and when assembling to order. When sales volume is high and forecast variance is low

What is a benefit of developing strategic alliances with key suppliers? Answers Ability to form long-term contracts Vertical integration Better response time from suppliers Elimination of extra suppliers

Rationale Strategic alliances are the basis for long-term contracts, which provide multiple benefits for both parties. Ability to form long-term contracts

Strategic sourcing is focused on: Answers stable pricing. acquiring goods and services. transactions. order execution.

Rationale Strategic sourcing should be focused on finding suppliers that provide the best value, and this can include many factors besides pricing. In fact, pricing may be the least important aspect depending on the commodity. acquiring goods and services.

What is vital to periodically evaluate regarding a breakthrough strategy designed to significantly increase inventory turnover? Answers Whether specific goals should be set if progress on the strategy is starting to slow Whether the change has introduced unintended consequences such as to quality Whether enough pressure is being placed on functional areas that could further increase inventory turnover Whether inventory turnover is becoming too high and needs to be lengthened

Rationale Strategies and tactics need to be monitored to ensure that unexpected negative results have not been introduced. Increasing inventory turnover is a worthy goal, but it could promote taking shortcuts that harm quality and result in customer dissatisfaction. Whether the change has introduced unintended consequences such as to quality

Subassemblies and options need to be master-scheduled separately from the end item in which of the following environments? Answers Engineer-to-order Assemble-to-order Make-to-stock Make-to-order

Rationale Subassemblies and options need to be master-scheduled separately from the end item in assemble-to-order to ensure a short final assembly and delivery lead time. In a make-to-stock environment, parts are dependent demand; in make-to-order and engineer-to-order, parts may be dependent or planned using a planning bill of material. Assemble-to-order

Establishing a results-oriented, high-performance culture generally requires managers and other leaders to: Answers increase the employee review cycle to once a month. foster competition in each department. set stretch objectives. implement a suggestion system.

Rationale Successfully leading the effort to foster a results-oriented, high-performance culture generally entails such leadership actions and managerial practices as setting stretch objectives. set stretch objectives.

Which of the following data is not considered in the available-to-promise (ATP) calculation? Answers Safety stock quantity On-hand inventory Master production schedule orders Customer orders

Rationale The ATP calculation does not include safety stock, meaning that the safety stock can be promised to customers if needed (it is uncommitted inventory). Safety stock quantity

What is a normal progression for a unique product characteristic that delights customers? Answers It always starts off at the product introduction stage as the focal point for advertising and sales presentations and always moves to the growth stage. it moves from an order qualifier to eventually become an order winner. It becomes a likely catalyst for a line extension or a new product. It starts as an order winner and eventually becomes an order qualifier.

Rationale Such characteristics rely on their novelty, and they're no longer novel once they are offered in the market. What was an order winner may in time become an order qualifier if it starts to be considered a standard requirement. It starts as an order winner and eventually becomes an order qualifier.

What is the primary difference between enterprise resources planning (ERP) and manufacturing resource planning (MRP II)? Answers ERP includes manufacturing information only. ERP includes supplier and distribution/delivery information. ERP is computer-based, but MRP II is not. ERP provides balance between production, marketing, and information technology.

Rationale Supplier and distribution/delivery information is included in ERP. ERP includes supplier and distribution/delivery information.

On-time supplier deliveries can be impacted most by: Answers long lead times. purchase order quantities. dedicated transportation carriers. supplier capacity.

Rationale Supplier capacity that is adequate for meeting the dates has the most impact on on-time deliveries. supplier capacity.

A direct handoff from one operation to the next, such as a customer and a supplier located in the same facility, will: Answers naturally increase quality levels of finished products. likely result in additional arrangements and becoming quite complex from a competitive perspective. be the root cause of complacency if the customer is always satisfied, thus preventing improvements within the process. likely result in close employee friendships, thus leading to an overall reduction in the quality of the finished products.

Rationale Supplier co-location with a key customer is similar to cellular manufacturing, where families of parts are produced within a single line or cell of machines controlled by operators who work only within the line or cell. Quality defects are discovered almost instantly as product moves from one station to the next. Therefore, the process itself drives quality up. naturally increase quality levels of finished products.

What is a benefit of supplier partnerships? Answers Ability to use blanket orders with multiple releases Easier expediting of late materials Dedicated resource for price negotiations Encourages suppliers to invest in product development

Rationale Supplier partnerships denote long-term agreements, which encourage suppliers to invest in joint product development. Encourages suppliers to invest in product development

What is the first step in establishing a supplier partnership? Answers Ranking the suppliers in order of least price Defining the means of communication Building a level of trust in the relationship Having the suppliers fill out a financial profile

Rationale Supplier partnerships must be based on a trusted relationship in order to be able to share information back and forth and reap the benefits of the partnership. Building a level of trust in the relationship

To eliminate waste, purchase orders can be replaced with: Answers supplier capacity requirements. pegging reports. supplier schedules. action lists.

Rationale Supplier schedules provide the supplier with the requirements of deliveries, including items, quantities, and dates. supplier schedules.

If supply and demand are not in balance at the aggregate supply level, what should be the priority to resolve the issue? Answers Adjusting supply and demand at the strategic level so it is not needed at the aggregate supply level Adjusting supply even if it is difficult Adjusting demand if it is less difficult than adjusting supply Adjusting how supply and demand are measured so imbalances are less frequent

Rationale Supply and demand balancing both occur regularly at a well-functioning organization, but the more difficult and costly efforts that may be required are typically attempted on the supply side before resorting to greater efforts on the demand side. This is because supply adjustments require internal changes while demand adjustments involve influencing external customers to accept changes. Adjusting supply even if it is difficult

S&OP fundamentals include which of the following? Answers Product family planning and mix planning Supply and demand planning and mix planning Supply and demand planning and product family planning Disaggregating volume into a master schedule and product family planning

Rationale Supply and demand planning and product family planning are fundamental to S&OP. Disaggregating volume into a master schedule and mix planning are fundamental to master scheduling, not S&OP. Supply and demand planning and product family planning

Supply chain variation frequently occurs when: Answers customers place larger orders than necessary. a valley and a peak exist in product demand history. variation in historical demand skews the quantitative forecast. product shortages are followed by price increases.

Rationale Supply chain distortion may occur when customers place larger orders than necessary. customers place larger orders than necessary.

Which of the following requires no disaggregating to develop the master schedule from the sales and operations plan and check for feasibility? Answers Supply Volume Demand Mix

Rationale Supply, or capacity, is shared across product families. The other responses all relate specifically to a product family and so would have to be disaggregated to end units for the master schedule. Supply

What are the three components of sustainability? Answers Economic, environmental, ecological Social, economic, regulatory Economic, environmental, social Social, environmental, regulatory

Rationale Sustainability includes elements of protecting the environment, sustaining the future economy, and being a responsible citizen. Economic, environmental, social

Which of the following goals of pull systems is easiest to implement as compared to push systems? Answers Reduced inventory Shortened cycle times Synchronized production Continuous improvement

Rationale Synchronized production is difficult to achieve in push systems but is critical for a pull system. Synchronized production

Considering sustainability as a strategic initiative offers which of the following advantages? Answers Some larger initiatives can be planned in addition to addressing "low-hanging fruit." Investments in sustainable initiatives can be decentralized and unique. The organization can avoid having to make sustainability policies. Senior management can delegate the process to an "army of volunteers."

Rationale Taking a strategic approach to sustainability promotes a more proactive perspective such as attention to future problems and opportunities. This can help avoid a problem in corporate sustainability programs: restricting the organization's attention to "low-hanging fruit" that offers quick, but in the long term, small results. Some larger initiatives can be planned in addition to addressing "low-hanging fruit."

A work center has four employees who work 8-hour shifts with a utilization of 85%. Demand on the work center is 60 units. What is the takt time at the work center? Answers 6 minutes 7 minutes 27 minutes 32 minutes

Rationale Takt Time = Available Time/Demand Available Time = 8 x 4 x 60 x 0.85 = 1,632 minutes Takt Time = 1,632 minutes/60 units = 27.2 minutes per unit (rounded in answer) 27 minutes

A supplier indicates that the ideal temperature for a raw material being considered as a possible ingredient in a food product is 0 degrees Celsius. What is an important follow-up question? Answers For what duration of time can the product be above freezing? Is there a need for a safety data sheet? Is air transport acceptable? What is the acceptable temperature range?

Rationale Temperature requirements are usually specified in a range. Items could get too cold or too warm. How long a product can stay above freezing would be highly dependent on the ambient air temperature and would not be very accurate information. If the range is known and the product temperature can be monitored, however, the temperature reading will indicate when the product needs to be returned to freezing. What is the acceptable temperature range?

Records state that finished goods inventory has 100 items in stock when there are actually 110. The first 100 customer orders are accepted and scheduled for immediate shipment. The next 50 customer orders are scheduled and promised for shipment the following week based on the next scheduled receipt. What is the customer service level for the orders scheduled for shipment? Answers 91% 100% 111% Not enough information to determine answer

Rationale The 100 that were promised this week will all be shipped, so this is a 100% customer service level for the time period. 100%

According to the APICS Dictionary, which technique is most directly associated with single-minute exchange of die (SMED)? Answers Internal setups performed in one minute or less Internal setup activities moved to external setup Single-minute exchange of tooling in assembly Scheduling the process to be down for less than ten minutes during setup

Rationale The APICS Dictionary defines SMED as "the concept of setup times of less than 10 minutes, developed by Shigeo Shingo in 1970 at Toyota." While moving internal setup activities to external setup activities is frequently associated with SMED, it is not directly in the dictionary definition. Scheduling the process to be down for less than ten minutes during setup

Why would floor stock not appear on a pick list? Answers It is always backflushed. It needs to be available to all employees. It has already been issued to production. It is easily misplaced.

Rationale The APICS Dictionary defines floor stocks as "stocks of inexpensive production parts held in the factory, from which production workers can draw without requisitions." Floor stock would not appear on a pick list, as it has already been issued to production. It has already been issued to production.

What is the term for the processes of creating, producing, and delivering a good or service to the market? Answers Business-to-business commerce Value stream Logistics Cumulative lead time

Rationale The APICS Dictionary defines the value stream as "the processes of creating, producing, and delivering a good or service to the market." Value stream

Records for a part dimension over time show that it has a single mean and that values tend to cluster around the mean. This type of distribution is likely to be referred to as: Answers Pareto. z-bar. binomial. normal.

Rationale The APICS Dictionary describes a normal distribution as a "statistical distribution where most of the observations fall fairly close to one mean." In addition, the "deviation from the mean is as likely to be plus as it is to be minus. When graphed, the normal distribution takes the form of a bell-shaped curve." normal

Insourcing describes the decision to use: Answers suppliers that are within a specific number of miles from the manufacturer. the firm's internal resources to provide goods and services. a single supplier. a single distributor.

Rationale The APICS Dictionary describes insourcing as the decision to use "the firm's internal resources to provide goods and services." the firm's internal resources to provide goods and services.

An organization is trying to forecast how many units of replacement part XYZ to produce in the upcoming period. The part is in fairly high demand and requires a long lead time to produce. What information could help the most with this forecast? Answers Mean absolute deviation (MAD) Mean time to repair (MTTR) Mean time between failures (MTBF) Mean time to failure (MTTF)

Rationale The APICS Dictionary, 16th edition, defines MTBF as "the average time interval between failures for repairable product for a defined unit of measure (e.g., operating hours, cycles, miles)." MTBF can be used to generate repair part forecasts for items with sufficient demand and long lead times. Mean time between failures (MTBF)

An organization has a product end-of-life plan that focuses on using up all of the raw materials and components not used in the replacement product being planned. What else needs to be a key part of this plan? Answers Ensuring that the new product doesn't suffer the same decline as the product being ended Selling off the old product's remaining finished goods inventory well before the new product will be released Ensuring that the old product will still be available during a transition period Building enough finished goods inventory to satisfy lifetime buy quantities for the old product

Rationale The APICS Dictionary, 16th edition, defines end-of-life management as follows: "Planning for phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of and an out-of-stock situation with the old product before the replacement product is available." While building an inventory to satisfy lifetime demand could be a strategy (such as to accommodate customers who cannot easily incorporate a new model into their existing systems), having lifetime buy quantities is not the same thing. Ensuring that the old product will still be available during a transition period

Which of the following statements about the bill of material (BOM) used in material requirements planning (MRP) is true? Answers It lists components of each assembly. It plays a role in computing requirements. It should be structured to reflect how a product is built. All of the above

Rationale The BOM is a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the required quantity of each. When the MRP BOM explosion occurs, the BOM enables the identification of all items and quantities that need to be replenished. The BOM is structured to reflect how the product is produced; this guides the operators in the process. All of the above

In which qualitative forecasting technique are the opinions of experts combined in a series of iterations? Answers Deming method Taguchi method Delphi method Shewhart method

Rationale The Delphi method is a qualitative forecasting technique where the opinions of experts are combined in a series of iterations. Delphi method

What is the difference between an FAS and a MPS? Answers The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand. The FAS addresses a shorter-term planning period than the MPS and looks at forecasted demand rather than customer orders. The FAS addresses a longer-term planning period than the MPS and looks at customer orders rather than forecasted demand. The FAS addresses a longer-term planning period than the MPS and looks at forecasted orders rather than customer orders.

Rationale The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand. The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand.

The final assembly schedule (FAS) takes place when: Answers the customer's order is received. there are few options. the component level is fixed. the forecast is fixed.

Rationale The FAS is a schedule of end items to finish the product for specific customers' orders in a make- or assemble-to-order environment. the customer's order is received.

The final assembly schedule (FAS) is differentiated from the master production schedule (MPS) because demand: Answers is defined by a bill of material. is configured per customer order. may be satisfied from finished goods. consists solely of shippable end items.

Rationale The FAS is only for shippable items. consists solely of shippable end items.

Which of the following statements about the final assembly schedule (FAS) is true? Answers The FAS is separate from the master production schedule and serves a completely different purpose. The FAS includes only final operations. The FAS is the same as the production plan. The FAS is the same as the master production schedule.

Rationale The FAS plans and controls final assembly, which is different from the master production schedule. It is typically driven by customer demand, not the forecast, and is for end items. The FAS is separate from the master production schedule and serves a completely different purpose.

Which inventory valuation method will cause asset values to most closely resemble current market value during a period of inflation? Answers Standard FIFO Average LIFO

Rationale The FIFO method assumes that the oldest inventory (first in) is the first to be used (first out). In inflationary times, this means the value of inventory will increase as lower priced items are used and as higher priced items are received into inventory. Therefore, inventory assets will be valued at a price closer to the market value. The opposite would be true of the LIFO method. Standard and Average are cost accounting systems, but they do not address the relative age of inventory. FIFO

What is the Global Reporting Initiative (GRI)? Answers Internet-based enterprise resources planning system Organization that pioneered a sustainability reporting framework Supplier scheduling tool for communicating supply status Guidelines for a global enterprise to use in reporting on production

Rationale The GRI is a network-based organization that pioneered the world's most widely used sustainability reporting framework. Organization that pioneered a sustainability reporting framework

The internal rate of return (IRR): Answers is used to calculate the profitability index. is used when considering investing in projects. equals the net present value. is the interest rate that makes the net present value of the investment equal to 1.

Rationale The IRR is the rate of compound interest at which the company's outstanding investment is repaid by proceeds from a project. is used when considering investing in projects.

What is a good policy concerning a company's internal rate of return (IRR)? Answers Reverse-engineer competing products whenever possible. Set margins based on competitive analysis. Exceed the costs of material, labor, and overhead prior to approval. Approve the project if the IRR exceeds the cost of capital.

Rationale The IRR is the rate of compound interest at which the company's outstanding investment is repaid by the proceeds from a project. Approve the project if the IRR exceeds the cost of capital.

Which of the following inventory accounting methods would indicate the lowest inventory value on the balance sheet in times of steadily rising prices? Answers Last in, first out (LIFO) First in, first out (FIFO) Standard cost Average cost

Rationale The LIFO method assumes that the newest (last in) item in stock is the first sold. In times of rising prices, replacement is at the current price, and this current price is higher than the accounted-for cost for the inventory that did not sell. In a falling price market, existing inventory is overvalued. Last in, first out (LIFO)

Which of the following cost methods causes inventory valuation to decrease when costs increase? Answers Actual Average First in, first out (FIFO) Last in, first out (LIFO)

Rationale The LIFO method causes inventory valuation to decrease when costs increase. All the others would cause inventory valuation to increase when costs increase. Last in, first out (LIFO)

"The average of the absolute values of the deviations from some expected value" best defines which of the following terms? Answers Standard deviation Mean average deviation Forecast error Mean absolute deviation

Rationale The MAD averages the absolute values of deviations from expected values. Standard deviation is incorrect because it is a statistical measure of difference between a measure and the mean or average of all deviations. Forecast error is incorrect because it is the difference between the actual demand and the forecast demand. Mean average deviation is incorrect, because it is an inaccurate use of the acronym MAD. Mean absolute deviation

Which of the following best represents inputs to the master scheduling process? Answers S&OP, MRP, capacity planning MPS, forecast, RCCP MPS, production plan, resource planning Production plan, forecast, distribution planning

Rationale The MPS is the output of the master scheduling process, so the answers including it are incorrect. Resource planning is used in the S&OP process. MRP is driven by the master scheduling process, and therefore cannot be in the correct answer. Production plan, forecast, distribution planning

The MPS typically displays the plan for which of the following? Answers Dependent demand items Product components Individual products Product families

Rationale The MPS represents what the company plans to produce expressed in specific configurations, quantities, and dates. The other answers are incorrect because the MPS contains independent items, not dependent demand items; product families are planned at the S&OP level; and the MPS schedules end items. Individual products

The PDCA cycle of quality improvement can be used for which of the following? Answers Prioritizing changes by identifying the problems that will be resolved by making these changes Planning quality concurrently with production planning Working toward a decision that satisfies all participants Exploring a range of solutions to a problem and piloting them in a controlled way before selecting one for implementation

Rationale The PDCA (plan-do-check-action) cycle is a four-step process for quality improvement. In the first step (plan), a plan to effect improvement is developed. In the second step (do), the plan is carried out, preferably on a small scale. In the third step (check), the effects of the plan are observed. In the last step (action), the results are studied to determine what was learned and what can be predicted. Exploring a range of solutions to a problem and piloting them in a controlled way before selecting one for implementation

If a team member is listed in a RACI chart as an R for a specific task, what is this member's role? Answers To confirm that a task has been satisfactorily completed To initiate the task and hand it off to the next team To assist in the completion of the task To report on progress on the task to project stakeholders

Rationale The R in the RACI acronym denotes the "responsible" role. This person may or may not perform the task, but the individual is responsible for confirming that the task has been satisfactorily completed. To confirm that a task has been satisfactorily completed

Which of the following is a reason for evaluating multiple sales and operations plans during the pre-S&OP meeting? Answers To assess their financial implications Because the forecast provided may not be accurate Because they are theoretical plans only and so can be changed at any time Because the S&OP plan cannot be finalized until delivered to top management

Rationale The S&OP process requires thorough analysis of alternative sales and operations scenarios to assess their financial implications. To assess their financial implications

Which production activity control scheduling technique often involves searching orders for ones that have the same setups as the last batch but just for one or more particular work centers? Answers TOC drum-buffer-rope Lean scheduling MRP-based scheduling Priority sequencing

Rationale The TOC (theory of constraints) drum-buffer-rope scheduling method approaches job sequencing by considering how to maximize throughput at bottleneck work centers first. One way this is done is by searching orders for the same setup as the last batch at bottleneck work centers and moving those to the top. Non-bottleneck work centers still use priority sequencing rules. TOC drum-buffer-rope

Using a 365-day year, what is the average age of the inventory if the cost of goods sold is $100,000 and the average inventory is $55,000? Answers 0.55 150.7 202 663

Rationale The average age of the inventory is calculated by dividing 365 by the inventory turns: 365/1.8 = 202. 202

What is a likely reason why a process is said to exhibit signs of being out of control if 13 points are on one side of the median? Answers 13 points should be equally likely to occur on both sides of the median. 13 points are statistically required in order to calculate a new median. 13 is a typical number used for plotting and is easy to remember. 13 points can easily be plotted in a two-shift or two-day operation.

Rationale The average of all points should approximate the median. Points all on one side are showing a tendency of heading out of control. 13 points should be equally likely to occur on both sides of the median.

The top level of the distribution requirements planning record should be: Answers at the master production schedule level. at the distribution center. at the manufacturing facility. at the point closest to the customer.

Rationale The best information to drive the planning would come from the point closest to the customer, whether that be direct information from the customer or from the distribution center closest to the customer. at the point closest to the customer.

What is a bill of resources? Answers Listing of key materials required to manufacture one unit of a selected item Listing of key resources required to manufacture one unit of a selected item Amount of product that can be loaded for distribution Unique configuration created to aid the master scheduler

Rationale The bill of resources details the key resources required to manufacture one unit of an item. Listing of key resources required to manufacture one unit of a selected item

What added benefit can result from incorporating sustainability policies in the strategic planning process? Answers Avoiding plant-level regulatory fines Adding measurable activities to job descriptions for facilities personnel Increasing expertise and diversity at the board of directors' level Reducing transportation costs

Rationale The board of directors' level would be strategic. The other responses would be tactical, not strategic. Increasing expertise and diversity at the board of directors' level

All of the following are considerations in the adoption of a process focus except: Answers the book value of current production assets. the capital intensity of the manufacturing process. the complexity of the manufacturing process. the type of technology used in the manufacturing process.

Rationale The book value of current production assets will have no effect on how the assets will be used in production. the book value of current production assets.

In the theory of constraints planning and control system, which of the following techniques facilitates the capacity control function? Answers Buffer management Pace of throughput Drum schedule Rope

Rationale The buffer ensures that the process will never be starved for needed inventory. This represents the amount of time that the inventory in the buffer protects the constraint from disruptions. Buffer management

To deal with excess inventory in one period and shortages in another period in a multi-node supply chain, a company implements point-of-sale reporting. What has this solution helped to eliminate? Answers Stress of stockouts Excessive costs of enterprise resources planning system changes Tendency to add bias to forecasts Bullwhip effect

Rationale The bullwhip effect is an extreme change in the supply upstream generated by a small change in demand downstream. Inventory can quickly move from being backordered to being in excess. This is due to the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain. Bullwhip effect

After the business plan, what is the next step in the planning hierarchy? Answers Master schedule Production plan Sales and operations plan Logistics plan

Rationale The business plan is a long-term plan; the next step is to break it down to a medium-term plan, which is what the sales and operations plan does. Sales and operations plan

Which of the following describes the outputs of the business planning process? Answers Statement of revenue, cost, and profit objectives by product family Mission, goals, and objectives of the organization, with action plans Determination of capital equipment investment to support the resource plan Sales and operations plan, production plan, and inventory or backlog plan

Rationale The business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement. Statement of revenue, cost, and profit objectives by product family

Why does sales and operations planning (S&OP) address both monetary units and product families? Answers The planning horizon covers both long- and short-term planning. Knowing both enables a cross-check to ensure consistency. Accounting needs monetary unit information, and production needs product information. Monetary units are an input, and product family plans are an output.

Rationale The business plan is an input to the demand part of S&OP and is stated in monetary units; the production plan is an output and is stated in product families. S&OP is considered a medium-term planning horizon. Monetary units are an input, and product family plans are an output.

Which of the following interfaces deals primarily with translating monetary units into product families for planning purposes? Answers Sales and operations planning to master scheduling Strategic planning to business planning Business planning to sales and operations planning Master scheduling to detailed scheduling and planning

Rationale The business plan is in monetary units, while the sales and operations plan uses aggregate product family planning. Business planning to sales and operations planning

A company has a standard product line that is regularly reengineered to reduce cost and improve quality. What must the buyer be most aware of when communicating new replenishment requirements to the supplier? Answers Due date Part cost Drawing revision Order quantity

Rationale The buyer needs to make sure that the supplier is providing parts for the latest engineering revision. Drawing revision

In manufacturing, what is the cash conversion cycle? Answers Length of time from purchase of raw materials to collection of accounts receivable Average time open to close for accounts receivable Ratio of accounts receivable for shipped end items to accounts payable for raw materials Length of time for a new product to generate profits

Rationale The cash conversion cycle in manufacturing is defined as the length of time from the purchase of raw materials to the collection of accounts receivable. Length of time from purchase of raw materials to collection of accounts receivable

What is the term for the intersection of a row and a column in an MRP grid? Answers Bucketless display Time bucket Manufacturing cell Time period

Rationale The cell formed by the intersection of a row and a column is a time bucket, which summarizes the designated number of days of data for that line. Time bucket

The number of exposures to stockouts is related to: Answers the reorder point. the number of replenishment orders. the required customer service level. the level of safety stock.

Rationale The chance of stocking out occurs when inventory is low, which occurs at the time an order is being placed. the number of replenishment orders.

Which of the following production methods is most likely to be used in an engineer-to-order environment? Answers Push Level Chase Pull

Rationale The chase method would be most likely to be used in an engineer-to-order environment. Chase

The marketing director is complaining that even though material availability is not a problem, backorders are rising. The operations manager says that many of the workers who were laid off months ago are unavailable and the few new workers hired so far face a learning curve. Which of the following could explain why this situation is occurring? Answers The organization has only a single distribution warehouse. The organization has poor quality performance. The organization has failed to invest in employee training programs. The organization is using a chase strategy.

Rationale The chase production strategy is a production planning method that maintains a stable inventory level while varying production to meet demand. In this situation, demand has increased again, and, while materials are available, scaling up the production workforce is proving difficult. While employee training may also be needed, the cycle of layoffs and hiring is more to blame for this issue. The organization is using a chase strategy.

Tracking signals are computed by which of the following methods? Answers Multiplying the MAD by four Dividing the cumulative sum of errors by the MAD Increasing the α coefficient to the MAD Dividing the average error by the trip value

Rationale The cumulative sum of errors divided by the MAD is the correct computation of a tracking signal. The cumulative sum of errors is also referred to as the running sum of forecast error. Dividing the average error by the trip value is incorrect because the trip value is a threshold predetermined by management. Multiplying the MAD by four is incorrect because it is one way to calculate a trip value. Increasing the α coefficient to the MAD is incorrect because the α coefficient can be adjusted to place more emphasis on recent information, but is not used to compute the tracking signal. Dividing the cumulative sum of errors by the MAD

Business-to-business customers have said that new products being rolled out need to have reasonable delivery reliability and price but insist on a product design that meets exacting precision requirements so it integrates with their product without costly rework. They do not care about delivery speed because they are able to place their orders far in advance. Which of the following strategies would be most likely to delight these customers? Answers Consider product design to be the only order winner to focus on and accept that this will require a higher-than-average price, use slow and inexpensive shipping to compensate, and work on great delivery reliability using a make-to-stock strategy. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time. Consider product design, delivery reliability, and price to be order winners to focus on so as to exceed expectations. Create a good design with best-in-class delivery reliability and a reasonable price by focusing on high production rates and inspections to ensure that only products that match the exacting specifications go out the door to the customer.

Rationale The combination of product and related services will delight customers when their order qualifiers are all met and their order winner qualities are kept as the highest priority. In this case, the organization does not try to make all things be order winners but focuses on great product design. They use slow shipping methods and make-to-order to keep their costs down and offer a price that keeps it as an order qualifier. Any extra costs required to ensure above-average delivery reliability could then be absorbed. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time.

An organization consistently wins awards for the designs of its products, but customer satisfaction scores don't seem to reflect this product superiority. What is likely the root cause of this issue? Answers Fickle customers Poor service provision Even better competitor products Order winners becoming order qualifiers

Rationale The combination of the product and its associated services is sometimes called the product-service package to indicate that the two are inseparable, especially in the mind of the customer. The customer may like a product itself, but if it has poor associated services, the customer will still likely not be satisfied. Poor service provision

A company produces products that are unique and highly customized. Which of the following methods for costing should be used for each product they produce? Answers Activity-based costing Direct costing Standard costing Project costing

Rationale The company's products are unique and highly customized. As such, the production environment is engineer-to-order and products are produced through projects. In this environment, project costing is the appropriate model. Project costing

A company seeks to maximize the life span and utilization of all products delivered. From this perspective, which of the following would an elevator company do? Answers Sell the elevators and service contracts. Sell the elevators at a breakeven or a loss and manage service as its key revenue generator. Sell the elevators and provide free service. Sell the elevators as a service, maintaining ownership itself.

Rationale The concept of natural capitalism divides the world's resources into four basic areas: natural, human, manufactured, and financial capital. Under this philosophy, an elevator company would see the elevator as a service, maintaining ownership itself. Sell the elevators as a service, maintaining ownership itself.

What can make producing an unrealistic final assembly schedule (FAS) a worse problem than producing an unrealistic master production schedule (MPS)? Answers The shorter planning horizon for an FAS magnifies the impact of forecasting error. An FAS is based entirely on forecasts. An FAS is the last step of the MPS, so there is less time to make corrections. An FAS is based entirely on actual customer orders.

Rationale The consequences of an unrealistic FAS can potentially be more severe than those of an unrealistic MPS because an FAS is based entirely on actual customer orders and has no forecasted component, meaning any change will directly impact a customer order. An FAS is based entirely on actual customer orders.

A statistical control chart distinguishes between special and common-cause variation through which of the following? Answers Histogram Control limits Distribution curve Sample size

Rationale The control chart distinguishes between common and special causes of variation through its control limits. Common causes of variation cause data to stay between the control limits 99.73 percent of the time. Distribution curve, sample size, and histogram are incorrect because a control chart does not show a distribution curve, sample sizes, or a histogram. Control limits

A statistical control chart distinguishes between special and common-cause variation through which of the following? Answers Histogram Sample size Distribution curve Control limits

Rationale The control chart distinguishes between common and special causes of variation through its control limits. Common causes of variation cause data to stay between the control limits 99.73 percent of the time. Distribution curve, sample size, and histogram are incorrect because a control chart does not show a distribution curve, sample sizes, or a histogram. Control limits

What is the interval between the completion of run time for one operation and the beginning of the setup at the next operation called? Answers Post-operation time Queue time Move time Interoperation time

Rationale The correct terminology for interoperation time is being tested here. Although queue and move times are both components of interoperation time, neither includes all the elements between completion of run time at one operation and the beginning of setup at the next. Post-operation time would include only wait time and possibly move time. Interoperation time

Why have standard manufacturing cost accounting methods become less applicable today? Answers Material costs are a higher proportion of total costs. Direct labor costs are a higher proportion of total costs. Material costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs. Material costs are a higher proportion of total costs, direct labor costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs.

Rationale The cost of materials and components has risen over time. With the rise in automation and lean manufacturing, the tracking of indirect labor costs has risen in importance, and these costs have a direct impact on total cost. Material costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs.

An overload condition has been identified in the current period in spite of having a well-balanced final assembly schedule and material plan. What is the first action to be taken by production? Answers Schedule overtime to get back on schedule. Adjust capacity planning parameters. Delay orders that caused the overload. Determine the reason for the overload.

Rationale The immediate need is to resolve the existing overload using overtime. Schedule overtime to get back on schedule.

What ratio can be used to determine a company's ability to pay its liabilities by converting assets in the near term? Answers Inventory turnover Current ratio Debt ratio Accounts receivable turnover

Rationale The current ratio reflects the ability to pay debts from assets that can be quickly converted to cash, unlike long-term assets or inventory, which is reflected in the debt ratio. Accounts receivable indicates the organization's ability to collect payments from customers, and inventory turnover indicates the speed with which assets are converted into revenue. Current ratio

The current ratio is used to appraise the ability of a company to: Answers issue more founders' stock. attain its current year-end earnings-per-share goal. sustain its current rate of sales. satisfy its current debt out of current assets.

Rationale The current ratio, used to appraise the ability of the company to satisfy its current debt out of current assets, is calculated as follows: (Current Assets/Current Liabilities) satisfy its current debt out of current assets.

A company has made process improvements that have reduced shift lengths from ten to eight hours while maintaining production rates and material delivery schedules. What is the general effect on the level of raw material? Answers It is increased by 20%. It is reduced by 20%. It is reduced by 25%. There is no change.

Rationale The daily production rate and material delivery schedules are the same, so levels will not change. There is no change.

Which of the following is the general rule for planning horizons? Answers They are based on the gross requirement of each distribution center in the system for that item. They extend into the future to cover the lead times through supply processes and delivery to the final distribution point. They depend on the delivery time and quantity of goods already ordered and in transit. They are primarily based on lead time in the manufacturing processes.

Rationale The definition of planning horizon is that it should extend far enough into the future to cover the sum of all lead times, from the beginning to the end of the manufacturing process through delivery to the final distribution point. They extend into the future to cover the lead times through supply processes and delivery to the final distribution point.

Which of the following management processes is responsible for balancing customer demand and the firm's output capabilities? Answers Forecast management Product management Priority management Demand management

Rationale The demand management process weighs both customer demand and a firm's output capabilities and tries to balance the two. Demand management

Which of the following actions should a dispatcher perform in an environment where there is excess capacity in order to meet a shortage at a downstream operation? Answers Splitting the lot Paying a premium Paying overtime Expediting

Rationale The dispatcher should split the lot so the required quantity is done in less time. Splitting the lot

Which of the following warehouse roles deals with grouping different items into an order? Answers Distribution channel Transaction channel Manufacturing channel Physical supply channel

Rationale The distribution channel is concerned with the transfer or delivery of goods or services to the customer. Distribution channel

A B2B organization makes replaceable belts for newspaper printing press maintenance. When identifying their customer segments, who would be the economic buyer? Answers Printing press manufacturers Newspaper readers Newspaper companies The Associated Press

Rationale The economic buyer is the organization whose budget funds the purchase. Since these are maintenance items for products out in the field, the newspaper companies would be the primary buyers. The printing press manufacturers would also be buyers but would buy in lower volume. Newspaper companies

A production plan has established 1,000 units in a period for a stocked product family. Specific percentages for end items are not known with certainty. Which of the following alternatives should the master schedule ignore when translating the product family into specific master production schedule quantities? Answers Use a super bill of material to overplan the percentages in a two-level master production schedule. Make an estimate of the number of actual end items to produce based on history. Use a modular bill of material and overplan the options to provide for some uncertainty. Overplan the end items based on historical deviations to provide for some uncertainty.

Rationale The end item quantities should not be overplanned, as they must equal the quantity in the production plan. Overplan the end items based on historical deviations to provide for some uncertainty.

Measuring the order fill rate enables a company to determine: Answers forecast accuracy. backorder allocations. customer service levels. throughput time.

Rationale The fill rate measures delivery performance of finished goods. customer service levels.

A company makes four product lines, each with a variety of features and options. Which of the following tools would be most appropriate for the company to use to document the product configurations to be built over the next two weeks? Answers Final assembly schedule Detailed material plan Master production schedule Planning bill of material

Rationale The final assembly schedule (FAS) is prepared after receipt of a customer order, as constrained by the availability of material and capacity (based on the features and options ordered). It schedules the operations necessary to complete the product assembly and states the exact set of end products to be built over the time periods. Final assembly schedule

Specifically accounting for a finishing lead time is an element of: Answers constrained scheduling. production scheduling. master production scheduling. final assembly scheduling.

Rationale The final assembly schedule is where any special packaging and finishing operations are defined for a customer order. final assembly scheduling.

The business plan reflects a connection between which of the following areas? Answers Sales forecasts and customer orders Customer orders and production quantity Production quantity and financial numbers Financial numbers and sales forecasts

Rationale The financial goals (profit and loss) are directly tied to the sales forecasts, which will provide a statement of expected company revenues. Financial numbers and sales forecasts

The validity of the material requirements plan (MRP) is most reliant on the accuracy of the: Answers on-hand inventory. projected available balance. scheduled receipts. gross requirements.

Rationale The first calculation in the process begins with the on-hand balance. on-hand inventory.

During MRP record balancing, if no safety stock is specified, when is the first net requirement triggered? Answers When projected available is less than the lot size When projected available is less than the gross requirements for the next period When projected available first becomes negative When projected available first becomes zero

Rationale The first net requirement is triggered during MRP record balancing when projected available first becomes negative. The other answers are incorrect because carrying no inventory until there is an item needed is a major advantage of MRP; because MRP generates the net requirement in the next period; and because lot size has no relation to net requirement calculation. When projected available first becomes negative

What is the first step in planning the scheduling of goods and services? Answers Production planning Master production scheduling Forecasting Sales and operations planning

Rationale The first step in determining what will actually be produced is sales and operations planning. Sales and operations planning

Which of the following is the most powerful and most widely used tool for diagnosing the principal competitive pressures in a market? Answers Four Ps (price, product, promotion, placement) Income statement Balance sheet Five forces model

Rationale The five forces model analyzes competitive pressures in a market and assesses the strength and importance of each of those pressures. Five forces model

The five forces model: Answers identifies market trends. is used to determine the economic features of a market. considers the impact of buyers on competition. determines what market positions rivals occupy.

Rationale The five forces model consists of the following elements: rivalry among competitive sellers, buyer bargaining power, substitute products, supplier power, and new entrants into the marketplace. considers the impact of buyers on competition.

What are the main components of advanced planning and scheduling (APS)? Answers Forecasting, sales and operations planning, production scheduling, distribution planning, and transportation planning Demand planning, production planning, production scheduling, distribution planning, and transportation planning Demand planning, production planning, production scheduling, material requirements planning, and final assembly scheduling Demand planning, sales and operations planning, master production scheduling, material requirements planning, and distribution planning

Rationale The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

What is the focus of the sales and operations planning meeting? Answers Planned vs. actual numbers Plan for future months Qualitative knowledge Previous month's numbers

Rationale The focus of the sales and operations planning meeting is the future months' forecast, sales, production, and inventory levels. Plan for future months

Which generic strategy has two subsets? Answers Focus Best-cost provider Differentiation Low-cost provider

Rationale The focus strategy has two subsets: a low-cost focus and a differentiation focus. Focus

A manufacturing company implementing a focused factory strategy has likely come to what conclusion? Answers A focused factory is more likely to recover from a market downturn. A focused factory will gain significantly from bill-of-material modularization. A focused factory will likely suffer higher costs due to under-capacity utilization if more diversified. A focused factory will outperform a plant attempting a broader set of objectives.

Rationale The focused factory idea holds that a plant focusing on a narrow range of products aimed at a particular market will outperform a plant attempting a broader set of objectives. A focused factory will outperform a plant attempting a broader set of objectives.

In which of the following zones is it most difficult to respond to changes in customer demand? Answers Liquid Slushy Frozen Danger

Rationale The frozen zone should be the most protected in terms of the amount of change permitted. The other answers are incorrect because there is no zone called the danger zone; in the liquid zone extensive changes can be made without causing much disruption to the MPS; in the slushy zone some change is tolerated, but changes must be controlled carefully. Frozen

Which of the following best describes mixed-model scheduling? Answers Produces some models for next year while making this year's models Aims to produce each according to daily demand All of the above Provide flexibility at the cost of higher WIP

Rationale The goal is to build every item every day, according to daily demand, in order to minimize WIP and control costs. Production of next year's models along with this year's models is not a mixed-model scheduling practice. Aims to produce each according to daily demand

A company's process design and manufacturing departments are developing a team to run a kaizen event to improve production methods and standards. Which of the following lists the steps for the kaizen project in the correct order? Answers Identify the problem areas; review the current work procedures; solve problems and develop new methods; implement new methods. Identify the problem areas; solve problems and develop new methods; review the current work procedures; implement new methods. Review the current work procedures; identify the problem areas; solve problems and develop new methods; implement new methods. Review the current work procedures; solve problems and develop new methods; identify the problem areas; implement new methods.

Rationale The goal of a kaizen project is to improve a process. For that activity to occur, the kaizen team must start with an analysis of the current process. The review should establish and quantify gaps and redundancies in process performance. Next, the kaizen team should correct problems and develop new methods so that the problems do not recur. This will include testing the possible new process steps. Finally, once the new processes have been cleared of all defects, the new process should be implemented. Review the current work procedures; identify the problem areas; solve problems and develop new methods; implement new methods.

Which of the following is an advantage of overforecasting a new assemble-to-order product during the growth phase as it relates to raw material inventory? Answers Overforecasting improves customer service by increasing part availability. There is no relationship between forecasting at the sales and operations level and raw materials. The planner is assured that any raw material excess will be used eventually. Raw materials are purchased only when actual customer orders offset forecasts.

Rationale The growth phase may result in levels that are too low, so excess raw material buffers against that. Overforecasting improves customer service by increasing part availability.

Which of the following most fully describes the improve phase of DMAIC? Answers It evaluates alternative remedies. It designs and tests a remedy. It evaluates alternative remedies and designs a remedy. It evaluates alternative remedies and designs and tests a remedy.

Rationale The improve phase typically evaluates alternative remedies developed in the analyze phase, designs a remedy after some experimentation, and tests the remedy under conditions that simulate the real world. Therefore, the other options are only partly true. It evaluates alternative remedies and designs and tests a remedy.

A statement of a company's goals and its approach to the management of inventories is the: Answers inventory cycle. inventory accounting. inventory investment. inventory policy.

Rationale The inventory policy is a statement of a company's goals and its approach to the management of inventories. inventory policy.

Which manufacturing environment is best suited for the introduction phase of a product's life cycle? Answers Flow Job shop Assembly line Engineer-to-order

Rationale The job shop layout allows for the incorporation of new product into existing work centers. Job shop

A make-to-stock company is considering improving its customer service level through a combination of shipping from finished goods and shipping from final assembly. Which of the following inventory management considerations is most important to this new strategy? Answers Production responsiveness End items Manufacturing environment Customer service level

Rationale The key is whether production can receive and ship an order in the lead time quoted to customers. Production responsiveness

During the material requirements planning process, what is the key purpose of the BOM? Answers Provide a structure to guide the explosion Provide a structure to guide netting Describe assembly details Generate a pick list of components needed for an item

Rationale The key purpose of a bill of materials is to provide a structure to guide the explosion. The BOM may form a pick list of components needed for an item, but not during the MRP process. The BOM does not guide netting. The BOM describes the material structure of an item, but gives few details about its assembly. Provide a structure to guide the explosion

Development of an effective work team involves which of the following guidelines? Answers Measure results frequently. Direct firmly. Avoid conflict. Select and train.

Rationale The key to effective work teams is to have the right personnel who are then trained in the processes of the operation or project they are assigned to. Select and train.

An organization uses rough-cut capacity planning (RCCP) at the tactical level during master scheduling as a capacity check on raw materials. What type of organization is this? Answers Assemble-to-order Make-to-order Make-to-stock This would not happen at any type of organization; RCCP occurs only during material requirements planning.

Rationale The level of detail at the tactical level will depend on the manufacturing environment. A make-to-order environment will plan master schedules at the raw materials level because nothing is produced until orders come in. Critical raw materials (scarce, bottleneck, etc.) would be part of RCCP. Make-to-order

Which of the following descriptions of the decoupling point does not apply in all manufacturing environments? Answers Latest point in the supply process at which a supplier holds inventory in expectation of a customer order Location of subassemblies awaiting final assembly Strategic decision that determines customer lead time and inventory investment Where inventory is placed to create independence between processes or entities

Rationale The location of subassemblies awaiting final assembly is the correct answer, because it describes the decoupling point only in an ATO manufacturing environment. All of the other answers apply to all manufacturing environments. Location of subassemblies awaiting final assembly

A component has three qualified suppliers, but none has been designated as the primary supplier. Which of the following lead times should be used by material requirements planning in order to ensure delivery reliability? Answers Longest Shortest Historical Average

Rationale The longest lead time ensures that sufficient lead time is provided if that supplier is selected. If one of the other suppliers is selected, they receive an order and additional lead time for delivery. Longest

Which of the following benefits is the most likely reason for reducing internal setup time when implementing continuous improvement? Answers There are fewer activities where a mistake can be made. The lot quantity per kanban can be reduced. Shorter cycle times can be quoted to the end customer. The number of kanbans in the process can be reduced.

Rationale The lot quantity can be reduced due to being able to perform more frequent setups. The lot quantity per kanban can be reduced.

Exponential smoothing techniques are desirable for which of the following reasons? Answers Low cost Long-range accuracy Low cost and flexibility of application Low cost, long-range accuracy, and flexibility of application

Rationale The low cost to assemble data and calculate a forecast and the flexibility of exponential smoothing are two important attributes of the technique. Low cost and flexibility of application

A component is defined on only one bill of material at level 6, but it also has independent demand. Which of the following statements is true? Answers As a service part, the low-level code is 0. As a service part, the low-level code is 6. It is treated as a phantom subassembly. The item cannot be planned by material requirements planning due to the independent demand.

Rationale The low-level code of a component does not change based on how it is used as long as it has a parent item. As a service part, the low-level code is 6.

What is the role of upper management in a quality organization? Answers To supervise the quality functions and activities To hire outside resources to provide quality oversight To provide resources and training for quality activities To facilitate the quality teams

Rationale The main role for upper management is to provide the resources for quality activities and provide training in quality methodologies. To provide resources and training for quality activities

A manager who is committed to employee involvement typically will Answers inform employees of decisions. tell decisions to employees. seek employee input on decisions. limit employee decisions.

Rationale The manager who is committed to employee involvement will seek employee input on decisions. To inform/tell employees of decisions and to limit employee decisions represent a command-and-control style of management and do not encourage employee involvement. seek employee input on decisions.

What is the logical connecting point between the supply system and the distribution system? Answers ISO 9000 TOC MRP MPS

Rationale The master production schedule (MPS) connects the distribution system, DRP, with the production system, material requirements planning (MRP). ISO 9000 is incorrect, because it is a documentation process related to documentation of production, return, and service policies and practices. TOC is incorrect because it is the theory of constraints, an internal philosophy related to increasing throughput at bottlenecks in the production and delivery process. MRP is incorrect because it receives input from the MPS and explodes the required bills of material to order purchased and production items. MPS (master production schedule)

The sum of the master production schedules for the items within a product family must be: Answers equal to the total shown in the production plan for that family. not more than the total shown in the material requirements plan. not more than the total shown in the production plan for that family. equal to the total shown in the material requirements plan.

Rationale The master production schedule disaggregates the production plan from product family to individual items. The totals on the master production schedule should match the product family total in the production plan. equal to the total shown in the production plan for that family.

Which of the following actions is taken first to ensure the validity of the material plan in a make-to-stock company? Answers Development of the master production schedule Development of the operations plan Development of the material requirements plan Development of the capacity requirements plan

Rationale The master production schedule is the first time in the planning hierarchy that individual products are defined by date and quantity. Development of the master production schedule

Who is responsible for disaggregating the production plan into the master production schedule? Answers Master scheduler Materials manager Production manager Sales manager

Rationale The master scheduler is responsible for disaggregating the production plan into the master production schedule. Master scheduler

The plan for the production and purchase of components used in making items in the master production schedule is the: Answers capacity management plan. production plan. sales and operations plan. material requirements plan.

Rationale The material requirements plan explodes the products from the master production schedule orders to determine the quantities and dates for all manufactured and purchased components. material requirements plan.

Why does capacity requirements planning use infinite rather than finite planning? Answers Infinite capacity matches the level of detail as defined in the planning hierarchy. Customer demand is inconsistent and requires variable work center capacity. The material requirements plan cannot provide sufficient detail for finite loading. Capacity requirements planning is simply a reflection of the requirements from the material plan.

Rationale The materials plan drives the requirements for capacity planning. Capacity requirements planning is simply a reflection of the requirements from the material plan.

The simple average of a group of values is the: Answers median. mode. middle. mean.

Rationale The mean is the arithmetic average of a group of values. mean

Which of the following is true of using planning bills to forecast options for an assemble-to-order product? Answers The product mix cannot equal more than 100%. The product mix can equal less than 100%. Overplanning of an option would mean that the percentages equal more than 100%. Each planning bill option is forecast separately and is not combined with other options.

Rationale The mix for a planning bill must add up to a minimum of 100% but may be greater in order to gain flexibility. Overplanning of an option would mean that the percentages equal more than 100%.

The value that occurs most frequently in a group of values is known as the: Answers muda. mean. median. mode.

Rationale The mode is the value that occurs most frequently in a group of values. mode.

A company is developing a new transmission product, and it needs to automatically pick up the final assembly via an overhead monorail for transport to shipping. Which of the following types of partnerships is most appropriate? Answers Technical Operational Financial Strategic

Rationale The monorail carrier will need to pick up the transmission using several lifting points. This is a technical challenge that requires collaborative effort. Technical

Which factor contributes most to the success of a change initiative? Answers Using supervisors as coaches Education and training at the top of the organization Communicating to employees the reason for the change Day-to-day involvement of top management in implementation and control

Rationale The most critical step listed is to communicate the purpose and objectives behind the initiative to employees. This creates a sense of urgency and involvement and reduces resistance. Communicating to employees the reason for the change

At the close of a project to design a new process for operations, an important unit manager refuses to cooperate in implementing the process. What is the most likely cause for this problem? Answers Insufficient budget to meet all stakeholder needs Failure to engage the unit manager earlier in the process Poor quality in the new process A personality conflict with the project manager

Rationale The most likely problem when a customer rejects a deliverable is that this critical stakeholder was not involved early in the project and engaged throughout the project. The other choices are all possible but would have appeared and been addressed earlier. Failure to engage the unit manager earlier in the process

A company that recently initiated a sales and operations planning (S&OP) process is experiencing inadequate participation. Which of the following factors is most likely the reason for this? Answers Senior management is not committed to the new process. An integrated software system is not in place. The sales team continues to forecast inaccurately. The manufacturing environment is make-to-order.

Rationale The most likely reason is that senior management is not committed to the new process. Senior management is not committed to the new process.

The target inventory level of a periodic review system is: Answers an economic order quantity. an average. a minimum. a maximum.

Rationale The order quantity may vary in the periodic review system, since it is the amount of inventory that is required to bring the total inventory to a maximum or target inventory level. a maximum.

Which option is the most sustainable long-term approach to waste in manufacturing? Answers Redesign products to minimize use of materials. Donate reusable materials, such as lumber, to nonprofits. Purchase materials from suppliers with certifications in sustainable practices. Recycle as much leftover and returned material as possible.

Rationale The most sustainable waste strategy is to avoid using materials in the first place (i.e., to minimize their use in product and packaging design). Redesign products to minimize use of materials.

What do companies often use to sustain financial objectives matched with strategic objectives? Answers Total market capitalization value of the company Balance sheet Balanced scorecard Ratio of earnings per share and stock price

Rationale The most widely used framework for keeping financial objectives matched with strategic objectives is the balanced scorecard. Balanced scorecard

What forecast technique uses average demand for a certain number of periods prior to the month being forecasted? Answers Exponential smoothing Moving average Average Historical demand

Rationale The moving average is an average of a certain number of the most recent observations. Moving average

Which of the following is the least likely use of Pareto chart analysis in DMAIC? Answers In the measure phase, identifying the "vital few" categories of symptoms of errors in sales order documentation Selection of the "vital few" projects for improvement in the define phase In the improve phase, determining the relationship between time in storage and loss of potency of an active ingredient In the analyze phase, tabulating the percentage of total shutdown time accounted for by each of 11 steps required to shut down in order to remove a hot mold from the molding machine

Rationale The need for correlation analysis is best met by tools such as scatter diagrams, not a Pareto chart. In the improve phase, determining the relationship between time in storage and loss of potency of an active ingredient

Which of the following statements correctly describes netting logic when safety stock is involved? Answers If the projected available balance falls below the safety stock, material requirements planning will generate a planned order. Safety stock is classified as a requirement in the current planning period. Allocations are added to on-hand inventory and safety stock to establish a beginning available balance. On-hand inventory should be reduced by allocations and increased by safety stock to establish a beginning available balance.

Rationale The netting process ensures that the projected available balance (PAB) does not drop below the safety stock. Allocations are taken from the beginning on-hand inventory first, and then the gross requirements are subtracted. If the PAB falls below the safety stock, material requirements planning generates a planned order. If the projected available balance falls below the safety stock, material requirements planning will generate a planned order.

If an organization has implemented a sustainability initiative but it has not produced the desired results, what step should the organization take next? Answers Implement an audit. Educate the organization about the goals of the plan. Prepare a business case for the plan. Revise the plan's objectives.

Rationale The next step the organization takes should be to implement an audit. All of the other options should have preceded implementation of the sustainability initiative. Implement an audit.

Using the nominal group technique to generate ideas is similar to: Answers force-field analysis. brainstorming. A3. mind mapping.

Rationale The nominal group technique, which is similar to brainstorming, is used by teams to generate ideas on a particular subject. brainstorming

Supplier waste can be eliminated by using which of the following? Answers Acceptance sampling Vendor-managed inventory Quality at the source Joint replenishment

Rationale The objective of quality at the source is to reduce or eliminate shipping or receiving quality inspections and line stoppages as a result of supplier defects. Quality at the source

In a company with somewhat erratic demand levels, which of the following is of most importance to the planner in the relationship between material requirements planning (MRP) and capacity requirements planning (CRP)? Answers Whether the plan is achievable Whether there is a balance Whether overload conditions exist Whether underload conditions exist

Rationale The objective of running CRP with MRP is to know that the plan is achievable. Knowing the other elements is important in order to help achieve the plan. Whether the plan is achievable

On a matrix that has service production volume on one axis and service variety on the other, which is the best example of a low-variety, high-volume service? Answers Online photo printing service Phone calls to sales prospects Standard dental cleaning visit Vehicle oil change service

Rationale The oil change service has the lowest variety. Photo printing, for example, typically has many options. Oil change services are also high-volume services compared to other automotive maintenance options. Vehicle oil change service

Capacity requirements planning has been used to check the validity of the material plan, and no constraining work centers have been identified. Which of the following is most likely the reason? Answers The available capacity is greater than that required by the volume and mix. The capacity check did not include the various constraining work centers. The production operations are balanced and have no individual bottlenecks. Capacity requirements planning used infinite capacity rather than finite loading.

Rationale The only scenario that is known is that there is enough available capacity. Individual operations within a work center may still have bottlenecks. The available capacity is greater than that required by the volume and mix.

A market leader in systems computing fails to adapt to market trends for smaller devices and cloud computing. This reveals a poor assessment process concerning its: Answers monthly sales and operations planning (S&OP). strengths, weaknesses, opportunities, and threats (SWOT) analyses. operations strategy. executive dashboard capabilities.

Rationale The operations strategy shapes the long-term capabilities of an operation and should be consistent with the overall strategy. operations strategy.

"Responding to the customer with the price and availability, promise and confirmation, and advance ship notices" best defines which of the following terms? Answers Order fulfillment cycle Focus on quality Order qualifier Continuous improvement

Rationale The order fulfillment process is defined as a series of customer interactions with an organization through the order filling process, which includes price and availability, promise and confirmation, and advance shipping information. Order fulfillment cycle

A company produces and distributes three families of basic materials that are sold directly to manufacturers. The industry is very competitive, and the growth rate is low. Which of the following would be the most appropriate focus for the operations strategy in this situation? Answers Reducing lead time variability Reducing waste in operations Increasing speed of production Increasing operating flexibility

Rationale The performance objectives for a company differ depending on the type of business. In this situation, with a business that produces standard, basic products in a competitive environment, the focus of the operations strategy will likely be cost reduction and efficiencies, which can be achieved by reducing waste in operations. Reducing waste in operations

A supplier has notified a buyer that an order for a component will be two weeks late due to a material shortage. Which of the following actions should the material planner take? Answers Expedite the order to the required date. De-expedite the order to synchronize required dates. Perform bottom-up replanning based on pegging and available inventory. Identify affected parent orders and reschedule each by two weeks.

Rationale The planner first needs to identify the effect of a late shipment on parent requirements. Perform bottom-up replanning based on pegging and available inventory.

There is available inventory of 100 units of a component. There are five parent orders that each require 100 of the component, for a total requirement of 500 units. The five end items are being produced to a forecast, and no actual demand is known. Which of the following actions is the planner most likely to do? Answers Wait and see which parent is the first to stock out and release that parent. Firm the planned orders of the parents for 20 each and release all five. Expedite the component and release the five orders on their scheduled release dates. Release one of the parent orders on the scheduled date and hold the others.

Rationale The planner will allocate the available inventory so as to produce some of each parent. Firm the planned orders of the parents for 20 each and release all five.

Which of the following is a point in the master scheduling process planning horizon that marks a boundary inside of which changes to the schedule may affect component schedules, capacity plans, customer deliveries, and cost? Answers Demand time fence Projected available balance Planning time fence Available-to-promise

Rationale The planning time fence is a point in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may affect component schedules, capacity plans, customer deliveries, and cost. Demand time fence is not as good an answer because changes inside the demand time fence are almost certain to have adverse effects in a well-planned process. Planning time fence

Which method of setting the price of a good or service is the most realistic way to do it given today's global economy? Answers Determine the necessary price and then subtract the total cost per unit to determine the resulting profit margin. Determine the desired profit margin, add actual variable costs per unit, and then sum them to find the price. Choose a costing approach that results in the best profit margin and then use it to find the price. Determine the desired total cost per unit and add the desired profit margin to find the price.

Rationale The price in today's global markets is determined by market forces and is often either fixed or falling. Therefore, the price is the starting point. Necessary price considers value to the customer relative to alternatives. It also compares the total cost of ownership against competitor pricing. To sell at a profit, total costs per unit need to be lower than the market-determined price per unit or the product should not be produced. Determine the necessary price and then subtract the total cost per unit to determine the resulting profit margin.

Which of the following is the primary goal of distribution requirements planning (DRP)? Answers Maintaining a well-balanced inventory at all appropriate locations within the network Delivering products on schedule in the quantities requested by the customer Decoupling the distribution plan from the production plan Accurately feeding the gross requirements into the master production schedule

Rationale The primary goal of DRP is to ensure that inventory is available in the right quantities and in the right places in the distribution channel. Maintaining a well-balanced inventory at all appropriate locations within the network

What is the primary goal of the theory of constraints? Answers Elevating constraints Managing buffers Identifying bottlenecks Maximizing throughput

Rationale The primary goal of the theory of constraints is to maximize throughput. This is done by identifying bottlenecks, or constraints, and elevating them so that they are no longer constraints. Sometimes this will include buffering the constraint with either time or inventory. Maximizing throughput

Once the company's value chain has been documented and internal consensus has been gained, the next step in using value chain analysis is: Answers identifying key functions and people in each step to facilitate duplication and fail-safe processes. finding overlapping activities and consolidating whenever possible. isolating core activities from non-core activities with the goal of outsourcing the non-core activities. completing a value chain analysis for the company's most significant competitors.

Rationale The primary purpose of value chain analysis is to facilitate an activity-by-activity comparison of how effective a company is relative to its competitors. completing a value chain analysis for the company's most significant competitors.

A textile plant spins fiber into yarn, weaves the yarn into a line of standard fabrics, and dyes these fabrics to custom color specifications. Dyeing is done in a light-to-dark sequence to reduce high changeover costs. While spinning and dyeing capacity is adequate during the peak season, the capacity of the plant's weaving operations is well below the required level. If product design and price are the primary competitive factors, which of the following actions would effectively resolve the problem? Answers Building inventory of undyed fabric just before the peak season begins Changing dyeing schedules to use subcontractors for dyeing during the peak season Building inventory of feed yarn just before the peak season begins Changing weaving and dyeing schedules to accommodate the needs of key customers

Rationale The problem with the operation is that there is a constraint in the weaving process. The goal would be to look for alternatives around the constraint. Viable alternatives are: Stockpiling fabric before the peak season begins so the dyeing operation is not starved during the busy season. Using subcontractors for weaving during the peak season and/or adding equipment depending on which is the constraint. Building inventory of undyed fabric just before the peak season begins

Which characteristic best describes the problem-solving A3 report? Answers It is a structured top-down method for continuous improvement. It is aligned with both the PDCA and six sigma DMAIC methods. It must be authored by a senior supervisor. It relies heavily on nemawashi, or consensus building.

Rationale The problem-solving A3 report is based on collaboration and visual communication among team members to build consensus for the improvements being design and developed. The other answers are incorrect because the report author may be a worker well-trained in A3 problem solving, and the purpose of A3 and PDCA thinking is to leverage the skills and judgment of both workers and managers; the A3 report and process were developed in a PDCA environment, though an adaptation for use in the DMAIC model might be possible. It relies heavily on nemawashi, or consensus building.

Operations strategy formulation should be: Answers a five-year rolling activity updated biannually. a monthly seven-step process involving top management. an annual process with quarterly adjustments. a relatively infrequent event.

Rationale The process of formulating an entirely new operations strategy should be a relatively infrequent event. a relatively infrequent event.

During the production strategy review portion of developing the supply plan, which would be a good reason to consider changing from chase production to a hybrid strategy of level production plus some outsourcing? Answers The review of production rates finds that there is not sufficient aggregate capacity to meet the production plan's load requirements. The financial plan review indicates that the cost of maintaining excess capacity is low. Product family load profiles are becoming smoother, but competitor failures sometimes cause a spike in demand. The production performance review indicates that flexibility metrics for production are higher than targeted.

Rationale The production and inventory planning process that results in a supply plan starts with corporate strategy and includes a review of production strategy, then financial plans, then production rates, and then production performance. During the production strategy review phase, the inputs to that strategy are assessed for changes. The correct answer is an example of such changes. The other answer choices are from later in the process. Product family load profiles are becoming smoother, but competitor failures sometimes cause a spike in demand.

A synchronized production principle that determines the size of the production batch as compared to other quantities is that the production batch is equal to: Answers the order quantity. a multiple of the transfer quantity. the bottleneck yield quantity. the work center activation quantity.

Rationale The production batch and the transfer batch need to be logically interrelated. The needs of production at a work center may dictate the production batch size; the transfer batch will then be some evenly divisible portion of the production batch so that each transfer batch can be exactly the same size. In other cases, such as in lean systems, the size of the transfer batch may dictate the size of the production batch, such as when the transfer batch is the same as or some multiple of the kanban quantity of the next work center. a multiple of the transfer quantity.

A buyer asks a supplier to design a product to the buyer's specifications. Which of the following steps is the buyer not responsible for? Answers Detailed product requirements Analysis of test results Production of samples Approval of test procedure

Rationale The production of samples is the responsibility of the supplier, who will eventually make the product if tests are successful. The other three actions all are the responsibility of the buyer. Production of samples

What information is necessary for determining the production planning horizon? Answers Time frame for acquiring additional capacity Product life cycle Financial year-end cycle Cumulative lead time

Rationale The production plan has to reach far enough into the future for the organization to be able to acquire additional capacity if needed to produce the plan. Time frame for acquiring additional capacity

Which of the following planning techniques affects material and capacity planning only indirectly? Answers Final assembly schedule Order configuration Master scheduling Production plan

Rationale The production plan is stated in terms of families. The other responses are all inputs to material requirements planning (MRP). Production plan

Which of the following is most correct regarding the production plan in a make-to-stock environment? Answers A production plan cannot be used for one-of-a-kind products that have not been assigned to a product family. The production plan is the time-phased plan of overall output, and it may be stated in terms of units, tons, or linear feet. Past-due load in the production plan receives an increased priority by the planner's use of the critical ratio technique. An overloaded production plan alerts the master scheduler to correct the condition in the master production schedule.

Rationale The production plan is the time-phased plan of overall output. The production plan is the time-phased plan of overall output, and it may be stated in terms of units, tons, or linear feet.

Which of the following is true of the sales and operations planning (S&OP) process? Answers The production plan is the agreed-upon plan. Forecasts of future demand are best expressed in units. The supply plan does not include inventory. Consensus by management is not necessary.

Rationale The production plan must be agreed to by all members of the S&OP team. The production plan is the agreed-upon plan.

The production planning process uses which of the following time fences? Answers Demand time fence Planning time fence Production planning time fence There are no time fences in production planning.

Rationale The production plan uses the planning horizon of the sales and operations plan but no time fences. There are no time fences in production planning.

Which production planning method usually creates a build-up of inventory? Answers Subcontracting Level Seasonal Chase

Rationale The production planning methods that produce a build-up in inventory are level and hybrid. The chase method is incorrect, because it does not build up inventory. Neither seasonal nor subcontracting is a production planning method, and therefore also incorrect. Level

A company intends to cut its backlog from four months to two. Annual demand is 360 units. What is the number of units that should be included in the production plan? Answers 300 units 360 units 420 units 720 units

Rationale The production rate is 30 units per month. To decrease backlog, an extra 60 units should be produced above the annual demand of 360 units. 420 units

What is the purpose of the project scope statement? Answers Create a high-level schedule for project completion Assign roles to team members Describe a change control process Define the deliverables

Rationale The project scope statement defines what the project's deliverables are and will do and what they are not and will not do. The other answers are incorrect because the change control process is used in part to track and control changes to the scope; "assign roles to team members" describes the responsibility matrix; and a definition of the deliverables is created based on the work required to create the deliverables. Define the deliverables

Which of the following statements is true of a situation in which the stocking unit of measure is different from the purchasing unit of measure? Answers The bill of material will be in the purchasing unit of measure. The standard cost will be in the purchasing unit of measure. The purchase order receipt will be in the purchasing unit of measure. Issues of inventory will be in the purchasing unit of measure.

Rationale The purchase order will be in the purchasing unit of measure, as will the receiving documents. Everything else will be in the stocking unit of measure. The purchase order receipt will be in the purchasing unit of measure.

A company operates in a make-to-order environment and has departments with job shop layouts. On-time schedule performance, most commonly, is a function of: Answers splitting lots when necessary to supply downstream operations. achieving the planned internal setup and run times. reducing the number of jobs at work centers by limiting floor space. an actual queue time that is not longer than planned.

Rationale The queue is the longest element of lead time. Actual queues that are less than planned (standard queue time) keep the schedule on time. an actual queue time that is not longer than planned.

The quick asset ratio is a financial calculation best used to: Answers assist with cash flow rate planning. learn if a company is top-heavy with regard to capital equipment. measure a firm's financial stability. measure a firm's equity valuation.

Rationale The quick asset ratio, a measure of a firm's financial stability, is calculated as follows: (Current Assets - Inventory)/Current Liabilities measure a firm's financial stability.

The reorder point technique is suitable for: Answers dependent items. independent items. high-value items. make-to-order items.

Rationale The reorder point technique assumes that the demand of an item is independent of other items. independent items.

The actual cost of an order can be different from its standard cost because of which of the following factors? Answers Tooling Maintenance Queue Scrap

Rationale The reporting of scrap from a production order will increase the actual material, labor, and overhead, as additional inventory and labor will have to be expended to build scrap replacement products. Scrap

Which of the following is true of the relationship between the production plan and the resource plan? Answers The resource plan is an input to the production plan. The production plan is constrained by the resource plan. The production plan is an output of the resource plan. The resource plan and the production plan are at different levels of the planning hierarchy.

Rationale The resource plan identifies when the production plan cannot be met due to a resource constraint. The production plan is constrained by the resource plan.

The standard hours of load placed on a resource within a time period is the: Answers bill of resources. resource calendar. resource driver. resource profile.

Rationale The resource profile is the standard hours of load placed on a resource by time period. resource profile.

A representative of a supplier has called a buyer to tell her that the minimum order quantity for a raw material is being increased to 1,000 pieces immediately. Which of the following would be the most appropriate action for the buyer to take next? Answers Change the lot sizing parameters for the item. Firm all planned orders for the item at 1,000 pieces. Change the quantity for all scheduled receipts. Use a pegging report to identify all affected customer orders.

Rationale The revised minimum order quantity should result in a change to the lot size for the item. Change the lot sizing parameters for the item.

In addition to the ruinous price-cutting and easy imitation by competitors, which of the following is another common risk of pursuing a low-cost provider strategy? Answers Shift in market interest from low cost Need to offer best-in-class customer service Shift in value chain design Need to improve product delivery speed

Rationale The risk of a shift in market interest away from low cost is the most common risk of pursuing a low-cost provider strategy among the options. Offering best-in-class customer service, while desirable and nice for the customer, will likely increase costs and therefore is counter to pursuing a low-cost provider strategy. The need to improve product delivery is also desirable, but it is not a risk (but might be a solution). Shift in market interest from low cost

When implementing new productivity technology, a significant risk is that the application: Answers May not work as planned, be done on schedule, or stay within budget. May not meet paying customers' needs. May not be operable without internal or external experts. May not have the necessary documentation for training and implementation.

Rationale The risk with implementing new productivity technology is that it may not work and the project may not be done on time or within budget. May not work as planned, be done on schedule, or stay within budget.

How often is the forecast information used in the sales and operations planning process updated? Answers Weekly Monthly Quarterly Annually

Rationale The sales and operations plan and the inputs to it are updated on a rolling monthly basis. Monthly

Operation overlapping, when used to expedite completion of orders will: Answers eliminate idle time at the second operation. increase capacity. decrease move costs. decrease queue time for other orders.

Rationale The second operation begins processing prior to completion of the first operation to minimize idle time at the second operation. eliminate idle time at the second operation.

The amount of time an item may be held in inventory before it becomes unusable is: Answers a limited life. the shelf life. lot control. the product life cycle.

Rationale The shelf life is the amount of time an item may be held in inventory before it becomes unusable. the shelf life.

A company produces ten families of products that require six weeks' cumulative lead time to produce and that are stocked for sale from the distribution center. Which of the following reviews is of little or no value in the sales and operations planning process? Answers Finished goods inventory Sales plan by product family Product family forecast accuracy Mix sold versus mix produced

Rationale The six-week lead time means that production and sales occur in different periods and so are not directly comparable. Mix sold versus mix produced

A work cell has six operations. The information required to determine the capacity of the cell includes: Answers setup. number of operators. capacity of the fastest operation. capacity of the slowest operation.

Rationale The slowest operation in the work cell would be the constraint. capacity of the slowest operation.

What is an advantage of small-scale operations and facilities? Answers Good fit for high-volume, low-variety operations Higher average production cost per unit Less overcapacity during scale-up Good fit for high-volume, low-variety operations

Rationale The smaller facility better matches demand during the scale-up period; a larger facility would have excess capacity until demand catches up with it. Higher unit cost is not an advantage. The other choices are advantages of large-scale operations and facilities. Less overcapacity during scale-up

Which of the following inventory evaluation methods best measures falling costs? Answers First in, first out Last in, first out Average cost Standard cost

Rationale The standard cost consists of a fixed cost composed of direct material, direct labor, and overhead. This cost remains fixed until a decision is made to update it as time passes to arrive at a new standard. Any difference between the standard and the actual cost is a variance that can be quantified to show how much actual costs have fallen or risen since the last standard cost update. Standard cost

Which of the following is not a component of a demand pattern? Answers Trend Random variation Seasonal variance Standard deviation

Rationale The standard deviation is a measurement of the dispersion of data or of a variable. It is computed by finding the differences between the average and actual observations, squaring each difference, adding the squared differences, dividing by n - 1 (for a sample), and taking the square root of the result. Standard deviation

Which of the following accounting methods results in no change in inventory value regardless of whether material costs are increasing or decreasing? Answers Average Process Actual Standard

Rationale The standard method results in no change in inventory value regardless of whether material costs are increasing or decreasing. The other options increase or decrease with material cost changes. Standard

Which of the following is part of a business plan? Answers Statement of profit objectives Production plan Short-term sales objectives Master scheduling

Rationale The statement of profit objectives is part of a business plan, along with a long-range strategy and revenue and cost objectives. The sales and operations plan is derived from the business plan through the S&OP process and must agree with the business plan, but it is not a part of the business plan. The business plan specifically is concerned with long-range strategy and revenue and cost and profit objectives, not short-term sales objectives. Master scheduling occurs following S&OP, which follows business planning. Statement of profit objectives

Of the following, which has the most influence on the choice of manufacturing environment? Answers Logistics resource planning Strategic business planning Master scheduling S&OP

Rationale The strategic business planning process leads to decisions such as what products to sell, types of customers, product variety and volume, and order fulfillment lead time. These decisions have a major influence on choice of manufacturing environment. The other answers are tactical planning processes aimed at leveraging the capabilities of manufacturing environments to create profitable manufacturing processes. Strategic business planning

The plan for determining actions to support the mission, goals, and objectives of an organization is the: Answers tactical plan. strategic plan. sales and operations plan. project plan.

Rationale The strategic plan is the plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization strategic plan.

The strategic risk plan must have go/no-go guidelines for: Answers the legal community. customer contracts. make-or-buy decisions. switching from problem mitigation to recovery.

Rationale The strategic risk plan asks, "At what point do we reach the limit of avoidance and mitigation strategies before we start to rely on recovery strategies?" switching from problem mitigation to recovery.

Which lead/lag strategy tends to increase cash requirements? Answers Lead capacity only Lag capacity only Both lead capacity and lag capacity when lag capacity is combined with inventory stockpiling Both lead capacity and lag capacity regardless of the inventory strategy

Rationale The strategy that tends to increase a company's cash requirements is to lead capacity and to lag capacity when lag capacity is combined with inventory stockpiling. Both lead capacity and lag capacity when lag capacity is combined with inventory stockpiling

What happens once the final draft of a company's strategy has been formulated? Answers It must next be published in the company's annual report if the company is publicly traded. It is typically submitted to the company's board of directors for review and approval. It must be filed with the Securities and Exchange Commission. All stakeholders have approximately 30 days to fine-tune it.

Rationale The strategy-making efforts of top managers are complemented by advice and counsel from the company's board of directors. Normally all major strategic decisions are submitted to the board for review, discussion, and official approval. It is typically submitted to the company's board of directors for review and approval.

Which best describes a summarized parts list? Answers All of the parents for which there is an existing requirement The relationships among all components All of the parts required to produce one item All of the parents in which a component is used

Rationale The summarized parts list, or summarized BOM, is a list of all the parts and their quantities required in a given product structure to produce one unit. All of the parents in which a component is used, and for which there is an existing requirement describe the where-used list and pegging report. The summarized parts list does not show the relationships among components. All of the parts required to produce one item

Which team has the responsibility for preparing the preliminary production plan? Answers Executive S&OP team Demand planning team Pre-S&OP team Supply planning team

Rationale The supply planning team is responsible for preparing the production plan and recommending changes as necessary to meet the demand plan. The other answers are incorrect because the demand planning team reviews the sales plan; the pre-S&OP team makes decisions on balancing supply and demand; and the executive S&OP team reviews and makes the final decisions on sales and operations plans as necessary. Supply planning team

What is a company that uses the theory of constraints trying to achieve? Answers Mixed-flow scheduling Increased capacity utilization Schedules that adapt to restrictions Resource leveling

Rationale The theory of constraints manages the constraints, or restrictions, that exist in the process. Schedules that adapt to restrictions

Time fences should be viewed as a way to: Answers avoid changing the master production schedule. evaluate production effectiveness. maximize production. measure the likely impact of changing the master production schedule.

Rationale The time fence is not a barrier to change, merely an indicator of the point at which effort, time, and cost will start to becoming significant if making a change. measure the likely impact of changing the master production schedule.

A time fence policy does which of the following? Answers Monitors changes in supply and demand conditions Controls the amount of change that can occur during predefined areas of the planning horizon Controls supply planning information for production Avoids excess inventory through a dynamic process

Rationale The time fence policy controls the amount of change that can occur within a predefined area of the planning horizon. The other answers are incorrect because the time fence policy is designed to control the demand side of the MPS; time fence policies control the amount of change permitted to a MPS, and are not maintained; and time fence policies control the amount of change permitted within predetermined zones of the MPS, not changes in supply and demand conditions. Controls the amount of change that can occur during predefined areas of the planning horizon

A company produces desk clocks as a product family, with 20 different end items. The overall production plan has been set at 8,000 units per month. Which of the following actions should the master scheduler take to develop the master production schedule? Answers Schedule a quantity greater than 8,000 units to allow for demand changes. Schedule a mix of the 20 end items such that the total equals 8,000 units. Schedule a mix of the 20 end items, minus the quantity already in stock. Finalize the production quantity based on rough-cut capacity planning.

Rationale The total of the end items should equal the production for the product family. Schedule a mix of the 20 end items such that the total equals 8,000 units.

The traditional hierarchical structure is good at running the day-to-day affairs of the organization, which includes executing the current strategy and continuously improving it. An organization develops a dual operating system consisting of a traditional organizational hierarchy and a network organizational structure. The latter develops "big opportunities." What is a typical role for the traditional organizational hierarchy? Answers Focusing more on creativity than logic Executing strategic changes that are extensions of the current strategy Focusing more on leadership than management Executing strategic changes that require speed and agility

Rationale The traditional hierarchical structure is good at running the day-to-day affairs of the organization, which includes executing the current strategy and continuously improving it. Executing strategic changes that are extensions of the current strategy

The control phase of DMAIC may include each of the following except Answers transferring the remedy to the control phase. documenting the improved process. implementing and monitoring process controls. mistake-proofing (poka-yoke).

Rationale The transfer of the selected remedy takes place near the end of the improve phase, and is not part of the DMAIC control phase . transferring the remedy to the control phase.

What should performance measurements for purchased transportation focus on? Answers Customer service and delivery performance Cost and delivery performance Cost and accuracy of paperwork Accuracy of paperwork and customer service

Rationale The two primary factors for measuring the performance of purchased transportation are the cost or purchase price of the transportation and the delivery performance. Cost and delivery performance

What are typical tradeoffs when considering multiple distribution centers? Answers Facility costs, inventory costs Facility costs, delivery time Facility costs, transportation costs, delivery time Transportation costs, inventory costs

Rationale The typical tradeoffs of multiple distribution centers are facility costs, transportation costs, and delivery time. Facility costs, transportation costs, delivery time

Which of the following is true of the ultimate effect of a change in strategy? Answers It is rarely known for sure. It is typically instantaneous. It is relatively straightforward. It must be highly predictable.

Rationale The ultimate effect of a change in strategy is rarely known for sure. It is rarely known for sure.

What may be the result if a machine-paced process that produces many different products uses a single predetermined overhead rate rather than cost drivers for product costing? Answers Poor decisions about pricing, product mix, or contract bidding Highly flexible workforce Significant gains in time to generate quotes for new orders Increased simplicity in work center staffing

Rationale The use of a single predetermined overhead rate rather than cost drivers for a machine-intensive facility that produces many different products may result in poor decisions about pricing, product mix, or contract bidding. Poor decisions about pricing, product mix, or contract bidding

A company produces a high-volume electronic assembly using a series of dedicated production lines. This is an example of which process environment? Answers Repetitive Continuous Job shop Batch

Rationale The use of dedicated production lines for high-volume demand occurs in repetitive manufacturing. Repetitive

The voice of the customer process is in complete alignment with: Answers quality function deployment (QFD). qualitative forecast techniques. the Delphi method. process flow analysis methodology.

Rationale The voice of the customer involves actual customer descriptions of the functions and features customers desire for goods and services. It relates to QFD. quality function deployment (QFD).

A plant refines a raw material into a bulk liquid chemical using a highly automated production process. Which of the following would be the most appropriate operational unit of measure for capacity and load in this situation? Answers Gallons of the bulk chemical Standard labor hours Plant operating hours Monetary units of the chemical

Rationale The volume of the liquid chemical is the most appropriate operational unit of measure. Although monetary units can be used in such a case, volume is a more typical unit of measure. Gallons of the bulk chemical

Subdividing project tasks into a hierarchy of individual tasks is done using a: Answers resource graph. work breakdown structure. task list. Gantt chart.

Rationale The work breakdown structure develops a structure of tasks by subdividing the work into manageable tasks. work breakdown structure.

What does the work breakdown structure show? Answers Task assignments Work to be done Contingency funding Project schedule

Rationale The work breakdown structure should identify and organize the work that is required to produce the project deliverables. Task assignments is incorrect because the WBS does not show assignments, although it may provide references for the work being assigned. Pproject schedule cannot be addressed until the required work is identified. C ontingency funding would be included in the project budget but not the work breakdown structure. Work to be done

Capacity requirements planning data used to calculate available labor and machine capacity is most likely to be located in the: Answers routing operation details. capacity planning bill of labor. work center data. labor reporting database.

Rationale The work center master record contains all of the data regarding the capacity properties of the productive resource. This data is used whenever any job is assigned to be completed at the work center. work center data.

Which type of capacity is the best indicator that the material plan is infeasible if it equals the required capacity at a particular work center? Answers Theoretical Bottleneck Demonstrated Rated

Rationale Theoretical capacity is an ideal and is usually not attainable. If it is equal to the required capacity, the work center is overloaded. Theoretical

Improvement programs at a manufacturing company have increased efficiency 10% and utilization 5%. What is the effect on the theoretical capacity? Answers It remains constant. It has increased. It has decreased. It varies with work in process.

Rationale Theoretical capacity is defined as "the maximum output capability, allowing no adjustments for preventive maintenance, unplanned downtime, shutdown, and so forth." As such, efficiency and utilization have no impact on the capacity calculation. It remains constant.

Which of the following is the best reason for performing master scheduling at the narrowest point of the product structure? Answers Planning is more accurate due to aggregation of bill-of-material levels. Any other point adversely affects material requirements planning. There are fewer items to master-schedule at the narrowest point. Any higher point contains unknown customer order uniqueness.

Rationale There are fewer items to schedule at this point. There are fewer items to master-schedule at the narrowest point.

The criteria for quality self-inspection include an attitude that quality is number one, training, certification, mutual confidence, and: Answers protecting the environment. meeting customer needs. fitness for use. self-control.

Rationale There are five criteria for effective self-inspection: quality is number one, mutual confidence, self-control, training, and certification. self-control.

Which of the following performance objectives refers to the time that has elapsed between the beginning and the end of the sales transaction? Answers Speed Flexibility Dependability Quality

Rationale There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. Speed refers to the time that has elapsed between the beginning and the end of the sales transaction, and is focused on delivery lead time. The importance of speed varies depending on the industry - some industries will depend on getting products to customers as quickly as possible. Achieving speed requires the analysis of all transaction steps, in order to identify any opportunities to shorten the steps and/or the gaps between steps. Speed

Which of the following performance metrics refers to an operation's ability to provide a products or services to customers inexpensively? Answers Cost Dependability Quality Speed

Rationale There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. The cost objective refers to the goal of lowering the costs of individual units in order to increase profit and/or improve competitive advantage. Cost

Which of the following best measures the production operation's contribution to delivery reliability? Answers Cycle time per part Number of customer complaints Percentage of master schedule achieved Direct labor hours per product

Rationale There is a direct correlation between the percentage of the master schedule that is completed as scheduled and on-time delivery. Percentage of master schedule achieved

A company with a long history in the marketplace is considering acquiring a start-up that has technology the company believes will expand its business. What is one of the major obstacles the company will have to overcome if the acquisition occurs? Answers Bringing the new employees into the 401(k) plan Explaining the acquisition to the board of directors Mismatch of organizational cultures Explaining the acquisition to the financial media

Rationale There may be a mismatch of organizational cultures, which can extend from the leaders downward through the entire organization. A workforce used to more decision-making authority and fewer rules will not adapt smoothly to a more regimented organization. The other answers are insignificant compared to the culture issue. Mismatch of organizational cultures

In an engineer-to-order environment, what determines the latest point at which the bill of material can be completed and released to material requirements planning? Answers Demand horizon from the master production schedule Point at which the parent bill of material is completed Longest lead time horizon to obtain any required components Point at which the final assembly schedule is complete

Rationale There needs to be sufficient time to obtain any necessary components. Longest lead time horizon to obtain any required components

Which of the following responses is a company most likely to consider when establishing the forecast for a new item being added to an MTS product line? Answers Adopt pyramid forecasting in order to evaluate the importance of the new item above its family members. Reduce the α factor so that downward-trending demand in recent periods is more heavily weighted. Evaluate the sales promotion effect of the new item on sales of existing products. Apply quantitative analysis techniques based on leading economic indicators to establish short-term forecasts.

Rationale There should be little question about the effect of sales promotion on product forecasts. If the new product is to replace an older product, it would be prudent to know what promotion of the older product caused a sales response. The other answers are incorrect because the exponential smoothing techniques do not normally apply to new product introduction; pyramid forecasting is a forecast aggregation and disaggregation process and is not a method to emphasize certain products; and quantitative analysis typically is used when there is sales history. Leading economic indicators will predict the general direction of the entire industry for some period in the future but are not well-suited to individual product analysis. Evaluate the sales promotion effect of the new item on sales of existing products.

Good measures of material requirements planning performance include evaluations of which of the following factors? Answers Percentage of order due dates met Percentage of assembly orders with no shortage Percentage of orders started on time All of the above

Rationale These are all valid measurements of how well material requirements planning has produced orders on time to meet the schedule, the number of orders that were delivered to manufacturing without shortages, and the number of orders that were started on time. All of the above

Queue, setup, run, wait, and move times are components of: Answers replenishment lead time. demand lead time. delivery lead time. manufacturing lead time.

Rationale These are the elements that make up the manufacturing portion of the lead time. manufacturing lead time

The automaker Toyota turned societal concerns for fuel efficiency and automobile emissions into an industry-leading hybrid car strategy that enabled them to gain early market leadership. What is key to Toyota's strategy in this initiative? Answers Aligning competencies with social benefit for competitive advantage Differentiating itself from major competitors at this time Response to market needs to shape product designs Awareness of need to mitigate harm from value chain activities

Rationale This is a proactive response to an opportunity, using capabilities to create benefits. Aligning competencies with social benefit for competitive advantage

A company produces hats that can be personalized with a predetermined set of options for logos. Delivery is quoted as ten days from receipt of the order. Which of the following sales and operations planning elements is most likely to be of little use to management? Answers Inventory plan Demand forecast Production plan Backlog plan

Rationale This is an assemble-to-order environment; it would not have a backlog plan. Backlog plan

At a periodic review, a project manager notes that a sub-team has added features to the deliverable that were not in the scope statement. What will be the most likely result? Answers The quality of the deliverable will be improved. The project's sponsors may cancel the project. The customer will be displeased by the change. The project's schedule or budget may be affected.

Rationale This is an example of scope creep, which can affect the project's schedule and budget without necessarily improving customer acceptance of the deliverables. Not all changes improve quality. The other answers are incorrect because the customer agreed to a deliverable with certain features; the customer may be happy but may not be or may not care; and it is more likely that the project's variance will be accepted than that the project will be canceled at this stage. The project's schedule or budget may be affected.

Which of the following describes the planning horizon? Answers Maximum amount of lead time required to order and receive all purchased materials required Two years' long Amount of time a plan extends into the future Amount of time it takes to conduct the planning process

Rationale This is the APICS Dictionary definition of planning horizon. The other answers are incorrect because a planning horizon does not include manufacturing lead time; although the planning horizon may be two years in some instances, the length of a planning horizon varies depending on the particular planning activity taking place. Amount of time a plan extends into the future

What is a good method for mitigating an out-of-control internal manufacturing process? Answers Hiring more quality personnel Fact finding, educating, empowering, observing, adjusting, and repeating Using the supplier of the raw materials as the temporary scapegoat Hiring a public relations consultant

Rationale This method is illustrated in the example of a paper supplier. A major multinational customer reported to the paper supplier that their ink-jet paper product was curling (failing) under conditions of low humidity. A year later the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor. Then the major customer produced statistical proof that the supplier's process was out of control. This is a variation on the theme of plan, do, check, action. Fact finding, educating, empowering, observing, adjusting, and repeating

Threats to a company's future well-being often take the form of: Answers a smear campaign orchestrated by a nefarious competitor. a stock market adjustment. the entry of lower-cost foreign competitors. burdensome, oppressive regulations.

Rationale Threats to a company's future well-being often stem from the emergence of cheaper or better technology or the entry of lower-cost foreign competitors. the entry of lower-cost foreign competitors.

Which of the following tools is used to specify periods when various types of changes can be made to the master schedule? Answers Pegging of requirements Time fences Firm planned orders Sales and operations planning (S&OP)

Rationale Time fences are guidelines established to note where various changes in operating procedures may take place. Time fences

What are the two different types of performance targets that should be used to achieve organizational stretch objectives? Answers Financial and strategic Strategic and tactical Tactical and financial Operational and personal

Rationale To achieve organizational stretch objectives, a company must develop two types of performance targets: financial and strategic. Financial and strategic

Based on the information provided below, what is the total capacity requirement for the work center in hours? Run time = 15 minutes per piece Setup time = 1 hour Queue time = 8 hours Move time = 8 hours Quantity of order = 28 pieces Answers 7 hours 8 hours 16 hours 24 hours

Rationale To answer this question, first convert the run time in minutes to run time in hours: 15 minutes/60 minutes = 0.25 hours Then calculate the total capacity requirement as follows: (28 pieces x 0.25 hours per piece) + 1 hour setup = 8 hours Setup and run time are included; move and queue time are not included. 8 hours

What is a core competency? Answers Task best done by outsourcing to an innovative supplier Rare capability a company possesses, often protected by patents Operation a company performs better than anyone else in the marketplace Proficiently performed activity central to the company's strategy and competitive success

Rationale To be a core competency, a task must be performed proficiently and must be central to the company's strategy and competitiveness. Proficiently performed activity central to the company's strategy and competitive success

All of the following factors are required to implement effective cross-functional teams except: Answers change management. total quality management. employee empowerment. shared vision.

Rationale To be successful, cross-functional teams must be driven by employee empowerment, shared vision, and change management expertise. These factors are so important because team members cut across business functions and sometimes across supply chain partners. Total quality management refers to the activities surrounding product development and process management to eliminate the causes of variance and to build a philosophy of continuous improvement in all activities. total quality management.

A forecast is most useful for master scheduling purposes when expressed in: Answers days of inventory. money. labor required. units.

Rationale To be used for master scheduling, the forecast should be expressed in item quantities and dates. units

Which of the following may be necessary to prove feasibility when seeking capital investment approvals? Answers Outsourcing production until the project is complete or the machine comes up to speed Investigating interest rates from various lending institutions Calculating the payback period or internal rate of return Leveraging the existing overhead rates prior to completion

Rationale To finance a large, expensive project or capital investment, it is often necessary to calculate the payback period or internal rate of return. Calculating the payback period or internal rate of return

What should leaders do to ensure that strategic goals are clearly articulated and prioritized to address only those of highest importance? Answers Make sure that all IT initiatives are dollarized and prioritized using the internal rate of return method for improvement. Align improvement initiatives with strategic objectives. See that all department-initiated improvement initiatives are prioritized based on speed and value of implementation. See that improvement initiatives are acceptable to the people and to the departments in which the people reside.

Rationale To get the most from initiatives to execute strategy more proficiently, managers must have a clear idea of what specific outcomes really matter. Once initiatives to improve operations are linked to the company's strategic priorities, then comes the managerial task of building a total quality culture that is genuinely committed to achieving the performance outcomes that strategic success requires. Align improvement initiatives with strategic objectives.

A company is focusing on its supply chain design and costs. A competitive strategy would be to understand how effectively and efficiently it delivers value to customers as compared with its: Answers primary regulatory overseer. supply chain partners. quality function deployment strategy. competitors.

Rationale To remain competitive, a company must understand how effectively and efficiently it delivers value to customers relative to its competitors. competitors

Companies that both provide valuable social benefits and fulfill customer needs are likely to: Answers see profits drop. improve their competitive strength. reduce investment in research and development. win more government contracts.

Rationale Today's corporations must implement social responsibility in order to be competitive in the marketplace. improve their competitive strength.

Top management's role in implementing total quality management (TQM) includes: Answers aligning the corporate vision with individual needs. overcoming cultural barriers to employee involvement. hiring outside individuals to drive the implementation process. participating in self-directed work teams.

Rationale Top management's role is that of providing the vision and support to drive the program through the organization. That support often comes in the form of breaking down obstacles to the TQM program. overcoming cultural barriers to employee involvement.

Which of the following is a valuable forecast evaluation activity? Answers Involvement of users in the process of developing forecast tools Using standard hours to track variation Balancing bias in a forecast with the opposite bias Tracking actual demand against projected demand

Rationale Tracking actual demand against projected demand is the basic process of evaluating forecast performance. Involvement of users might ensure that they can effectively use the data from a forecasting system, but it is not an evaluation activity. Tracking actual demand against projected demand

Today's information systems deliver operation-specific performance data concerning machine, people, and product detail within the time frame required directly to managers. What is this an example of? Answers Invasive big-brother-type monitoring Nice-to-have feature of a fully implemented enterprise resources planning system IT systems delivering production value Fully functioning numerically controlled computer system

Rationale Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution. IT systems delivering production value

Tracking signals do which of the following? Answers Adjust forecasts when errors are reported. Compute the appropriate trip value to be used in demand filtering. Identify causes of forecast errors. Identify forecast bias.

Rationale Tracking signals indicate bias within the forecast when the RSFE exceeds MAD by at least three times. The other answers are incorrect because tracking signals indicate deviation from the forecasts but not the causes of these deviations; management is responsible for computing the true value to be used, and this is not the function of a tracking signal; and tracking signals do not adjust forecasts; they only report deviations from the forecast. Identify forecast bias.

At what do the organizational structures commonly found in large and successful organizations tend to be effective and efficient? Answers Functioning and executing Innovating and changing Such organizational structures tend to be neither effective nor efficient. Such organizational structures tend to be effective in most areas but not efficient.

Rationale Traditional organizational structures that most large and successful organizations have are usually good at keeping the organization functioning and executing effectively and efficiently. However, these same structures tend to have lost the entrepreneurship and agile innovation ability that makes start-ups so great. Functioning and executing

There are two generally recognized types of errors that can occur when responding to risk. In the first, the organization takes action, but it is an incorrect action. What is the second? Answers The organization postpones a decision while operations deteriorate. The organization does not take action when it should have. The organization halts all operations to gather more data. The organization continues to support an incorrect action when evidence suggests that it should not.

Rationale Two basic types of errors an organization can make when responding to risk are: Taking an action that is incorrect. Not taking action when they should have. The organization does not take action when it should have.

Which of the following are two risks associated with international distribution? Answers Global competition and cultural issues Cultural issues and operational profitability Asset protection and operational profitability Asset protection and global competition

Rationale Two risks associated with international distribution are asset protection and operational profitability. Asset protection and operational profitability

A purchased assembly is destruct-tested upon receipt. The sample size is 1% of the order quantity. The purchase order quantity to satisfy a production order of 200 units is: Answers 198. 200. 201. 202.

Rationale Two units would be scrapped due to the testing process. Since the sample size is 1%, or 2 units, 202 would have to be ordered every time. Two would be destroyed, therefore leaving 200 for the production order - which is either an order, or a make-to-stock item. 202

Distribution requirements planning (DRP) is used for: Answers sales and operations planning. purchasing planning. manufacturing planning. transportation planning.

Rationale Ultimately, planned orders from a warehouse become gross requirements in the master production schedule of either external or internal manufacturing during DRP. manufacturing planning.

Having suppliers that are certified via ISO 9000 or some other quality standard means that: Answers product quality is assured. suppliers fully understand customer needs. single-source relationships can be established. processes are defined and followed.

Rationale Under ISO 9000, processes are defined and followed. processes are defined and followed.

Under the theory of constraints, a missed order in which zone should be expedited immediately? Answers Red zone Green zone Buffer zone Yellow zone

Rationale Under the theory of constraints, the red zones are just before the constraint, the capacity-constrained resource (CCR), the assembly point, or the shipping point. Expediting in the red zone has priority over the expediting in the yellow and green zones. A buffer zone does not exist in theory of constraints. Red zone

Which of the following nonfinancial factors are critical to consider when setting up an offshore production facility? Answers Local laws, quality of labor force, and differences in time zone. Local laws, quality of labor force, and local infrastructure. Local laws, differences in time zone, and local infrastructure. Quality of labor force, differences in time zone, and local infrastructure.

Rationale Understanding local laws, the quality of the local workforce, and local infrastructure are all critical considerations when searching for a location. Local laws, quality of labor force, and local infrastructure.

One point is outside of the upper control limit for a process. Which of the following statements is most applicable to this situation? Answers The upper control limit may be set too tight for the process. The process shows an indication of being out of control. The process has gone out of control. The point needs to be checked to see if it is a special cause

Rationale Until a trend or multiple points have gone outside the control limits, there is only an indication that the process is out of control. The process shows an indication of being out of control.

Which ordering approach assumes the lowest level of operational integration between buyer and supplier? Answers Blanket order releases Consignment inventory Lean purchasing system Purchase orders

Rationale Use of a lean purchasing system and consignment inventory assumes highly integrated operations. Using blanket order releases assumes a low level of integration between suppliers and customers, but not as low as purchase orders. Purchase orders

Which of the following qualitative methods of forecasting should a company consider for a product that is replacing another? Answers Focus Groups Historical analogy Expert opinion Panel consensus

Rationale Use the history from the older product. Expert opinion, focus groups, and panel consensus are incorrect because none of these methods provides any greater knowledge of the future of a new product than any other method. Historical analogy

Which of the following actions is likely to improve the accuracy of a sales forecast? Answers Basing territorial advertising on sales estimates Adjusting the sales forecast up or down by a certain percentage to offset errors Informing sales representatives about the company's business outlook Increasing the sales quotas to match the sales forecast

Rationale Using business information would help sales personnel to better determine potential forecasts. Informing sales representatives about the company's business outlook

Which of the following would have the most impact on the use of a production activity control (PAC) system? Answers Adding a new workstation that uses the work center manufacturing process type Changing the rate of production in a continuous manufacturing process type Implementing modular bills of material for items with options Grouping production equipment into focused work cells

Rationale Using cellular manufacturing would change the way product is scheduled, sequenced, and managed. Grouping production equipment into focused work cells

What is an advantage of using an advanced planning system (APS) in a make-to-order environment with multiple production facilities and warehouses? Answers An APS system can plan distribution resources. An APS system can calculate the capacity required. An APS system can validate resource availability. An APS system can determine what the company is capable of promising.

Rationale Using sophisticated software, APS systems can check availability of raw material, supplier capacity, and work center capacity to determine what orders the company can accept in a make-to-order environment. An APS system can determine what the company is capable of promising.

The ratio of hours worked to the hours available is: Answers utilization. standard hours. productivity. efficiency.

Rationale Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to the clock time available. utilization

Through the use of value chain analysis, cost performance may be improved by: Answers charging more for products that use activities within the value chain. imposing high utilization targets for value chain operations. identifying and eliminating non-value-added activities. finding lower-cost raw materials.

Rationale Value chain analysis can improve the company's cost performance by identification and elimination of non-value-added activities. identifying and eliminating non-value-added activities.

Variability refers to a characteristic of: Answers standards. processes. statistical process control. causes.

Rationale Variability is related to the output of a process, and in a process capability analysis it can be measured by how well centered the results are around the mean and whether the results are tightly or loosely grouped. Processes are measured to determine their variability. processes

What is a significant difference between absorption costing and variable costing? Answers Variable costing captures all costs of production. Variable costing should not be used for make-or-buy decisions. Variable costing does not assign fixed factory overhead to the product. Variable costing assigns a portion of fixed factory overhead to the product.

Rationale Variable costing is an inventory valuation method in which only variable production costs are assigned to the product; fixed factory overhead is not assigned to the product. Variable costing does not assign fixed factory overhead to the product.

Standard activities producing differing results is an example of: Answers variation. conformance. common cause. rejection.

Rationale Variation is a change in data, a characteristic, or a function. Variation

Various cost-saving opportunities can be achieved from acquiring businesses with closely related: Answers philosophies concerning borrowing for capital expenditures. sales activities where products are sold to the same customers. workforce employees. financial calendars and accounting practices.

Rationale Various cost-saving opportunities spring from acquiring businesses with closely related sales and marketing activities where products are sold to the same customers. A single sales force can often reduce sales costs. sales activities where products are sold to the same customers.

A supplier is on site counting and restocking inventory. This is referred to as: Answers cycle counting. consignment. outsourcing. vendor-managed inventory.

Rationale Vendor-managed inventory is a means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. vendor-managed inventory.

A food producer and distributor of processed meats is considering purchasing a poultry business. This is an example of: Answers vertical integration. green manufacturing. horizontal integration. sustainable business practices.

Rationale Vertical integration is the degree to which a firm has decided to directly produce multiple value-adding stages from raw material to the sale of the product to the ultimate consumer. vertical integration.

What generalization about vertical integration is often true? Answers It usually works best when it occurs in the downstream direction. It poses fewer risks than outsourcing. It is usually driven by capacity needs. It aims at lowering both costs and risks of production.

Rationale Vertical integration provides greater control over the supply chain, which can lower costs and risks. It aims at lowering both costs and risks of production.

Visibility into suppliers' systems can allow an organization to prepare its own system to manage production and logistics. Which of the following is an example of this? Answers Making decisions on a supplier's viability Collecting data for the next sales and operations planning meeting Finding processes a supplier can eliminate to reduce costs Adjusting production schedules in response to delayed material delivery

Rationale Visibility into a supplier's system allows the organization to react more quickly to supplier delivery changes. Adjusting production schedules in response to delayed material delivery

Visual management supports continuous improvement in which of the following ways? Answers It simplifies the steps in process improvement. It supports formal systems to identify opportunities. It ensures supervisory control of information. It supports group understanding of goals.

Rationale Visual management is a method of group communication where items such as the status of production, inventory levels, improvement activities, goals, schedules, etc., are visually displayed and support the group's understanding. It supports group understanding of goals.

A company operates a strict pull system with its suppliers, with shipments every two, four, and eight hours. A third-party logistics supplier manages all incoming and outgoing shipments. Which of the following delivery performance measures is most likely to incorporate a tolerance to allow for uncontrollable conditions? Answers Required carrier Required date Required advance shipping notice Required time window

Rationale Weather and traffic conditions cannot be controlled, so acceptable time windows need to be provided, including tolerances. Required time window

An organization has determined that brand recognition is its most important strategic advantage for breaking into a foreign market. Which entry option would create the greatest risk to this advantage? Answers Subsidiary Franchise Export Joint venture

Rationale When using franchising as an entry option to gain access to foreign markets, the franchisor gives up some control over its brand. Franchisees can weaken the brand in the new market by delivering poor quality or service. They may also alter the brand when it conflicts with local culture and customer preferences. This has the effect of diluting the power of the brand. Franchise

What must operations do when the overall strategy is to compete with low-cost, no-frills products? Answers Compromise from time to time with low-cost/low-quality component suppliers. Leverage low labor costs in countries with low labor rates without the assistance of sophisticated technology. Use technology. Robots that replace people don't look for breaks, vacations, or raises. Use outsourcing as much as possible regardless of supply chain complexity.

Rationale When a European car manufacturer acquired an existing automobile facility in an emerging nation just moving from central planning to market-driven planning, its hope was to build low-cost, no-frills cars. Leveraging existing platforms and a low cost design imperative, they succeeded. The facility was bare-bones with no robot technology, leveraging low labor rates. Leverage low labor costs in countries with low labor rates without the assistance of sophisticated technology.

A strategic decision has been made to expand a highly customer-centric organization into a foreign country. What should a solid risk assessment reveal? Answers Processes that work in one country should work in another. Local regulations will probably not be an issue, as the opportunity for new tax receipts usually wins the day. Locals should carry the major share of customer interactions. Cultural interactions are likely a major source of potential failure.

Rationale When a U.S.-based amusement company decided to expand its largely successful theme park operations to Europe, it brought American management styles, cultural tastes, labor practices, and marketing pizzazz to Europe. When the French stayed away in droves, the company accused them of cultural snobbery. Cultural interactions are likely a major source of potential failure.

Current trends are essentially forcing companies that use outsourcing to ensure that all suppliers conform to: Answers USMCA regulations. EDI (electronic data interchange) protocols. appropriate corporate social responsibility practices. Electronic Product Code (EPC) standards.

Rationale When a company chooses to outsource any part of its operations, it must consider quality, speed, dependability, flexibility, and cost and must ensure that suppliers conform to appropriate corporate social responsibility (CSR) practices. appropriate corporate social responsibility practices.

A company has multiple divisions essentially performing the same functions. What would be a good first step related to continuous improvement and benchmarking? Answers Benchmarking one division's processes against another's Ensuring that management avoids benchmarking one division against another, as this will likely cause ill feelings Having the divisions benchmark other companies' activities in these areas in hopes of developing one common company-wide process Jointly forming a cross-functional team to come up with a proposal for a company-wide process

Rationale When a company has multiple divisions or organizational units performing much the same functions at different locations, it can be useful to look at "best-in-company" practices as a benchmark for improvement. Benchmarking one division's processes against another's

The firm planned order (FPO) technique may be used to achieve which of the following results? Answers Prevent automatic rescheduling of planned orders by material requirements planning (MRP). Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and reduce plant load fluctuation. Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and increase plant capacity. Reduce plant load fluctuation, and trigger MRP to replan higher-level items.`

Rationale When a planned order is firmed in the material requirements plan, it is frozen and will not be changed by the MRP processor. Since it is frozen, it will help in dampening small changes in supply and demand. Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and reduce plant load fluctuation

A standard cost accounting system is often tied directly to the routing and dispatching systems as well as the product structure. Which of the following cost measures are determined from this data? Answers Overhead costs and job costs Overhead costs and standard variances Job costs and standard variances Overhead costs, job costs, and standard variances

Rationale When a production order is created and produced, operators will report direct labor and materials for the order. Accounting is able to view all costs accumulated to the job and to contrast them with costing standards to determine variances. Overheads are normally reported indirectly as a percentage of labor reported and are not impacted by routing and dispatching systems. Job costs and standard variances

Which of the following describes what happens when a normally dependent demand item is not included in a material requirements planning bill of material explosion? Answers The item doesn't require safety stock. The assembly is changed from a make to a buy part. As a dependent demand item, the item would not be included on the bill of material. There is excess inventory of all of the components.

Rationale When an item is changed to a purchased component, the explosion stops and ignores the components. The assembly is changed from a make to a buy part.

When strategically aligning operational capabilities with market needs, caution must be exercised so that: Answers operations capabilities are 100% aligned with all market forecasts. employee staffing is soft enough so that a good amount of overtime will be necessary. capabilities are not so tightly aligned as to offer little to no room for response flexibility. all capital projects are completely approved and aligned with the most optimistic market forecast.

Rationale When assessing the potential for failure, operations should look to its line of fit concerning alignment to market needs. Too tight a fit risks market needs expanding beyond operational capabilities. capabilities are not so tightly aligned as to offer little to no room for response flexibility.

When assessing a manufacturer's risk and likely points of weakness, what key area must be analyzed? Answers Company's IT systems Operations capabilities in matching volume and mix to forecasted demand Company's critical ratio calculated using the values from the most current balance sheet Learning and growth quadrant in the balanced scorecard

Rationale When assessing the potential for failure, operations should look to their line of fit concerning their operational alignment to market needs. Too tight (or too narrow) a fit risks market needs expanding beyond operational capabilities. Operations capabilities in matching volume and mix to forecasted demand

What will increase rivalry among sellers in the same industry? Answers Buyer demand grows slowly or is flat, and cost to switch brands is high. Customer loyalty is high, and cost to switch brands is high Both strong and weak rivals exist. Buyer demand grows slowly or is flat, and both strong and weak rivals exist.

Rationale When buyer demand grows slowly or is flat, sellers must compete harder to increase revenues. When strong and weak rivals exist, strong competitors tend to exploit their advantages and weak ones have to move quickly to compete. It is harder to entice a customer to switch when they are loyal. Buyers are not likely to change suppliers. Buyer demand grows slowly or is flat, and both strong and weak rivals exist.

According to the five forces model of competition, when does supplier rivalry weaken? Answers When buyer costs to switch brands are low When buyer costs to switch brands are high When buyer demand is diminishing When competitors are numerous

Rationale When customers' costs to switch brands of purchased components are high, rivals have less opportunity to convert customers to their products. When buyer costs to switch brands are high

When evaluating potential customer/supplier partnerships, the supplier should consider which of the following questions? Answers Is the customer creditworthy, and will the customer share cost savings? Does the customer practice lean/total quality management, and is the customer active in preventive maintenance? Is the customer creditworthy, does the customer practice lean/total quality management, and will the customer share cost savings? Is the customer creditworthy, will the customer share cost savings, and is the customer active in preventive maintenance?

Rationale When deciding on the viability of a supplier/customer relationship, the supplier should ask: Is the customer creditworthy? Does the customer practice lean/total quality management? Will the customer share cost savings? Is the customer creditworthy, does the customer practice lean/total quality management, and will the customer share cost savings?

A company successfully incentivizes employees in a labor-paced environment to exceed scheduled output in scheduled time. This is an example of an employee wage policy: Answers that will be totally compatible with almost every unionized organization. that is bound to cause strife when engineering increases standard times by operation. that will likely put the company's products at the top in this industry for quality. that is creating production value.

Rationale When designing the payroll system at one steel company, management decided to incentivize the employees with a 1% bonus rewarded for every 1% that their output exceeded the goals. The company consistently achieved their low-cost provider goals. that is creating production value.

What is a key up-front question concerning the viability of a process technology investment? Answers Will it shorten the time between when a customer makes a request and when the product is delivered? What is the expected return on investment? How will the new system improve profitability? Is it cloud-based or client-server-based or both?

Rationale When evaluating the acceptability of a process technology investment, a key question is whether it will shorten the time between when a customer makes a request and when the order is confirmed or the product is delivered. Will it shorten the time between when a customer makes a request and when the product is delivered?

What is a typical question to ask when evaluating the acquisition of new process technology? Answers Will the process improvement meet the performance promises of the process technology supplier? How will this process improvement affect the company's balance sheet? Will this put the company into a market-share leadership position? Does the process technology improve the specification of the product or service?

Rationale When evaluating the acceptability of a process technology investment, a key question to ask is "Does the process technology improve the specification of the product or service?" Does the process technology improve the specification of the product or service?

An organization decides that mass customization will be their strategy to fight increasing competition. Which of the following will need to be present for this strategy to succeed? Answers The basic product design must be simple enough to allow it to be tailored or customized in the field. The product design must be for a basic family of products that is capable of both being mass-produced and being customized to individual customer needs. The product design needs to be for a family of products that can be produced on a continuous line while also being fully understood by marketing so it can be forecasted at the level of the final stock keeping unit. The basic product needs to be produced on a continuous line and in a kit form that allows using postponement to require assembly by the customer in many different configurations.

Rationale When mass customization becomes the driving operational strategy to thwart competition, the product design must define a basic family of products or services that can be mass-produced and still be customized to the needs of the individual customer. The product design must be for a basic family of products that is capable of both being mass-produced and being customized to individual customer needs.

The possibility of maintaining or acquiring other diverse businesses will be facilitated by finding: Answers an entity with solid assets. a manufacturing strategic fit. a company with a similar strategic vision. an entity with a positive cash flow.

Rationale When snowmobile maker Bombardier diversified into motorcycles, it was able to set up motorcycle assembly lines within the same manufacturing facility where it was assembling snowmobiles. a manufacturing strategic fit.

Which of the following is true of a make-to-order manufacturing environment? Answers The typical approach is to use the total cost method for order analysis. The most appropriate costing method is job order costing. The best cost accumulation system to use is time and materials with contract costing. The standard cost method is probably the best approach for order analysis.

Rationale When the products are manufactured in identifiable lots or batches or to customer specifications, the most appropriate costing method to use is job order costing. The most appropriate costing method is job order costing.

Which of the following benefits of setup reduction is most immediate? Answers Reduced queue time Reduced product cost Reduced work in process Improved quality

Rationale When the setup time is reduced, it will immediately reduce the overall cost of the product. Reduced product cost

Which is an example of how a fixed order quantity (FOQ) inventory ordering technique could result in excess inventory? Answers Demand is very low, and the order point is not reached for many weeks. The organization holds no safety stock at the ordering location. The order lead time is longer than expected. Demand is high until the order point, but after that it drops to low levels.

Rationale Whenever the stock reaches a designated order point (a certain number of units left in inventory), an order is placed for a fixed quantity. If demand falls unexpectedly after this point (the demand during the lead time), the fixed order plus the units still in stock could be in excess of what is specified by policy. Demand is high until the order point, but after that it drops to low levels.

What is the primary purpose of a core values statement? Answers Emphasizes to shareholders the organization's commitment to ethical behavior Enhances recruitment of the right kind of employees Provides ethical and business guidepost to organization members Satisfies the needs of legal and regulatory stakeholders

Rationale While a core values statement can support recruitment, its primary function is for the existing members of the organization. It helps guide future business and ethical decisions. Provides ethical and business guidepost to organization members

What is the minimum that should be done prior to there being an exception in production activity control (PAC)? Answers Expedite faster-to-complete orders to get them out of the way. De-expedite less-important orders to create available capacity. Identify responsible parties and communication paths. Nothing can be done, as this is the nature of an exception.

Rationale While expediting and de-expediting need to wait until after an exception occurs, the organization can do some contingency planning. The minimum amount of contingency planning is to identify responsible parties and communication paths. Identify responsible parties and communication paths.

A stated goal of a continuous improvement project related to the order cycle is to significantly reduce the number of customers who are lost due to unacceptably long lead times. Which improvement would help most with this? Answers Regularly expediting orders with a chance of being late Reducing the average duration of the order cycle Reducing the maximum duration of the order cycle Eliminating the order processing step

Rationale While reducing the average duration of the order cycle is also a useful improvement, it is the lead times that miss the target by the largest number of days that have the most chance of being significant to these customers. Reducing the maximum duration of the order cycle

Which of the following is a capacity management plan that tracks performance to the capacity plans? Answers Capacity requirements planning (CRP) Input/output control (I/O) Finite loading Rough-cut capacity planning (RCCP)

Rationale With I/O, planned inputs and outputs for each work center are developed by capacity requirements planning and approved by manufacturing management. Actual input is compared to planned input to identify when work center output might vary from the plan. Input/output control (I/O)

Which of the following would be true if LIFO (last in, first out) was used instead of FIFO (first in, first out) to value inventory during a time of inflation? Answers The value of the inventory would be lower and the cost of goods sold would be lower. The value of the inventory would be higher and the cost of goods sold would be lower. The value of the inventory would be higher and the cost of goods sold would be higher. The value of the inventory would be lower and the cost of goods sold would be higher.

Rationale With LIFO, the last units acquired (most expensive in times of inflation) would be consumed before the less expensive units, causing the inventory value to be lower and the cost of goods sold to be higher. The value of the inventory would be lower and the cost of goods sold would be higher.

Which of the following would occur with a chase strategy? Answers Low inventories and frequent capacity changes High inventories and frequent capacity changes Low inventories and few capacity changes High inventories and few capacity changes

Rationale With a chase strategy, inventories are kept relatively low due to following sales, but frequent capacity changes occur. Low inventories and frequent capacity changes

A company has been a preferred supplier for several parts for a number of years. Which of the following information is of most importance on a purchase order? Answers Required order due date Required terms/conditions Required order quantity Required part number

Rationale With a preferred supplier, most of the information is already known, except for the due date for the next order. Required order due date

Which costing method is more commonly used for items imported for resale when substantial changes in the exchange rate are regularly experienced? Answers Average Actual Standard Activity-based

Rationale With actual costing, the item costs are tracked by lot, batch, or order. It is used when item costs may fluctuate greatly between inventory purchases. This is the only way to establish true cost. Actual

Multiple functional groups work on a new product design at the same time, as opposed to working in sequence, which reduces cycle time. This is referred to as: Answers project engineering. process engineering. collaborative engineering. concurrent engineering.

Rationale With concurrent engineering, multiple functional groups work on a new product design at the same time. This reduces cycle time. concurrent engineering.

Which of the following is a potential process transition point that a business with declining production volume may face? Answers Line to project Continuous to batch Batch to line Project to jobbing

Rationale With declining production volume, the appropriate choice would be to move from high-volume continuous production to building products in intermittent batches. Continuous to batch

In the five forces model of competition, as products available from rival suppliers become less differentiated, supplier rivalry is said to: Answers increase. diminish design innovation. become stagnant. cause price increases.

Rationale With similar product offerings, buyers have less reason to be brand-loyal, thus increasing supplier rivalry. increase

In an established pull system with some suppliers delivering as often as every four hours, which of the following performance measures is most important? Answers Required quantity Parts availability Delivery reliability Use of kanbans

Rationale With such frequent deliveries, quantity is less of an issue than on-time delivery. Delivery reliability

Who, if anyone, is responsible for creating item inventory policies such as for inventory levels, lot sizes, and safety stock when vendor-managed inventory (VMI) is used? Answers Vendor Customer Independent third party Such policies are not needed when using VMI.

Rationale With vendor-managed inventory, the supplier is responsible for maintaining the inventory level required by the customer. This activity is accomplished through regularly scheduled reviews of the on-site inventory. The vendor creates the item inventory policy (e.g., inventory level, lot size, safety stock), within the bounds of an agreement with the customer. Vendor

How is the projected available balance (PAB) within the demand time fence calculated? Answers Opening stock plus MPS (master production schedule) orders minus actual demand and production forecast Opening stock plus MPS orders minus actual demand Opening stock minus actual demand and production forecast Opening stock plus MPS orders

Rationale Within the demand time fence, the forecast is no longer included in total demand and projected available inventory calculations; only customer orders are considered. Therefore, the PAB would include opening stock plus MPS orders minus actual demand (customer orders). Opening stock plus MPS orders minus actual demand

A customer order for a quantity of 50 exists within the planning time fence. A change order has been received to increase the quantity to 100. There is a forecast in that period of 80. Which of the following changes should occur? Answers Forecast quantity should be changed to 120; order quantity should be changed to 100. Forecast quantity should not be changed; order quantity should be changed to 80 in this period and 20 in the next period. Forecast quantity and order quantity should both be changed to 100. Forecast quantity should not be changed; order quantity should be changed to 100.

Rationale Within the planning time fence, the order change can be accepted. The forecast does not change. Forecast quantity should not be changed; order quantity should be changed to 100.

For the purpose of material requirements planning, it is most important for the bill of material to: Answers be linked to the operation routings. calculate product cost. be able to balance capacity and load. accurately define part dependencies.

Rationale Without accurate items and use in the bill of material, the entire explosion and netting process is invalid. accurately define part dependencies.

Customer order promises should be made by: Answers taking into account material and capacity availability. the salesperson estimating when the product will be available. using sales and operations planning. the use of standard lead times.

Rationale Without checking material and capacity availability, promises may be made that cannot be kept. taking into account material and capacity availability.

Sources of load on work centers in a job shop include: Answers master production schedule orders and past-due orders. planned orders and backlog. open orders and planned orders. open orders and master production schedule orders.

Rationale Work center load includes all planned loads as well as orders already open. open orders and planned orders.

What is a common measure of a capacity planning process in a lean environment? Answers Minimal work in process between work centers Minimal work in process between personnel Minimal work in process between operations Minimal work in process between workstations

Rationale Work in process is a measure of how well the planned buffers between work centers are being maintained; it measures the effectiveness of the overall capacity planning process. Minimal work in process between work centers

What effect does a write-off of inventory have on a company's profit and loss statement? Answers It decreases the cost of goods sold. It decreases net earnings. It decreases the sales value. It decreases current assets.

Rationale Writing off inventory increases operating expenses, which decreases gross profit and therefore net earnings. It also decreases assets, but we see this in the balance sheet, not in the profit and loss statement. It decreases net earnings.

Which of the following describes the Global Reporting Initiative (GRI) guidelines concerning a company's environmental performance? Answers Preliminary set of rules that the U.S. Environmental Protection Agency (EPA) is considering codifying into law Framework around which a company can set its own goals Set of rules that the U.S. Environmental Protection Agency (EPA) enforces for U.S.-based companies and their tier 1 suppliers Mandatory set of European Environment Agency (EEA) rules that EU-based companies are required to follow

The GRI framework sets out principles and performance indicators that organizations can use to measure and report their human rights, labor, environment, and anti-corruption practices and outcomes. Framework around which a company can set its own goals

A B2B organization sells hydraulic presses that are priced at $25,000. The unit contribution margin (CM) is $10,000. If the organization has $4,000,000 in fixed costs, what is the break-even point in units? Answers 160 units 267 units 400 units 1,600 units

The break-even point in units is calculated as the fixed costs divided by the unit CM. $4,000,000/$10,000 = 400 units. 400 units

A company has researched expanding capacity by designing and acquiring the largest machine of its type in the industry, even though this would result in excess capacity if business remained steady. However, the new machine would provide capacity flexibility without requiring much more additional staff. The alternative would be a second smaller machine, but this would require twice as many workers. A new facility is also planned rather than expanding the existing one. This new facility would be big enough for the new equipment, and it would also allow the organization's support functions that are currently leasing space elsewhere to move into the new facility. What is this an example of? Answers Antiquated thinking that bigger is better The operations people having too much influence in the company Wishful thinking about capacity utilization The business strategy driving the need for a focused factory

The business strategy driving the need for a focused factory

Given the following information, calculate the new forecast for product A using exponential smoothing. α factor—0.7 Actual demand—600 Old forecast—562 Seasonal index—2.1 Answers 882 260 589 813

The formula for forecasting using exponential smoothing is as follows: New Forecast = α × Actual Demand + (1- α) × (Old Forecast) or 0.7 × 600 + .3 × 562 = 588.6 ≈ 589. 589

A gear manufacturer's operations are as follows: The gear machining process produces 85 units per hour, operating at three shifts per day, five days per week. The final assembly line is currently a bottleneck. It is capable of producing at a rate of 120 units per hour, operating at one shift per day, five days per week. The heat-treating furnace produces 50 units per hour, operating 24 hours per day, seven days per week, with no downtime. Shifts for all departments except the heat-treating furnace are eight hours with one hour of lunch/break time per day. Demand is for 8,000 end items per week. What actions should the company take that will allow the 8,000 end items to be made?

The output for the three operations can be calculated: The heat-treating furnace currently produces 8,400 units per week (7 days x 24 hours x 50 units). Therefore, it already produces enough for the 8,000 units per week. Gear machining currently produces 8,925 units per week (5 days x 3 shifts x 7 hours x 85 units). It also already produces enough for the 8,000 units per week. Final assembly currently produces 4,200 units per week (5 days x 7 hours x 120 units). Increasing the final assembly process to 2 shifts per day would produce 8,400 units per week (5 days x 2 shifts x 7 hours x 120 units), which would handle the 8,000-per-week demand. Once these changes are made, the three operations can make 8,400, 8,925, and 8,400 respectively. The pace of production (the "drum" in the theory of constraints) should be tuned to meet the 8,000-per-week demand. Increase final assembly to two shifts per day and adjust the pace of production for a throughput of 8,000 per week.

Which of the following choices will improve a company's responsiveness to customer demand? Answers Drum-buffer-rope Increased productivity Two-level master schedule Large lot sizes

Two-level master schedule

Why does production become less synchronous the lower a part is in a bill of material? Answers Successive lot quantities decouple demand from supply. Cumulative lead times introduce a measure of variability. Bills of material typically exclude floor stock at lower levels. Machining and assembly occur in batches to reduce setups.

Why does production become less synchronous the lower a part is in a bill of material? Answers Successive lot quantities decouple demand from supply. Cumulative lead times introduce a measure of variability. Bills of material typically exclude floor stock at lower levels. Machining and assembly occur in batches to reduce setups. Successive lot quantities decouple demand from supply.

Early due diligence concerning a backward integration initiative includes an analysis of both companies': Answers supplier relationships. corporate cultures. cash flows. balance sheets.

corporate cultures.