ISDS 3115 Final

Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors. True False

True

Which of the following is NOT one of the benefits in MRP? A increased inventory levels B. better response to customer orders as the result of improved adherence to schedules C. improved utilization of facilities and labor D. faster response to market changes

A increased inventory levels

Which of the following is an advantage of the postponement technique? A reduction in inventory investment B. reduction in automation C. early customization of the product D . reduction in training costs E. better quality of the product

A reduction in inventory investment

Which of the following statements about ABC analysis is FALSE? A. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. B. In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. C. Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis. D. In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C"items have. E. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.

A. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

Which of the following statements regarding the production order quantity model is TRUE? A. It relaxes the assumption that all the order quantity is received at one time. B. It applies only to items produced in the firm's own production departments. C. It relaxes the assumption that the demand rate is constant. D. It minimizes inventory E. It minimizes the total production costs.

A. It relaxes the assumption that all the order quantity is received at one time.

Which of the following statements regarding a pull system is TRUE? A. Problems become more obvious. B. Manufacturing cycle time is increased. C. Work is pulled to the downstream stations before it is actually needed. D . Large lots are pulled from upstream stations. E. None of the above is true of a pull system,

A. Problems become more obvious.

Enterprise resource planning (ERP): A. automates and integrates the majority of business processes. B. does not integrate well with functional areas other than operations C. is inexpensive to implement D. seldom requires software upgrade or enhancement. E. all of the above

A. automates and integrates the majority of business processes.

Which one of the following is not a benefit of JIT implementation? A. variability increase B. quality improvement C. rapid throughput D. rework reduction E. cost reduction

A. variability increase

Local optimization is a supply-chain complication best described as: A. the opposite of the bullwhip effect. B optimizing one's local area without full knowledge of supply chain needs C. the result of supply chains built on suppliers with compatible corporate cultures D. obtaining very high production efficiency in a decentralized supply chain. E. the prerequisite of global optimization.

B optimizing one's local area without full knowledge of supply chain needs

Which one of the following statements is TRUE regarding JIT inventory? A. It increases if setup costs decrease. B. It is the minimum inventory necessary to keep a perfect system running. C. It is minimized with large lot production. D. It exists just in case something goes wrong. E It hides variability.

B. It is the minimum inventory necessary to keep a perfect system running.

Which of the following aggregate planning strategies is a demand option? A. varying production levels B. changing price C. using part-time workers D. subcontracting E. changing inventory levels

B. changing price

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A. price cuts or discounts B. subcontracting C. advertising D. counterseasonal products or services E. promotion

B. subcontracting

How can a reduction of in-transit inventory be encouraged? A high setup costs B. supplier location near plants C. use of trains, not trucks D. low carrying costs E. low-cost, global suppliers

B. supplier location near plants

When quantity discounts are allowed, the cost-minimizing order quantity: A: may be a quantity below that at which one qualifies for that price. B. minimizes the unit purchase price, C minimizes the sum of holding, ordering, and product costs. D. is always an EOQ quantity. E minimizes the sum of holding and ordering costs.

C minimizes the sum of holding, ordering, and product costs.

In the basic EOQ model, if D = 6000 per year. S = $100, and holding cost = $5 per unit per month, what is the economic order quantity ? A. 490 B. 100 C. 141 D. 24 E. 600

C. 141

The two most basic inventory questions answered by the typical inventory model are: A. ordering cost and carrying cost. B. timing of orders and cost of orders. C order quantity and service level D timing of orders and order quantity. E. order quantity and cost of orders.

D timing of orders and order quantity.

ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A. the number of units on hand B. unit price OC. annual demand D. annual dollar volume E. item quality

D. annual dollar volume

Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A. close relationships with skepticism B. distant relationships with skepticism C. distant relationships with trust D. close relationships with trust E none of the above

D. close relationships with trust

In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A. increase by 200% B. increase by 100%. C. either increase or decrease. D. increase by about 41% E. increase, but more data is needed to say by how much

D. increase by about 41%

Which of the following is NOT a goal of JIT partnerships? A. obtain improved quality and reliability B removal of in-transit inventory C. removal of in-plant inventory D. removal of unnecessary activities E. All of the above are goals of JIT partnerships

E. All of the above are goals of JIT partnerships

The main trait of a single-period model is that: A. the cost of a shortage cannot be determined accurately. B. the order quantity should usually equal the expected value of demand C supply is limited. D. it has the largest EOQ sizes. E. inventory has limited value after a certain period of time.

E. inventory has limited value after a certain period of time.

Dependence on an external source of supply is found in which of the following aggregate planning strategies? A. varying production rates through overtime or idle time B. hiring and laying off C. using part-time workers D. back ordering during high demand periods E. subcontracting

E. subcontracting

The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site. True False

False

Savings in the supply chain exert more leverage as the firm's net profit margin decreases. True False

True

Which of these statements about the production order quantity model is FALSE? A. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production crder quantity B. Average inventory is less than one-half of the production order quantity C. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. D. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. E. None of the above is false.

A. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production crder quantity

Which of the following statements regarding aggregate planning is TRUE? A. Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon. B. In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon. C. Because service firms have no inventory, the chase strategy does not apply. D. A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies. E. A disadvantage of the option of changing inventory levels is that it forces abrupt production changes.

A. Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in The parent assembly. B. The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. D. The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. E. All of the above are true.

A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in The parent assembly.

Low-level coding means that: A. a component item is coded at the lowest level at which it appears in the BOM structure. B. the top level of the BOM is below level zero and that BOMs are not organized around the finished product C. the code being used is the code for the lowest level in the BOM structure. D. the lowest-paid staff member in the production department performs the coding. E. a final item has only a few levels in the BOM structure

A. a component item is coded at the lowest level at which it appears in the BOM structure.

The fixed - period inventory system requires more safety stock than a fixed-quantity system because: A. a stockout can occur during the review period as well as during the lead time. B. this model is used for products that require very high service levels C. this model is used for products that have large standard deviations of demand. D. setup costs and holding costs are large. E. replenishment is not instantaneous.

A. a stockout can occur during the review period as well as during the lead time.

Which one of the following is a characteristic of a JIT partnership? A. removal of incoming inspection B. active pursuit of vertical integration C. third-party logistics never used D. frequent deliveries in large lot quantities E. maximal product specifications imposed on supplier

A. removal of incoming inspection

A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following? A. the bullwhip effect B. vendor-managed inventory C. double marginalization D. postponement E. CPFR

A. the bullwhip effect

ABC analysis is based upon the principle that: A. there are usually a few critical items, and many items that are less critical. B. as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items. C. all items in inventory must be monitored very closely. D. more time should be spent on class "C" items because there are many more of them. E. an item is critical if its usage is high.

A. there are usually a few critical items, and many items that are less critical.

An advantage of the fixed-period inventory system is that: A. there is no physical count of inventory items when an item is withdrawn. B. no inventory records are required, C. orders usually are for smaller order quantities. D. safety stock will be lower than it would be under a fixed-quantity inventory system E, the average inventory level is reduced

A. there is no physical count of inventory items when an item is withdrawn.

The two most basic inventory questions answered by the typical inventory model are: A. timing of orders and order quantity. B. timing of orders and cost of orders C. ordering cost and carrying cost. D. order quantity and cost of orders. E. order quantity and service level.

A. timing of orders and order quantity.

Which of the following actions is consistent with the use of level scheduling? A. use inventory to meet demand requirements B. vary production levels to meet demand requirements C. use overtime to meet higher-than-average demand requirements D. vary work force to meet demand requirements E. none of the above

A. use inventory to meet demand requirements

The purpose of safety stock is to: A. eliminate the likelihood of a stockout due to erroneous inventory tally B. control the likelihood of a stockout due to variable demand and/or lead time. C. eliminate the possibility of a stockout. D. protect the firm from a sudden decrease in demand. E. replace failed units with good ones.

B. control the likelihood of a stockout due to variable demand and/or lead time.

Which choice below best describes the counterseasonal product demand option? A. lowering prices when demand is slack B. developing a mix of products that smoothes out their demands C. producing such products as lawnmowers and sunglasses during the winter D. using subcontractors only when demand is excessive E. the breaking of the aggregate plan into finer levels of detail

B. developing a mix of products that smoothes out their demands

Characteristics of just-in-time partnerships do NOT include: A focus on core competencies. B. large lot sizes to save on setup costs and to gain quantity discounts. C. produce with zero defects. D. long-term contracts. E. removal of in-transit inventory.

B. large lot sizes to save on setup costs and to gain quantity discounts.

Manufacturing cycle time is best defined as the A. length of the work shift, expressed in minutes per day. B. time from raw materials receipt to finished product exit. C. time between the start of one unit and the start of the next unit. D. sum of all the task times to make one unit of a product. E. time it takes a unit to move from one workstation to the next.

B. time from raw materials receipt to finished product exit.

Aggregate planning would entail which of the following production aspects at BMW for a 12-month period? A number of cars with a hi-fi stereo system to produce B. total number of cars to produce C. number of two-door vs. four-door cars to produce D. number of green cars to produce E. B, C, and D

B. total number of cars to produce

Which of the following is FALSE concerning enterprise resource planning (ERP)? A It attempts to automate and integrate the majority of business processes. B. It provides and accesses information in a real-time environment. C. It is inexpensive to implement D. It shares common data and practices across the enterprise. E. ERP software promises reduced transaction costs

C. It is inexpensive to implement

JIT makes quality cheaper because: A. JIT adds more buffers to the system. B. the cost of low quality can be hidden in inventory. C. JIT prevents long runs of defects. D. B and C E. A, B and C

C. JIT prevents long runs of defects.

The proper quantity of safety stock is typically determined by: A. using a single-period model. B. minimizing total costs. C. Setting the level of safety stock so that a given stockout risk is not exceeded. D. multiplying the EOQ by the desired service level. E. carrying sufficient safety stock so as to eliminate all stockouts.

C. Setting the level of safety stock so that a given stockout risk is not exceeded.

A grocery store is attempting to implement a kanban system. Which of the following would not be an application of kanbans? A. A line of 5 people in the Chinese department signaling the department to heat 5 Crab Rangoon. B. A red light on top of the cashier's lane signals that the cashier needs additional change replenished. C. The meat department stocking up on turkeys before Thanksgiving. D. An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts E. All of the above are kanban applications.

C. The meat department stocking up on turkeys before Thanksgiving.

Which of the follow ng statements is TRUE about the MRP plan when using lot-for-lot ordering? A. The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. B. The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. C. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. D. The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. E. All of the above are true.

C. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.

Which of these is among the demand options of aggregate planning? A. varying workforce size B. changing inventory levels C. back-ordering during high-demand periods D. subcontracting E. varying production rates through overtime or idle time

C. back-ordering during high-demand periods

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A. horizontal integration B. job expansion C. backward integration D. current transformation E. forward integration

C. backward integration

Which of the following aggregate planning strategies is a capacity option? A. influencing demand by extending lead times B. counterseasonal product mixing C. changing inventory levels D. influencing demand by changing price E. influencing demand by back ordering

C. changing inventory levels

Which of the following aggregate planning strategies is a demand option? A. changing inventory levels B. varying production levels C. changing price D. subcontracting E. using part-time workers

C. changing price

A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A. horizontal integration B. keiretsu C. forward integration D. current transformation E. backward integration

C. forward integration

Which of the following is NOT an opportunity for effective management in the supply chain? A. Vendor-managed inventory B. CPER C. local optimization D. postponement E. accurate "pull" data

C. local optimization

In MRP, the number of units projected to be available at the beginning of each time period refers to: A. planned order releases. B. scheduled receipts. C. projected on hand. D. net requirements. E the amount necessary to cover a shortage

C. projected on hand.

Which of the following is generally found in most Lean environments? A. a push system for purchased parts and a pull system for manufactured parts B. a push or pull system, depending upon the rate of demand C. pull systems D. a push system for high margin items and a pull system for low margin items E. push systems

C. pull systems

A disadvantage of the "few suppliers" sourcing strategy is: A. possible violations of the Sherman Antitrust Act. B. the lack of cost savings for customers and suppliers. C. the high cost of changing partners. D. the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer. E. the risk of not being ready for technological change.

C. the high cost of changing partners.

Which of the following would NOT generally be a motive for a firm to hold inventories? A. to hedge against inflation B. to take advantage of quantity discounts C. to minimize holding costs D. to decouple various parts of the production process E. to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand

C. to minimize holding costs

Which of the following statements is true regarding the leverage of supply chain savings? A. Supply chain leverage is about the same for all industries. B. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C. Supply chain leverage depends only upon the percent of sales spent in the supply chain. D. Supply chain savings exert more leverage as the firm's net profit margin decreases. E. None of the above is true.

D. Supply chain savings exert more leverage as the firm's net profit margin decreases.

Which of the following statements about quantity discounts is FALSE? A. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. B. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. C. The smaller the ordering cost, the less attractive a discount schedule will be D. The larger the annual demand, the less attractive a discount schedule will be. E. In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available.

D. The larger the annual demand, the less attractive a discount schedule will be.

Which of the following is NOT an advantage of level scheduling? A. lower absenteeism B. lower turnover C. stable employment D. matching production exactly with sales E more employee commitment

D. matching production exactly with sales

The objective of aggregate planning is to meet forecast demand while over the planning period. A. minimizing fixed cost B. maximizing service level C. minimizing stock out D. minimizing cost E. all of the above

D. minimizing cost

What is the practice of keeping a product generic as long as possible before customizing? A. vendor-managed inventory B. backward integration C. forward integration D. postponement E. keiretsu

D. postponement

What is the primary purpose of the basic economic order quantity model shown below? A. to minimize the sum of carrying cost and holding cost B. to calculate the reorder point, so that replenishments take place at the proper time C. to calculate the optimum safety stock D. to minimize the sum of setup cost and holding cost E. to maximize the customer service level

D. to minimize the sum of setup cost and holding cost

Which of the following is TRUE regarding the steps to reducing setup times? A. The standardization of both tooling and work procedures is advantageous to setup time reduction. B. The cycle of steps is repeated until setup time is reduced to under a minute. C. The first step involves performing as much setup preparation as possible while the process/machine is operating D. Move material closer and improve material handling are done before operator training. E. All of the above are true.

E. All of the above are true.

Which of the following statements about the basic EOQ model is TRUE? A. If annual demand were to double, the EOQ would increase. B. If annual demand were to double, the number of orders per year would increase C. If the ordering cost were to double, the EOQ would rise D. Carrying cot were to increase, EOQ would fall E. All of the above statements are true

E. All of the above statements are true

Which one of the following statements is TRUE about the kanban system? A. The supplier workstation signals the customer workstation as soon as a batch is completed. B. It is useful to smooth operations when numerous quality problems occur. C. The quantities in the containers are usually large to reduce setup costs. D. It is associated with a push system. E. The customer workstation signals to the supplier workstation when production is needed.

E. The customer workstation signals to the supplier workstation when production is needed.

What directly results from disaggregation of an aggregate plan? A. priority scheduling B. detailed work schedules C. a transportation matrix D. a capacity-demand matrix E. a master production schedule

E. a master production schedule

Which of the following is characteristic of lean operations? A. inventory buffers between each workstation to minimize system downtime B. specialty workers with no cross-training C. no supplier partnerships D. easy, mindless jobs E. low space requirements

E. low space requirements

Aggregate planning for service firms that provide intangible output deals mainly with: A. centralized purchasing. B. smoothing the production rate and finding the optimal size of the workforce. C. capital investment decisions. D. centralized production. E. planning for human resource requirements and managing demand.

E. planning for human resource requirements and managing demand.

Hewlett-Packard delays customization of its laser printers as long as possible. This is an example of which of the following? A. backward integration B. standardization C. vendor-managed inventory D. timely customization E. postponement

E. postponement

What term is used to describe the outsourcing of logistics? A. hollow logistics B. sub-logistics C. e-logistics D. shipper-managed inventory (SMI) E. third-party logistics (3PL)

E. third-party logistics (3PL)

The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain. True False

True

Revenue management is MOST likely to be used in which one of the following situations? A a firm with a good counterseasonal product mix B. a dental clinic that wants to fill its appointment book c. an airline attempting to fill "perishable" seats at maximum revenue D. a fast food restaurant with wide demand fluctuations during the day E a shipping company that can change its fleet size easily

c. an airline attempting to fill "perishable" seats at maximum revenue

Which of these aggregate planning strategies is a capacity option? A. changing price B. counterseasonal product mixing c. using part-time workers D. back ordering E. promotion

c. using part-time workers

Which of the following statements about aggregate planning is TRUE? A. The option of varying workforce size by hiring or layoffs is used where the size of the labor pool is small. B. A pure chase strategy allows lower inventories when compared to a pure level scheduling. C. A disadvantage of subcontracting is that it may require skills or equipment outside the firm's areas of expertise. D. An advantage of the counterseasonal product and service mixing option is that it matches seasonal fluctuations without hiring/training costs. E. In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand.

B. A pure chase strategy allows lower inventories when compared to a pure level scheduling.

Which choice best describes level scheduling? A. Overtime is used to handle seasonal demand fluctuations. B. Inventory goes up or down to buffer the difference between demand and production C. Price points are calculated to match demand to capacity D. Subcontracting, hiring, and layoffs manipulate supply. E. Daily production is variable from period to peri

B. Inventory goes up or down to buffer the difference between demand and production

Which of the following statements is NOT true about MRP? A. MRP has evolved as the basis for Enterprise Resource Planning. B. MRP is an independent demand technique used in a production environment. C. MRP provides a clean structure for dependent demand. D. MRP uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements.

B. MRP is an independent demand technique used in a production environment.

Outsourcing A. transfers traditional internal activities to outside vendors. B. allows the outsourcing firm to focus on its key success factors C. utilizes the efficiency that comes with specialization. D. All of the above are true of outsourcing E. None of the above is true of outsourcing

D. All of the above are true of outsourcing

Kanban is associated with all EXCEPT which of the following? A. reductions in inventory B. small lot sizes C. signals, such as cards, lights, or flags D. increased material handling E. moving inventory only as needed

D. increased material handling

A disadvantage of the fixed-period inventory system is that: A. orders usually are for larger quantities. B. additional inventory records are required. C. it involves higher ordering costs than the fixed quantity inventory system. D. since there is no count of inventory during the review period, a stockout is possible. E. the average inventory level is decreased.

D. since there is no count of inventory during the review period, a stockout is possible.

In level scheduling, what is kept uniform from month to month? A. demand levels B. inventory levels C. product mix D. sub-contracting levels E production workforce levels

D. sub-contracting levels

In aggregate planning, which one of the following is not a basic option for altering demand? A promotion B. back ordering C. pricing D. subcontracting E. personal selling

D. subcontracting

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A. time phasing B. lot sizing C. modular bills D. time fences E. closed loop system

D. time fences

All EXCEPT which of the following statements about ABC analysis are true? A. ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume. B. ABC analysis suggests that there are the critical few and the trivial many inventory items. C. In ABC analysis, inventory may be categorized by measures other than dollar volume. D. ABC analysis is an application of the Pareto principle. E. ABC analysis suggests that all items require the same high degree of control.

E. ABC analysis suggests that all items require the same high degree of control.

Lean operations are known for their A. supplier education. B. challenging jobs. C. employee development D. supplier partnerships. E. All of the above are attributes of lean operations.

E. All of the above are attributes of lean operations.

Which of the following is consistent with a chase strategy? A. little or no use of inventory to meet demand requirements B. vary production levels and work force to meet demand requirements C. vary work force to meet demand requirements D. vary production levels to meet demand requirements E. All of the above are consistent with a chase strategy.

E. All of the above are consistent with a chase strategy.

Which of the following is an element of inventory holding costs? A. investment costs B. housing costs C. pilferage, scrap, and obsolescence D. material handling costs E. All of the above are elements of inventory holding costs.

E. All of the above are elements of inventory holding costs.

The bullwhip effect: A.increases the costs associated with inventory in the supply chain. B. occurs because of distortions in information in the supply chain C. occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. D results in increasing fluctuations at each step of the sequence. E. All of the above are true.

E. All of the above are true.