MKT 411 EXAM #2 (chp. 5-7)
T/F: The inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue.
TRUE
Advantages of an ERP system:
- Added visibility reduce supply chain inventories - Helps to standardize manufacturing processes - Measure performance & communicate via a standardized method
Carrying costs include:
- Damage - Theft/pilferage - Obsolescence - Excess capital invested - Freight and storage
What an ABC inventory control system is:
- Determines which inventories should be counted & managed more closely than others - A items are given the highest priority with larger safety stocks. A items account for approximately 20% of the total items & about 80% of the total inventory cost - B items account for the other about 40% of total items & 15% of total inventory cost. - C items have the lowest value and hence lowest priority. They account for the remaining 40% of total items & 5% of total inventory cost.
When using the continuous review system, stockouts can occur: a. At any time b. During the delivery lead time c. Prior to the reorder period d. Between review periods
b. During the delivery lead time
The impact of poor communication and inaccurate forecasts along the supply chain can cause: a. Consumer's risk b. Material shortages c. Reverse Logistics d. Economies of scale
b. Material shortages
Cyclical variations are longer than a year and can be influenced by: a. Population growth b. Political factors c. Events such as natural disasters d. Imbalances in supply and demand
b. Political factors
Each unit produced contains $1.25 in materials. This is an example of: a. Processing cost b. Setup cost c. Direct cost d. Carrying cost
c. Direct cost
Which of the following is considered an advantage/benefit of utilizing an ERP system? a. Fairly inexpensive to purchase and implement b. Flexible enough that it allows different companies with different business models to mold the new ERP system to fit the company's business model c. Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries d. All of these choices are correct.
c. Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries
CPFR relies heavily on? a. Firms retaining information b. Firms acting in their own best interest c. Firms sharing information d. Firms acting independently
c. Firms sharing information
If the EOQ assumptions hold, and if a firm orders the EOQ, the average inventory level over time should be a. Equal to the lead time quantity. b. Twice the EOQ. c. Half the EOQ. d. The square root of the EOQ.
c. Half the EOQ.
Inaccurate forecasts can result in negative outcomes like: a. Material shortages and decreased costs of obsolescence b. High inventory costs and increased profits c. Imbalances in supply and demand d. Low inventory costs and stockouts
c. Imbalances in supply and demand
The Economic Manufacturing Quantity (EMQ) model relaxes which assumption of the classical EOQ model? a. Zero safety stock b. Constant demand c. Instantaneous replenishment d. Constant price
c. Instantaneous replenishment
Fundamentally, ERP systems exist to optimize three things in an organization:
- Information - Materials - Cash
The primary goal of forecasting
is to minimize deviation between actual demand and forecast
Major categories of inventory cost:
- Direct costs- directly traceable to unit produced (e.g., labor) - Indirect costs- cannot be traced directly to the unit produced (e.g., overhead) - Fixed costs- independent of the output quantity (e.g, buildings, equipment) - Variable costs- vary with output level (e.g., materials) - Order costs- direct variable costs for placing an order - Holding or carrying costs- incurred for holding inventory in storage - In manufacturing, setup costs are related to machine setups
If the cost of an item is $500, the carrying cost rate is 20%, the order cost is $75, annual demand is for 1,000 units, calculate the economic order quantity. Round off to the next highest unit. a. 39 b. 26 c. 52 d. 15
a. 39
If annual demand = 2000, order cost = $50, annual holding cost rate = 15%, and the purchase price = $25 for orders of less than 1000 units, or $15 for orders of 1000 units or more, should you take the discount? Also, what is the minimum total cost? a. Yes -- $38,477 b. Yes -- $31,225 c. No -- $43,280 d. No -- $50,867
b. Yes -- $31,225
Independent Demand:
demand for end products & has demand pattern affected by trends, seasonal patterns, & general market conditions
Enterprise Resource Planning Systems (ERP)
integrates internal operations with a common software platform & centralized database system
Near-Field Communication (NFC):
secure form of data exchange between an NFC tag & Android-powered devices
Radio Frequency Identification (RFID):
tracks individual unit of goods. Does not require direct line of sight to read a tag and information on the tag is updatable
What is CPFR?
- It is a business practice that combines the intelligence of multiple trading partners in the planning & fulfillment of customer demands. - It links sales & marketing best practices, such as category management, to supply chain planning processes to increase availability while reducing inventory, transportation & logistics costs
Challenges in implementing ERP systems:
- Lack of top management commitment - Lack of adequate resources Lack of proper training - Lack of communication - Incompatible system environment
Stockout costs include:
- Lost sales - Future deals - Image and reputation
CPFR benefits:
- Strengthens partner relationships - Provides analysis of sales & order forecasts - Uses point-of-sale data, seasonal activity, promotions, to improve forecast accuracy - Manages demand chain & eliminates problems before they appear - Allows collaboration on future requirements & plans - Uses joint planning & promotions management - Integrates planning, forecasting and logistics activities - Provides efficient category management & understanding of consumer purchasing patterns
Qualitative Forecasting Methods:
- Used when data are limited, unavailable, or not currently relevant - Forecast depends on skill & experience of forecaster & available information -Four qualitative models used are 1. Jury of executive opinion 2. Delphi method 3. Sales force composite 4. Consumer survey
Dependent Demand - internal demand for parts based on demand of the final product in which parts are used Examples include; Subassemblies, components, & raw materials
- internal demand for parts based on demand of the final product in which parts are used - Examples include; Subassemblies, components, & raw materials
What is production "capacity":
- maximum workload that an organization is capable of completing in a given period of time
What is an Economic Order Quantity (EOQ) model?
- quantitative decision model based on the trade-off between annual inventory holding costs & annual order costs - Seeks to determine optimal order quantity • Order Cost is direct variable cost associated with placing an order. (Sometimes called setup cost) • Holding Cost is cost incurred for holding inventory in storage. (Sometimes called carrying cost)
What is inventory turnover:
-how many times inventory "turns" in an accounting period. Higher number is better -calculated by dividing the Cost of revenue over the Average Inventory
Two types of ERP implementation:
1. Best-of-breed - picks best application for each function • Some businesses require best-of-breed for advanced or big data analytical decision making • Disadvantage - software may not integrate well with other systems 2. Single integrator solution - picks all desired applications from single vendor • Advantages - all the applications should work well together • Getting system up and running should be easier
Top three challenges for CPFR implementation:
1. Difficulty of making internal changes 2. Cost 3. Trust
Two major RFID standards:
1. Electronic product code (EPC) standard, managed by the EPCglobal, Inc. • Classes 0, 1 and 2 are passive RFID tags - do not store power on the tags • Classes 3 and 4 are active RFID tags contain a power source to boost their range • Class 5 tags communicate with other class 5 tags and devices 2. 18000 standard of the International Standards Organization (ISO)
The three primary time frames of resource planning:
1. Long-range - Aggregate Production Plan (APP) usually covers a year or more, involves the construction of facilities & major equipment purchase 2. Intermediate - plan spans six to eighteen months. Shows the quantity & timing of end items (i.e., master production schedule - MPS) 3. Short-range - plan covers few days to few weeks. Detailed planning process for components & parts to support the master production schedule (i.e., materials requirement planning - MRP)
3 primary forecasting techniques:
1. Qualitative forecasting - based on opinion & intuition 2. Quantitative forecasting - uses mathematical models & historical data to make forecasts 3. Time series models - most frequently used among all the forecasting models
The four major categories of inventory:
1. Raw materials- unprocessed purchase inputs 2. Work-in-process (WIP)- partially processed materials not yet ready for sales 3. Finished goods- completed products ready for shipment 4. Maintenance, repair & operating (MRO)- materials & supplies used in producing products (e.g., cleaners & brooms)
If at the end of the year, the cost of revenue = $2,500, total revenue = $12,000 and inventory value = $2,000, the inventory turnover ratio would be:
1.250
Complete the following MRP record and provide the planned order releases for Week 3. Lead time is 2 weeks. Safety stock is 4. Use LFL lot sizes. Part A Week 1 2 3 4 5 Gross Requirements 32 16 34 40 53 Scheduled Receipts 22 Projected On-Hand inventory 56 Planned Order Releases a. 8 b. 40 c. 53 d. 0
1: 56 - 32 = 24 2: 24 + 22 - 16 = 30 3: 30 - 34 = -4 ... since negative can't be correct must be at least 4 do -4 + 8 = 4 must be 53
Which of the following is a reason firms are migrating to ERP systems? a. ERP systems use a centralized database system to tie the entire organization together b. ERP systems are easy to implement, particularly in large organizations c. ERP systems are inexpensive to implement d. ERP systems are successful with two-dimensional processes
a. ERP systems use a centralized database system to tie the entire organization together
The demand for an item is normally distributed with an average annual demand of 8000 units, and with a standard deviation of demand during the lead time of 6 units. The lead time for this item is a constant 3 days. Calculate the reorder point using a 95 percent in-stock probability (Z = 1.65) and assuming 365 days per year. Round off to the nearest whole unit. a. 58 units b. 76 units c. 43 units d. 18 units
b. 76 units
The quantity discount model is used when: a. Demand varies over time. b. The purchase price varies. c. The purchase lead time varies. d. The EOQ is discounted.
b. The purchase price varies.
According to the text, for long-term forecasts, it is recommended that which type of forecasts be used? a. Qualitative b. Quantitative c. Combination of both qualitative and quantitative d. Forecasts cannot be developed for the long term
c. Combination of both qualitative and quantitative
Proper demand forecasting enables _____________________ for businesses to be competitive. a. Stockouts and good responsiveness to market dynamics b. Low inventory costs and increased costs of obsolescence c. High inventory costs and increased profits d. Better planning and utilization of resources
d. Better planning and utilization of resources
Which of the following is not an assumption of the basic economic order quantity model? a. Order lead time is known and constant b. Price is constant c. Demand is known and constant d. Replenishments take place at the proper time
d. Replenishments take place at the proper time
Use of the periodic review system is characterized by: a. Constant order quantities at constant time intervals. b. Constant order quantities at variable time intervals. c. Variable order quantities at variable time intervals. d. Variable order quantities at constant time intervals.
d. Variable order quantities at constant time intervals.
Too much inventory creates: a. Excess setup cost. b. Excess carrying cost. c. Excess ordering cost. d. Excess stockout cost.
b. Excess carrying cost.
If an item is ordered using its economic order quantity, the annual carrying cost should be: a. twice the annual purchase price. b. the square root of the annual ordering cost. c. equal to the annual ordering cost. d. slightly less than the annual ordering cost. e. None of these choices are correct.
c. equal to the annual ordering cost
Which of the following is a time-phased finished-goods inventory replenishment plan in a distribution network? a. Distribution resource plan b. Discrete available-to-promise plan c. Aggregate distribution plan d. Distribution requirements plan
d. Distribution requirements plan
Quantitative forecasts use mathematical techniques that are based on: a. Expert opinions b. Surveys c. Sales force knowledge of the market d. Historical data
d. Historical data
Which of the following is a disadvantage of carrying too much inventory? a. it increases the need to purchase items. b. it leads to lower average finished goods inventories. c. it leads to higher annual inventory ordering costs. d. it creates an unnecessary waste of scarce resources. e. it reduces the need to conduct cycle counts.
d. it creates an unnecessary waste of scarce resources.
The College Bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day. The lead time for this calculator is 9 days. Compute the statistical reorder point that results in a 95 percent in-stock probability. Choose the closest answer.
200 units
The College Bookstore sells a unique calculator to college students. The demand for this calculator is constant at 20 units per day. The lead time for this calculator is variable at an average of 9 days with a standard deviation of 2 days. Compute the statistical reorder point that results in a 95 percent in-stock probability. Choose the closest answer.
246 units
The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000. What is the economic order quantity (EOQ)?
300
When demand and delivery lead time are known and constant, daily demand = 8, purchase lead time = 5 days, and the purchase price = $20/unit, then the reorder point is:
40
Use the information below to calculate the number of orders per year when using the EOQ: Annual demand for an item is 43,000 units The cost to place an order is $200 The per unit cost of the item is $50.00 The annual holding rate is 35% Choose the closest answer.
49
The __________ specifies which end product is to be made, how many are required, and when they need to be completed.
Aggregate production plan
Using the ________________ multiple software infrastructures and databases may have to be used to link the multiple applications obtained from different vendors.
Best-of-breed solution
T/F: The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C. A items receive the smallest amount of safety stock, while C items typically have the most safety stock.
FALSE
T/F: The four categories of inventory are raw materials, intermediate assemblies, work-in-progress and finished goods.
FALSE
The ___________ planning horizon is shorter than the aggregate production plan's, but must be longer than a firm's production lead time to ensure the end item can be completed within the planning horizon?
Master production schedule
The ___________ solution picks all the desired applications from a single vendor for the ERP system.
Single integrator
In 2016, Spin Master, did not properly forecast demand for their new product, Hatchimals, causing ___________ for their distributors.
Stockouts
If your company had an annual purchase cost of items equal to $2,000,000, an annual holding cost of $150,000 and an annual ordering cost of $50,000 this scenario would reveal that:
Your order lot size was higher than the EOQ
Which of the following describes the capacity planning horizon order from long to short range? a. 1st - Resource requirements plan (RRP), 2nd - Rough-cut capacity plan (RCCP), 3rd - Capacity requirements plan (CRP) b. 1st - Rough-cut capacity plan (RCCP), 2nd - Resource requirements plan (RRP), 3rd - Capacity requirements plan (CRP) c. 1st - Capacity requirements plan (CRP), 2nd - Resource requirements plan (RRP), 3rd - Rough-cut capacity plan (RCCP) d. None of these choices are correct.
a. 1st - Resource requirements plan (RRP), 2nd - Rough-cut capacity plan (RCCP), 3rd - Capacity requirements plan (CRP)
Using the actual demand shown in the table below, what is the forecast for June (round to the whole number) using a 3-month weighted moving average and the weights 0.2, 0.3, 0.5 (remember how to apply them)? Dec. Jan. Feb. Mar. Apr. May 39 36 40 44 48 50 a. 48 b. 46 c. 52 d. 54
a. 48
Enterprise systems made from applications purchased from multiple vendors over time may be referred to as: a. Best-of-breed b. Mix-and-match c. Best-in-class d. All of these choices are correct.
a. Best-of-breed
A company is conducting forecasting that revolves around the global recession and real estate crises. This type of forecasting can be referred to as what component of a time series? a. Cyclical Variations b. Seasonal Variations c. Trend Variations d. Random Variations
a. Cyclical Variations
Why are firms migrating to ERP systems? a. ERP systems tie together a variety of specialized systems b. ERP systems are inexpensive to implement c. ERP systems are successful with two-dimensional processes d. ERP systems are easy to implement, particularly in large organizations
a. ERP systems tie together a variety of specialized systems
The real value of CPFR comes from: a. Firms exchanging forecasting information b. Sophisticated forecasting algorithms c. Centralized purchasing and forecasting relationships d. Reverse logistics programs
a. Firms exchanging forecasting information
Two methods have been used to produce the following forecasts over the past four months. Which forecast is the best one? Demand Forecast A Forecast B 150 130 180 200 170 180 220 184 180 190 195 180 a. Forecast A b. Forecast B c. They are equally good. d. There is not enough information to tell
a. Forecast A
Which of the following is NOT a benefit of CPFR? a. Improved corporate image among regulators b. Provides analysis of sales and order forecasts c. Strengthens partner relationships d. Allows collaboration on future requirements and plans
a. Improved corporate image among regulators
According to the textbook, which of the following is considered a reason that ERP implementations fail? a. Lack of communication within an organization b. Organizations tend to spend too much time and money training their employees on the new system c. Top management becomes overcommitted to the point where they constantly encourage the employees during implementation d. All of these choices are correct.
a. Lack of communication within an organization
A limitation that these systems needed continuous modifications pertains to which of the following? a. Legacy MRP system b. Enterprise Resource Planning system c. Distribution Requirements system d. Dependent demand system
a. Legacy MRP system
Which strategy uses overtime and subcontracting to cope with the high demand periods? a. Mixed Production Strategy b. The Aggregate Production Strategy c. The Level Production Strategy d. The Chase Production Strategy
a. Mixed Production Strategy
Which one of the following is NOT a type of qualitative forecasting? a. Naïve method b. Delphi method c. Consumer survey d. Jury of executive opinion
a. Naïve method
Which of the following is considered an advantage/benefit of utilizing an ERP system? a. Reduces the bullwhip effect b. Minimal capital investment is needed to purchase and implement the system c. Utilizes multiple databases in order to provide up-to-date information d. Increases the bullwhip effect
a. Reduces the bullwhip effect
Which one of the following is NOT a type of qualitative forecasting? a. Simple moving average b. Consumer survey c. Jury of executive opinion d. Sales force composite
a. Simple moving average
According to the text, which of the following is NOT one of the top three challenges for CPFR? a. Sophisticated forecasting algorithms b. Trust c. Cost d. Difficulty making internal change
a. Sophisticated forecasting algorithms
Which of the following systems allows changes and other modifications to be executed quickly to minimize delivery lead times? a. The Enterprise Resource Planning System b. The Master Production System c. The Aggregate Planning System d. The Financial Analysis System
a. The Enterprise Resource Planning System
Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand? a. The Level Production Strategy b. The Aggregate Production Strategy c. Mixed Production Strategy d. The Chase Production Strategy
a. The Level Production Strategy
While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth? a. The year 2000 millennium bug b. The trend for companies to eliminate their supply chain partners c. The increased use of email during the 1990's d. All of these choices are correct.
a. The year 2000 millennium bug
A positive error implies that a forecast was? a. Too low b. Too high c. Neither too high or too low d. The sign of an error gives no information as to the direction of the error.
a. Too low
Your company is conducting forecasting that revolves around population growth in large cities. This type of forecasting can be referred to as what component of a time series? a. Trend Variations b. Seasonal Variations c. Random Variations d. Cyclical Variations
a. Trend Variations
According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT: a. Supplier lead times b. Cost c. Trust between supply chain partners d. Making organizational and procedural changes
a. supplier lead times
If actual demand for a period was 108 and the forecast for that period was 103, what is the forecast error for the period? a. 0 b. 5 c. -5 d. Forecast error cannot be determined by the information given.
b. 5
Which of the following would be considered a dependent demand item? a. Retail customers b. Bicycle tires used to assemble a bicycle c. Furniture d. Televisions
b. Bicycle tires used to assemble a bicycle
Which of the following shows the parent-component relationships and the exact quantity of each component required for making a higher-level part? a. Distribution Requirement Plan b. Bill of Materials c. Resource Requirement Plan d. Master Production Schedule
b. Bill of Materials
The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the: a. Delphi method b. Bullwhip effect c. CPFR effect d. Mean deviation
b. Bullwhip effect
Which forecasting method would use the size of the advertising budget as a variable in the forecasting technique? a. Random variation forecasting b. Cause-and-Effect forecasting c. Business cycle forecasting d. Time series forecasting
b. Cause-and-Effect forecasting
Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include: a. Operating systems and Internet browsing b. Customer relationship management and Human resource management c. Computer assisted drawing and Photo enhancing d. All of these choices are correct.
b. Customer relationship management and Human resource management
The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from: a. Sophisticated forecasting algorithms b. Exchange of forecasting information c. Both "Sophisticated forecasting algorithms" and "Exchange of forecasting information" d. None of these choices are correct.
b. Exchange of forecasting information
Which production strategy is best suited for firms needing highly skilled labor where hiring and training costs are high? a. The chase production strategy b. Level production strategy c. The aggregate production strategy d. Mixed production strategy
b. Level production strategy
Which of the following is NOT a common module of ERP systems? a. Customer Relationship Management b. Marketing Resources Management c. Supply Chain Management d. Human Resources Management
b. Marketing Resources Management
Cycle counting can be described as: a. Stock counts of MRO items. b. Physically counting inventory on a periodic basis. c. The analysis performed by an ABC analysis. d. Inventory control in a motorcycle shop.
b. Physically counting inventory on a periodic basis.
Organizations that choose to implement one single system with all of the desired applications from a single vendor is said to have chosen a(n): a. Elite integrator solution b. Single integrator solution c. Best-of-breed solution d. Premier application solution
b. Single integrator solution
Which of the following was a limitation of the legacy MRP systems? a. The systems accessed real-time information on available capacities b. The systems were designed to perform a very specific operational function c. The systems linked internal operations to the financial function d. All of these choices are correct.
b. The systems were designed to perform a very specific operational function
An RFID system consists of: a. The code, band, writer, and reader. b. The tag, reader, communication network, and software. c. The header, manager, object, and serial number. d. The standards, the equipment, the software, and the printer
b. The tag, reader, communication network, and software.
What component of a time series is based on increasing or decreasing movements over many years and are due to factors such as population growth, population shifts, cultural changes, and income shifts? a. Seasonal Variations b. Trend Variations c. Random Variations d. Cyclical Variations
b. Trend Variations
Random variations in a Time Series component are due to: a. Population growth b. Unpredictable events c. Using a large value for the exponential smoothing constant d. Inaccurate responses of the expert participants
b. Unpredictable events
Which of the following would refer to the 80/20 rule when applied to the ABC inventory control system? a. 80 percent of the items account for 20 percent of the groups. b. 80 percent of the unit cost accounts for 20 percent of the items. c. 80 percent of the total annual $ usage is accounted for, by 20 percent of the items. d. 20 percent of the items account for 80 percent of the tasks. e. None of these choices are correct.
c. 80 percent of the total annual $ usage is accounted for, by 20 percent of the items.
When using the ABC Inventory Classification, A items typically account for about: a. 15% of the overstocked items. b. 20% of the annual dollar usage. c. 80% of the annual dollar usage. d. 80% of the items
c. 80% of the annual dollar usage.
The two types of RFID tag are: a. Bar code and writeable. b. EPC and ISO. c. Active and passive. d. Line of sight and radio signal.
c. Active and passive.
The formula for forecast error is calculated by using the equation: a. Actual demand for period t plus the forecasted demand for period t b. Actual demand for period t divided by the forecasted demand for period t c. Actual demand for period t minus the forecasted demand for period t d. The average of Actual demand for period t and forecasted demand for period t
c. Actual demand for period t minus the forecasted demand for period t
An advantage/benefit of utilizing an ERP system includes which of the following? a. ERP systems enable the firm to automate some of the steps of a manufacturing process b. ERP systems are designed to take advantage of Internet technology c. Both "ERP systems are designed to take advantage of Internet technology" & "ERP systems enable the firm to automate some of the steps of a manufacturing process" d. None of these choices are correct
c. Both "ERP systems are designed to take advantage of Internet technology" & "ERP systems enable the firm to automate some of the steps of a manufacturing process"
Which of the following basic production strategies works best with make-to-order manufacturing firms? a. Mixed production Strategy b. Capacity Production Strategy c. Chase Production Strategy d. Level Production Strategy
c. Chase Production Strategy
Which production planning strategy varies production to match demand? a. Mixed production strategy b. Level production strategy c. Chase production strategy d. No strategy exists that varies production to match demand
c. Chase production strategy
When General Motors purchases tires for their automobiles, this can be classified as: a. Independent demand b. Continuous demand c. Dependent demand d. Customer demand
c. Dependent demand
In forecasting, a tracking signal is used to: a. To route the products on a different mode of transportation b. Measure the underlying changes in demand c. Determine if the forecast bias is within the acceptable control limits d. Estimate the demand for the next period
c. Determine if the forecast bias is within the acceptable control limits
All of the following may influence demand and should be considered when developing a forecast EXCEPT a. New competition b. Supplier quality c. Ergonomic conditions d. Emerging markets
c. Ergonomic conditions
Completed items ready for shipment are classified as: a. Product demand inventories b. Work-in-completion inventories c. Finished goods inventories d. MRO inventories
c. Finished goods inventories
The categories of inventory are raw materials, work-in-process, finished goods and _______. a. In-transit inventories b. Anticipation inventories c. Maintenance, repair and operating supplies d. Operating items
c. Maintenance, repair and operating supplies
Which of the following is very detailed and specifies the end-product to be made, how many units are required and when they need to be completed? a. Aggregate production schedule b. Bill of materials c. Master production schedule d. Capacity requirements schedule
c. Master production schedule
Which production planning strategy maintains a core workforce while using overtime, temporary, or part-time workers to manage demand fluctuations? a. Level production strategy b. Chase production strategy c. Mixed production strategy d. No strategy exists that varies production to match demand.
c. Mixed production strategy
Which type of forecasting technique would a firm likely use when launching a new product and historical data does not exist? a. Time Series b. Associative c. Qualitative d. Quantitative
c. Qualitative
When there is not a lot of currently relevant data available it is generally best to use: a. Naive forecasting b. Simple moving average forecasting c. Qualitative forecasting d. Time series forecasting
c. Qualitative forecasting
To check the feasibility of the Master Production Schedule, one would look to: a. Distribution Requirement Plan b. Capacity Requirement Plan c. Rough-Cut Capacity Plan d. Material Requirement Plan
c. Rough-Cut Capacity Plan
Legacy MRP systems typically utilized multiple software packages and databases which caused: a. The system to crash often b. Data integrity c. The same information to be stored in multiple locations d. Planned order releases
c. The same information to be stored in multiple locations
Calculate the final discrete available-to-promise quantity for Week 1 using the following table. Weeks. 1 2 3 4 5 MPS BI = 30; 10 10 15 15 10 Committed Customer Orders 20 5 25 15 ATP:D a. ATP1 = 20 b. ATP1 = 0 c. ATP1 = 15 d. ATP1 = 10
d. ATP1 = 10
Legacy MRP systems had which of the following limitations? a. The systems were not user-friendly b. The systems needed continuous modifications c. The systems were designed to perform a very specific operational function d. All of these choices are correct
d. All of these choices are correct
While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is a reason that has contributed to its rapid growth? a. A recent development in ERP called cloud computing b. The year 2000 millennium bug c. The rapid development of computer and information technology over the last three decades d. All of these choices are correct
d. All of these choices are correct
According to the textbook, which of the following is considered a reason that ERP implementations fail? a. Management underestimates the training required to implement the system b. Lack of communication between the firm and its ERP software provider c. Top Management doesn't take an active role in the implementation process d. All of these choices are correct.
d. All of these choices are correct.
Which of the following is a benefit of CPFR? a. Provides an analysis of key performance metrics b. Integrates planning, forecasting and logistics activities c. Uses joint planning and promotions management d. All of these choices are correct.
d. All of these choices are correct.
Which of the following is NOT a benefit of better forecasts? a. Smoother production plans b. Improved customer service c. Reduced stock outs d. Improved corporate image among regulators
d. Improved corporate image among regulators
Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks? a. Rough-cut capacity plan b. Master production schedule c. Resource requirements plan d. Material requirements plans
d. Material requirements plan
If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the: a. Beginning inventory b. Master Production Schedule c. Bill of materials d. Most recent positive ATP
d. Most recent positive ATP
Which of the following is NOT an assumption of the economic order quantity (EOQ) model? a. Lead time is known and constant. b. Demand is known, constant, and independent. c. Quantity discounts are not possible. d. Production and use occur simultaneously. e. The only variable costs are setup cost and holding cost.
d. Production and use occur simultaneously.
Which of the following is not a dependent demand item? a. Service parts at an auto repair shop b. Hamburger buns at McDonalds c. Raw materials at a manufacturer d. Retail goods at a department store
d. Retail goods at a department store
When linear trend forecasts are developed, demand would typically be: a. The passive variable b. The lead variable c. The independent variable d. The dependent variable
d. The dependent variable
Which one of the following is NOT a reason for firms to carry inventory? a. To take advantage of quantity discounts b. To allow for production scheduling flexibility c. To maintain independence of operations d. To increase production change/setup costs e. To meet variations in product demand
d. To increase production change/setup costs
Which of the following is true under the Periodic Review System? a. a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system b. the only uncertainty is the magnitude of demand during the delivery lead time c. there are no discrepancies between physical inventory and the stock record d. a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system e. it is more expensive to administer compared to the Continuous Review System
d. a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system
Which of the following is a disadvantage of carrying too much inventory? a. it increases the need to purchase items. b. it leads to lower average finished goods inventories. c. it leads to higher annual inventory ordering costs. d. it creates an unnecessary waste of scarce resources. e. it reduces the need to conduct cycle counts.
d. it creates an unnecessary waste of scarce resources
The primary purpose of the basic economic order quantity (EOQ) model is to: a. Maximize the customer service level b. Calculate the reorder point, so that replenishments take place at the proper time c. Minimize the sum of purchase cost and holding cost d. Calculate the optimum safety stock level e. None of these choices are correct
e. None of these choices are correct
Given the following product structure diagram, determine how many posts will be needed to make 50 chairs. leg assembly: 2 Seat: 1 Posts: 4 Foot rests: 1 Legs: 2 a. 100 b. 300 c. 400 d. 200
each chair has 2 legs so... 50 x 2 = 100 x 4 posts = 400