MKT 411 Exam 2
Which strategy uses overtime and subcontracting to cope with the high demand periods?
Mixed production strategy
The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from:
Exchange of forecasting information
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
Using the data set below, what would be the forecast for period 4 using a three period moving average: (Choose the closest answer.) Period Actual Demand 1. 10,000 2. 2,400 3. 13,250 4. 15,750 5. 20,500 6. 18,500
11,883
Using the data set below, what would be the forecast for period 5 using a four period weighted moving average? The weights for each period are 0.05, 0.15, 0.30, and 0.50 from the oldest period to the most recent period, respectively. (Choose the closest answer.) Period Actual Demand 1 10,000 2. 12,400 3. 13,250 4 14,750 5 15,220 6 18,500
13,710
Using the data set below, what would be the forecast for period 5 using the exponential smoothing method? Assume the forecast for period 4 is 14000. Use a smoothing constant of α = 0.4 (Choose the closest answer.) Period. Actual Demand. 1 10,000. 2 12,400 3 13,250 4 14,750 5 15,220 6 18,500
14,030
A forecasting method has produced the following data over the past 5 months shown in the data set. What is the mean absolute deviation (accurate to 1 decimals)? Month. Actual. Forecast 1. 12 11 2 13 10 3 10. 8 4 11 6 5 9. 8
2.4
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
Based on the information in the data set below, what is the mean squared error (accurate to 1 decimal)? Month. Actual. Forecast 1. 12 11 2 13 10 3 10 8 4 11 6 5 9 8
8
Which of the following would refer to the 80/20 rule when applied to the ABC inventory control system?
80 percent of the total annual $ usage is accounted for, by 20 percent of the items
demand time fence
A firmed planning segment that is used with the MRP application; it usually stretches from the current period to a period several weeks into the future.
multiple regression forecast
A forecast technique using multiple regression
naive forecast
A forecasting approach where the actual demand for the immediate past period is used as a forecast for next period's demand.
linear trend forecast
A forecasting method in which the trend can be estimated using simple linear regression to fit a line to a time series of historical data.
cause and effect forecasting
A forecasting method that uses one or more factors (independent variables) that are related to demand to predict future demand.
Aggregate Production Plan
A long-range production plan; it sets the aggregate output rate, workforce size, utilization, inventory and backlog levels for a plant.
forecast bias
A measure of the tendency of a forecast to be consistently higher (negative bias) or lower (positive bias) than the actual demand.
simple moving average forecast
A method that uses historical data to generate a forecast; it works well when the demand is fairly stable over time.
time series forecasting
A prediction technique based on the assumption that the future is an extension of the past and that historical data can thus be used to forecast future demand.
capacity requirements planning
A shortrange capacity planning technique that is used to check the feasibility of the material requirements plan.
bullwhip effect
A term referring to ineffective communication between buyers and suppliers and infrequent delivery of materials, combined with production based on poor forecasts along a supply chain that results in either too little or too much inventory at various points of storage and consumption. Simply, it causes an amplification of the variation in the demand pattern along the supply chain.
tracking signal
A tool used to check the forecast bias.
collaborative planning, forecasting, and replenishment
According to the Council of Supply Chain Professionals, "CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information. This allows for continuous updating of inventory and upcoming requirements, essentially making the end-to-end supply chain process more efficient. Efficiency is also created through the decrease expenditures for merchandising, inventory, logistics, and transportation across all trading partners."
The __________ specifies which end product is to be made, how many are required, and when they need to be completed.
Aggregate production plan
business cycle
Alternating periods of expansion and contraction in economic activity
best-of-breed solution
An ERP system that picks the best application or module for each individual function.
Closed-loop MRP
An MRP-based manufacturing planning and control system that incorporates aggregate production planning, master production scheduling, material requirements planning and capacity requirements planning.
Bill of Materials (BOM)
An engineering document that shows an inclusive listing of all component parts and assemblies making up the final product.
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
Which of the following would be considered a dependent demand item?
Bicycle tires used to assemble a bicycle
An advantage/benefit of utilizing an ERP system includes which of the following?
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"
The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the:
Bullwhip effect
Which of the following basic production strategies works best with make-to-order manufacturing firms?
Chase product strategy
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:
Customer relationship management and Human resource management
Common examples that contribute to carrying costs
Damage, theft/pilferage, obsolescence, excess capital invested, freight and storage
Why are firms migrating to ERP systems?
ERP systems tie together a variety of specialized systems
Which of the following is considered an advantage/benefit of utilizing an ERP system?
Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries
All of the following may influence demand and should be considered when developing a forecast EXCEPT
Ergonomic conditions
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
The four categories of inventory are raw materials, intermediate assemblies, work-in-progress and finished goods.
False
Qualitative Forecasting Methods
Forecasts based on opinions and intuition.
Quantitative forecasts use mathematical techniques that are based on:
Historical data
Inaccurate forecasts can result in negative outcomes like:
Imbalances in supply & demand
four qualitative forecasting techniques
Jury of executive opinion, Delphi method, Sales force composite, Consumer survey
According to the textbook, which of the following is considered a reason that ERP implementations fail?
Lack of communication w/in an organization
Common examples that contribute to stockout costs
Lost sales, future deals, image, and reputation
Which of the following is NOT a common module of ERP systems?
Marketing Resources management
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
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?
Material requirements plan
Which of the following is NOT an assumption of the economic order quantity (EOQ) model?
Production and use occur simultaneously.
When there is not a lot of currently relevant data available it is generally best to use:
Qualitative forecasting
three primary forecasting techniques
Qualitative forecasting, Quantitative forecasting, Time series models
consumer survey
Questionnaire uses inputs from customers on future purchasing needs, new product ideas, & opinions about existing or new products
Which one of the following is NOT a type of qualitative forecasting?
Simple moving average
In 2016, Spin Master, did not properly forecast demand for their new product, Hatchimals, causing ___________ for their distributors.
Stockouts
According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT:
Supplier lead times
Which of the following is TRUE regarding the EOQ figure below?
The EOQ is at lot size G, and curve K is the annual holding cost curve
When linear trend forecasts are developed, demand would typically be:
The dependent variable
forecast error
The difference between actual demand and the forecast.
Dependent Demand
The internal demand for parts based on the demand of the final product in which the parts are used ex: subassemblies, components, and raw materials
Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?
The level production strategy
Stockout costs
The lost income and expense associated w/a shortage of inventory
capacity
The output capabilities of a firm's labor and machine resources
Legacy MRP systems typically utilized multiple software packages and databases which caused:
The same information to be stored in multiple locations
Legacy MRP systems had which of the following limitations?
The systems were designed to perform a very specific operational function, the systems were not user-friendly, The systems needed continuous modifications
carrying costs
The total of all expenses related to storing unsold goods
available-to-promise (ATP) quantity
The uncommitted portion of a firm's planned production. It is used to promise new customer orders.
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?
The year 2000 millennium bug
Which one of the following is NOT a reason for firms to carry inventory?
To increase production change/setup costs
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?
Trend variations
Cloud Computing
When shared resources and other information are made available to users over the Internet, usually for a subscription fee. It allows small businesses, for example, to make use of sophisticated software without actually making the purchase; also termed on-demand computing.
Which of the following is true under the Periodic Review System?
a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system
Chase Production Strategy
a production strategy that adjusts output to match the demand pattern during each production period
forecast
an estimate of future demand and provides the basis for planning decisions
Qualitative Forecasting
based on opinion and intuition, used when data is limited, unavailable, or not currently relevant, Jury or executive opinion, delphi method, sales force composite, and consumer survey
Quantitative Forecasting
uses mathematical models and historical data to make forecasts, Includes causal variables to forecast demand
If an item is ordered using its economic order quantity, the annual carrying cost should be:
equal to the annual ordering cost
Quantitative Forecasting Methods
forecast is based on mathematical models and relevant historical data
Which of the following is a benefit of CPFR?
integrates planning, forecasting & logistics activities, uses joint planning & promotions management, provides and analysis of key performance metrics
Which of the following is a disadvantage of carrying too much inventory?
it creates an unnecessary waste of scarce resources
Classify the following inventory items as either A, B, or C items using the ABC inventory control system: Item # Annual Sales Unit Cost 1 130 units $ 4.00 2 400 units 15.30 3 25 units 17.00 4 1,320 units 1.25 5 90 units 2.10
item 1 (c), Item 2 (A), Item 3 (c), item 4 (B), item 5 (C)
Primary goal of forecasting
minimize deviation b/t actual demand & forecast
Time series model
most frequently used among all the forecasting models, based on the assumption that the future is an extension of the past; thus, historical data can be used to predict future demand
If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:
most recent positive ATP
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. calculate the optimum safety stock level d. minimize the sum of purchase cost and holding cost
none of these choices are correct
cloud-based forecasting
using supplier-hosted or software-as-a-service (SaaS) advanced forecasting applications that are provided to companies on a subscription basis
Cyclical variations are longer than a year and can be influenced by:
political factors
The ___________ solution picks all the desired applications from a single vendor for the ERP system.
single integrator
A positive error implies that a forecast was?
too low
The inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue.
true
Random variations in a Time Series component are due to:
unpredictable events
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
CPFR (Collaborative Planning, Forecasting, and Replenishment)
• it is a business practice that combines the intelligence of multiple trading partners in the planning and fulfillment of customer demands • it links sales and marketing best practices, such as category management, to supply chain planning processes to increase availability while reducing inventory, transportation, and logistics costs
jury of executive opinion
•Group of senior management executives who are knowledgeable about their markets, competitors, and the business environment collectively develop the forecast •good for long range planning and new product introductions
Delphi Method
•Internal and external experts are surveyed during several rounds •summary of responses is sent out to all the experts & they can modify their responses in next round •Good for high-risk technology forecasting; large, expensive projects; or major new product introductions
sales force composite
•based on sales forces knowledge of the market and estimates of customer needs •tendency for salesforce to under-forecast