MQM 227 Jagani FINAL

In implementing a lean production system you should work with suppliers to do which of the following?

Make frequent deliveries.

Within ERP, which set of applications is the largest and most complicated?

Manufacturing and logistics Manufacturing and logistics is the set of applications that is the largest and most complex of the module categories. It is frequently subdivided into multiple components: sales and operations planning, materials management, plant maintenance, quality management, production planning and control, and project management.

In general, which forecasting time frame best identifies seasonal effects?

Medium-term forecasts

Under the lot-for-lot (L4L) lot sizing technique as used in MRP, we would expect which of the following?

Minimized carrying costs Lot-for-lot (L4L) is the most common technique. It: • Sets planned orders to exactly match the net requirements. • Produces exactly what is needed each week with none carried over into future periods. • Minimizes carrying cost. • Does not take into account setup costs or capacity limitations. Because the logic of lot-for-lot says the production quantity will exactly match the required quantity, no inventory will be left at the end. Without any inventory to carry over into the next week, there is zero holding cost. However, lot-for-lot requires a setup cost each week. Lot-for-lot causes high setup costs.

One of the objectives in facility location analysis is to select a site with the lowest total cost. Which of the following costs are hidden costs that should be included in the analysis?

Movement of preproduction material between locations

According to the theory of constraints, which of the following is a financial measurement that can be used to measure the firm's ability to make money?

Net profit We have three measures of the firm's ability to make money: 1. Net profit—an absolute measurement in dollars. 2. Return on investment—a relative measure based on investment. 3. Cash flow—a survival measurement.

In a lean production system, we expect to see which of the following?

No extra inventory

Which of the following is not necessary to compute the order quantity using the fixed-time-period model with safety stock?

Ordering cost Equation 20.11 is for a fixed-time-period system with safety stock. It requires 1. The number of days between reviews 2. Lead time in days (time between placing an order and receiving it) 3. Forecast average daily demand 4. Number of standard deviations for a specified service probability 5. Standard deviation of demand over the review and lead time 6. Current inventory level (includes items on order).

What transportation mode has very high initial investment costs but gives a very low cost per mile for products that are highly specialized and require no packaging?

Pipeline

According to the theory of constraints, which of the following is a kind of time that makes up the cycle time in production?

Process time The following kinds of time make up production cycle time: 1. Setup time 2. Processing time 3. Queue time 4. Wait time 5. Idle time

A BOM file is also called which of the following?

Product tree

Which of the following is not an objective of work center scheduling?

Providing time for quality at the source The objectives of work center scheduling are to (1) meet due dates, (2) minimize lead time, (3) minimize setup time or cost, (4) minimize work-in-process inventory, and (5) maximize machine or labor utilization.

What three functional areas make up the manufacturing operating cycle?

Purchasing, manufacturing, and sales and distribution The manufacturing operating cycle has the goal of approaching the management of the firm with a more holistic approach. Because purchasing, manufacturing, and sales and distribution make up the internal supply chain of a manufacturing enterprise, this is where focus is placed.

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered external to the firm?

Raw material availability and competitor's behavior

In implementing a lean production system, you should work with suppliers to do which of the following?

Reduce lead times.

Which of the following address elimination of waste under lean production?

Reducing waiting time between process operations

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?

Redundant ordering systems

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for innovative products with a stable supply process is called which of the following?

Responsive

Which of the following is not an assumption of the basic fixed-order-quantity inventory model?

Returns to scale of holding inventory are diminishing. These assumptions are unrealistic, but they represent a starting point and allow us to use a simple example: 1. Demand for the product is constant and uniform throughout the period. 2. Lead time (time from ordering to receipt) is constant. 3. Price per unit of product is constant. 4. Inventory holding cost is based on average inventory. 5. Ordering or setup costs are constant. 6. All demands for the product will be satisfied. (No backorders are allowed.)

Which of the following priority rules used in scheduling the sequence of production is calculated as the slack time remaining in the schedule divided by the number of remaining operations, with the smallest value being run first?

STR/OP STR/OP (slack time remaining per operation) says orders with the shortest slack time per number of operations are run first.

Which of the following is an improvement-driven reason for outsourcing?

Shorten cycle time.

Which of the following forecasting methodologies is considered a time series forecasting technique?

Simple moving average

Which of the following is most closely related to the reason a firm might implement MRP?

So it can order the right parts MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these items should be ordered or produced.

Which of the following is considered a "pure" production planning strategy?

Stable workforce, variable work hours

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order-quantity inventory model, which of the following must be computed first?

Standard deviation of daily demand

Ownership costs include which of the following costs?

Supply chain costs Ownership costs include energy costs, maintenance and repair, financing, and supply chain/supply network costs

Ownership costs are incurred after the initial purchase and are associated with the ongoing use of the product or material. Which of the following is not an ownership cost listed in the text?

Taxes Ownership costs listed are energy costs, maintenance and repair, financing, and supply chain/supply network costs.

Using the ABC classification system for inventory, which of the following is a true statement?

The A items are of high dollar volume.

Which of the following is not a standard measure of schedule performance that can be used to evaluate priority rules?

The schedule quality index The following standard measures of schedule performance are used to evaluate priority rules: 1. Meeting due dates of customers or downstream operations. 2. Minimizing the flow time (the time a job spends in the process). 3. Minimizing work-in-process inventory. 4. Minimizing idle time of machines or workers.

Which of the following is not an aspect of ERP that determines quality?

The software should narrowly focus on a single function. There are four aspects of ERP software that determine the quality of the ERP system. The software should be multifunctional, integrated, capable of facilitating base planning, and modular in structure. Modular structure will allow it to be combined into a single expansive system, narrowly focused on a single function or connected with software from another source.

An important issue in facility location analysis is business climate. An unfavorable business climate could be indicated by which of the following?

The willingness of local politicians to provide favorable treatment for a consideration

According to the theory of constraints, which of the following is an operational measurement that can be used to measure the firm's ability to make money?

Throughput Financial measurements work well at the higher level, but they cannot be used at the operational level. We need another set of measurements that will give us guidance: 1. Throughput—the rate at which money is generated by the system through sales. 2. Inventory—all the money that the system has invested in purchasing things it intends to sell. 3. Operating expenses—all the money that the system spends to turn inventory into throughput.

What are two of the main objectives of ERP?

Transaction processing and decision support When an item is purchased from a vendor, a specific sequence of events occurs: solicitation of an offer, acceptance of an offer, delivery of goods, storage in inventory, and final payment. The effective handling of these steps can be divided into two categories; transaction processing and decision support. ERP assists in effective execution of both of these objectives.

Because the factors governing demand for products are very complex, all forecasts of demand contain error. T/F

True

MRP is based on dependent demand.

True MRP is based on dependent demand. Dependent demand is caused by the demand for a higher-level item. Tires, wheels, and engines are dependent demand items based on the demand for automobiles, for example.

Manufacturing firms maintain bill of materials (BOM) files, which are simply a sequencing of everything that goes into a final product.

True The bill of materials (BOM) file contains the complete product description, listing not only the materials, parts, and components but also the sequence in which the product is created.

According to the theory of constraints, a capacity-constrained resource (CCR) is one whose utilization is close to capacity and could be a bottleneck if it is not scheduled carefully.

True A capacity-constrained resource (CCR) is one whose utilization is close to capacity and could be a bottleneck if it is not scheduled carefully.

In time series data depicting demand, which of the following is not considered a component of demand variation?

Variance

In an overview of the major operations planning activities in a typical logistics organization, which of the following activities most immediately follows aggregate sales and operations planning?

Vehicle capacity planning

In an overview of the major operations planning activities in a typical manufacturing organization, which of the following activities is a medium range planning activity?

Vehicle loading

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case?

When the record shows positive balance but a backorder was written The computer can be programmed to produce a cycle count notice in the following cases: 1. When the record shows a low or zero balance on hand 2. When the record shows a positive balance but a backorder was written 3. After some specified level of activity 4. To signal a review based on the importance of the item (as in the ABC system)

Which of the following is one of the categories of manufacturing inventory?

Work-in-process

Which of the following is the net requirement using an MRP program if the gross requirement is 1,250 and the inventory on hand is 50?

1,200 1,250 - 50 = 1,200. Net requirements are the amounts that are needed week by week in the future over and above what is currently on hand or committed to through an order already released and scheduled.

Using the cut-and-try method for aggregate operations planning, we can determine the production requirement in units of product. If the beginning inventory is 100 units, the demand forecast is 1,200, and the necessary safety stock is 20 percent of the demand forecast, which of the following is the production requirement? Demand = 1,200; 20% of demand = 240; Inventory = 100; thus, 1,200 + 240 - 100 = 1,340.

1,340

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time?

100 the standard deviation of usage during lead time will be the square root of [25 x (20 x 20)] = square root of 10,000 = 100.

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2010 = 100, year 2011 = 120, year 2012 = 140, and year 2013 = 210), which of the following is the simple moving average forecast for year 2014?

142.5

A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values (i.e., year 2011 = 160, year 2012 = 140, and year 2013 = 170), and we want to weight year 2011 at 30 percent, year 2012 at 30 percent, and year 2013 at 40 percent, which of the following is the weighted moving average forecast for year 2014?

158

If annual demand is 12,000 units, annual holding cost is $15 per unit, and setup cost per order is $25, which of the following is the EOQ lot size?

200 From the equation: EOQ = Square root of (2 x 12,000 x 25/15) = 200.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days?

234 78 x 3 = 234.

Which of the following is the planned-order release using an MRP program if the gross requirement is 5,000, inventory on hand is 1,200, and planned receipts are 800?

3,000 5,000 - 1,200 - 800 = 3,000. Using net requirements, the program calculates when orders should be received to meet these requirements. This can be a simple process of just scheduling orders to arrive according to the exact net requirements or a more complicated process where requirements are combined for multiple periods. This schedule of when orders should arrive is referred to as "planned-order receipts." Because there is typically a lead time associated with each order, the next step is to find a schedule for when orders are actually released. Offsetting the "planned-order receipts" by the required lead time does this. This schedule is referred to as the "planned-order release."

In setting up a kanban control system you need to determine the number of kanban card sets needed. If the expected demand during lead time is 25 per hour, the safety stock is 20 percent of the demand during lead time, the container size is 5, and the lead time to replenish an order is 5 hours, what the number of kanban card sets is needed? k = 25 x 5 x 1.20/5 = 30.

30

If a small company has average daily sales of $5,000 and accounts receivable of $150,000, what is the average days of accounts receivable?

30 days Because the formula for Average days of accounts receivable = Accounts receivable divided by Average daily sales, average days of accounts receivable is $150,000/$5,000 = 30 days.

You have been called in as a consultant to set up a Kanban control system. The first thing to do is to determine the number of Kanban card sets needed. Your research shows that the expected demand during lead time for a particular component is 150 per hour. You estimate the safety stock should be set at 25 percent of the demand during lead time. The tote trays used as containers can hold 8 units of stock, and the lead time it takes to replenish an order is 2 hours. Which of the following is the number of Kanban card sets necessary to support this situation?

47

A company has recorded the last five days of daily demand on its only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order-quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)?

630 Average demand is 120 + 125 + 124 + 128 + 133/5 = 126. Lead time = 5 days, so the reorder point is 126 x 5 = 630.

If annual demand is 50,000 units, the ordering cost is $25 per order, and the holding cost is $5 per unit per year, which of the following is the optimal order quantity using the fixed-order-quantity model?

707 Q = 707.1 = Square root of (2 x 50,000 x 25/5).

Heavy sales of umbrellas during a rain storm is an example of which of the following?

A causal relationship

Which of the following are related to lean production?

A philosophy of waste elimination

The Pareto principle is best applied to which of the following inventory systems?

ABC classification This logic of the few having the greatest importance and the many having little importance has been broadened to include many situations and is termed the Pareto principle. Most inventory control situations involve so many items that it is not practical to model and give thorough treatment to each item. To get around this problem, the ABC classification scheme divides inventory items into three groupings: high dollar volume (A), moderate dollar volume (B), and low dollar volume (C).

You would like to use the fixed-time-period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8?

About 27.7 the standard deviation of demand over the 12 days of time between reviews and lead time is the square root of (12 x 64) = 27.71.

Which of the following is not a way in which a work center can be organized?

According to function in an assembly line The work center may be a single machine, a group of machines, or an area where a particular type of work is done. These work centers can be organized according to function in a work center configuration or by product in a flow, assembly line, or group technology cell (GT cell) configuration.

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for innovative products with an evolving supply process is called which of the following?

Agile

Which of the following is a main benefit of processing transactions in real time? -There is no delay in the processing of the transaction. -The amount of detail available in the system is extremely rich. -It allows for immediate analysis, which can be valuable in making improvements. -All of these

All of these Real-time processing means that as soon as the transaction is entered into the system, the effect of items such as inventory status, order status, and accounts receivable is known to all users of the system. This leads to multiple benefits: there is no delay in the processing of the transaction; the amount of detail available in the system is extremely rich; and it allows for immediate analysis, which can be valuable in making improvements. All of these benefits make the system more responsive.

According to the theory of constraints, which of the following can be a CCR?

An employee A capacity-constrained resource (CCR) is one whose utilization is close to capacity and could be a bottleneck if it is not scheduled carefully. A critical employee is an example of such a resource.

Which of the following is the set of all cost components that make up the fixed-order-quantity total annual cost (TC) function?

Annual holding cost, annual ordering cost, annual purchasing cost

Assume you are sequencing jobs using Johnson's rule. A particular job requires 3 hours to assemble and then is followed by 2 hours in the painting department. Which of the following is where you would schedule this job?

As late as possible in the unfilled job sequence. Johnson's rule states:1. List the operation time for each job on both machines. 2. Select the shortest operation time. 3. If the shortest time is for the first machine, do the job first; if it is for the second machine, do the job last. In the case of a tie, do the job on the first machine. 4. Repeat Steps 2 and 3 for each remaining job until the schedule is complete. Because the shortest operation time is on the second process, do the job as late in the schedule as possible.

Which of the following industry types have high expected benefits from the application of MRP?

Assemble-to-order

"A measure that is used to determine how many times the same asset can be used to generate revenue and profit" is the definition of which of the following?

Asset turns There are numerous supply chain matrices that can assist in measuring the performance of the supply chain. Asset turns is just one measure that can be useful in this capacity. Other related areas of interest include delivery performance, fill rate, lead time, supply of inventory, and cash-to-cash cycle time.

Assume there are five jobs (i.e., A, B, C, D, and E) that need to be sequenced in a production schedule. The remaining operating time necessary for completion of job A is 3 days (i.e., job A will take 3 more days to complete), B will take 9 days, C will take 6 days, D will take 5 days and E will take 8 days. Which job should be scheduled last if using the SOT priority rule for job sequencing?

B SOT (shortest operating time) says to run the job with the shortest completion time first. Job B at nine days has the longest operating time remaining and would be run last.

Which of the following is an input file necessary to run an MRP system?

Bill of materials (BOM) file

Which of the following is not a production activity report generated by MRP?

Bill of materials report

Which of the following is usually included as an inventory holding cost?

Breakage Holding costs include the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.

The effect of the lack of synchronization among supply chain members is referred to as which of the following?

Bullwhip effect The bullwhip effect indicates a lack of synchronization among supply chain members.

An example of a trading bloc is which of the following?

Central American Free Trade Agreement countries

Which of the following is a plant location methodology good for locating a single facility within a set of existing facilities based in distances and volumes of goods shipped?

Centroid method

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered internal to the firm?

Current physical capacity and current workforce

Which of the following methods discussed in the text requires generating several alternative aggregate plans?

Cut and try

Which of the following is one of the main purposes of an MRP system?

Determine the amount of materials needed to produce each end item. MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these items should be ordered or produced

Which of the following is one of Dr. Eli Goldratt's rules of production scheduling for optimized production technology?

Do not balance capacity, balance the flow. Goldratt's rules of production scheduling (Exhibit 23.1): 1. Do not balance capacity—balance the flow. 2. The level of utilization of a non-bottleneck resource is determined not by its own potential but by some other constraint in the system. 3. Utilization and activation of a resource are not the same. 4. An hour lost at a bottleneck is an hour lost for the entire system. 5. An hour saved at a non-bottleneck is a mirage. 6. Bottlenecks govern both throughput and inventory in the system. 7. The transfer batch may not and many times should not be equal to the process batch. 8. A process batch should be variable both along its route and in time. 9. Priorities can be set only by examining the system's constraints. Lead time is a derivative of the schedule.

Which of the following is a fixed-order-quantity inventory model?

Economic order quantity model There are two general types of multi-period inventory systems: fixed-order-quantity models (also called the economic order quantity, EOQ, and Q-model) and fixed-time-period models (also referred to variously as the periodic system, periodic review system, fixed order interval system, and P-model).

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for functional products with a stable supply process is called which of the following?

Efficient

To develop a lean manufacturing system a firm might do which of the following?

Eliminate anything that does not add value for the customer.

What is the common name for a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in a firm by way of a shared database?

Enterprise resource planning (ERP)

What is the common name for a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in a firm by way of a shared database?

Enterprise resource planning (ERP) ERP stands for enterprise resources planning (ERP) and is now commonly used by large companies to support supply and demand planning and control through the integration of a shared database that is accessed by all application programs.

Which of the following is considered a secondary report in an MRP system?

Exceptions reports

Aggregate sales and operations planning occur in a company about every 3 to 18 months.

False

The objective of the aggregate operations plan is to ensure that the marketing and sales plans are realistic.

False

On which four major areas do ERP modules typically focus?

Finance, manufacturing and logistics, sales and marketing, human resources ERP systems from various vendors are organized in different ways, but typically modules are focused on at least the following major areas: finance, manufacturing and logistics, sales and marketing, and human resources.

For a high-volume type of manufacturing, which of the following is the typical production scheduling approach?

Finite forward scheduling High-volume manufacturing schedules are characterized as finite forward scheduling

When work is scheduled in detail using the setup and run time required for each order, it is called which of the following?

Finite loading A finite loading approach actually schedules in detail each resource using the setup and run time required for each order.

Which of the following is a perpetual system for inventory management?

Fixed-order quantity

Which of the following is not one of the basic types of forecasting?

Force field analysis

A product tree can do which of the following?

Help to compute component usage. The BOM file is often called the product structure file or product tree because it shows how a product is put together. It contains the information to identify each item and the quantity used per unit of the item of which it is a part.

Very few products are moved without at least part of their journey being by which mode of transportation?

Highway

Which of the following is not a criterion that influences manufacturing plant or warehouse facility location decisions?

Historical cost

Which of the following is not a criterion that influences manufacturing plant or warehouse facility location decisions?

Immigration rules

Which of the following is an organizationally driven reason for outsourcing?

Improve effectiveness by focusing on what the firm does best.

A material requirements planning system is an example of which of the following scheduling systems?

Infinite loading, backward scheduling A material requirements planning (MRP) system is an example of an infinite, backward scheduling system for materials.

Which of the following of Fisher's product categories includes fashionable clothing, personal computers, and other products that typically have a very brief life cycle?

Innovative products To avoid low margins, many companies introduce innovations in fashion or technology to give customers an additional reason to buy their products. Fashionable clothes and personal computers are good examples.

Which of the following is a priority rule used to schedule the sequence of jobs in a production operation?

Last-come, first-served FCFS (first-come, first-served); SOT (shortest operating time); EDD (earliest due date first); STR (slack time remaining); STR/OP (slack time remaining per operation); CR (critical ratio); LCFS (last-come, first-served); random order or whim

In business forecasting, what is usually considered a short-term time period?

Less than three months

Maintaining a stable workforce working at a constant output rate while shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and allowing lost sales is which of the following production planning strategies?

Level

When implementing a lean production system, a stabilized schedule is achieved using which of the following?

Level scheduling

In a typical inventory status record, which of the following would you not expect to see?

Lost items The inventory status file is kept up to date by posting inventory transactions as they occur. These changes occur because of stock receipts and disbursements, scrap losses, wrong parts, canceled orders, and so forth.