OMIS 320 Test 2

As tighter control limits are instituted for the tracking signal, there is a greater probability of finding exceptions that require no action, but it also means catching changes in demand earlier.

True

Cause- and- Effect Models can have multiple independent variables.

True

Computer and information technologies MRP has evolved to become closed- loop MRP which can now take into account APP, MPS, and CRP.

True

Deming, Crosby, and Juran are all prominent quality professionals whose ideas were vital to Six Sigma.

True

Examples of forecasting accuracy measures are Mean Absolute Deviation, Mean Absolute Percentage Error, and Mean Square Error.

True

In the Delphi forecasting method, a group of internal and external experts are surveyed during several rounds in terms of future events and long- term forecasts of demand but the group members do not physically meet.

True

Key requirements to a successful ERP implementation include adequate computer support, accurate system inputs, and flexible business processes that can conform to the approaches used in the ERP software logic.

True

Lead Capacity Strategy is a proactive approach that adds or subtracts capacity in anticipation of future market conditions and demand.

True

Manufacturing cells are often U- shaped to make operator and material movements easier within the cell.

True

Manufacturing layouts for an organization practicing lean manufacturing principles seek to maximize operator visibility, maintain an effective and efficient flow of people and materials. and minimize the distance that work in process must travel from one processing center to another processing center.

True

One of the goals of an effective CPFR system is to minimize the negative impacts of the bullwhip effect on supply chains.

True

Radio Frequency Identification (RFID) is considered an eventual replacement of bar code because of its ability to store huge amounts of information to differentiate specific units of goods.

True

Relaxing the instantaneous replenishment assumption of the EOQ model results in the Economic Manufacturing Quantity model.

True

Six Sigma is a quality improvement concept developed by Motorola.

True

Some of the benefits of CPFR include strengthening partner relationships, providing an analysis of sales and order forecasts both upstream and downstream, and allowing collaboration on future requirements and planning.

True

Some of the important steps involved in implementation of a CPRF process model include developing a collaborative arrangement, creating a sales forecast, creating an order forecast, and generating those orders.

True

Some of the leading suppliers of CPFR solutions mentioned in the textbook are JDA software group, i2 technologies, and oracle.

True

Statistical process control uses control charts to monitor the outputs of a process to identify variations due to assignable causes from variations due to common causes.

True

System nervousness is when even small changes to upper- level production plans cause major changes in lower- level production plans.

True

Dependent demand and independent demand items differ in that: I. For any product, all components are dependent- demand items. II. The need for independent- demand items is forecast. III. The need for dependent- demand items is calculated. A. I only B. I & II only C. I & III only D. II & III only E. I, II, & III

E. I, II, & III

The (s, S) continuous review inventory system orders the same quantity Q when physical inventory reaches the reorder points.

False

The Chase Production Strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern.

False

The Institute of Supply Management (ISM) surveys more than 300 purchasing and supply executives in the United States using a questionnaire seeking information on :changes in production, new orders, new export orders, imports, employment, inventories, prices, lead- times, and the timeliness of supplier deliveries in their companies comparing the current month to the previous month". the ISM Report on business focuses only on the manufacturing sector.

False

The five "S's" refer to various safety activities practiced by Toyota.

False

The four broad categories of inventory are raw materials, work- in- process, subassemblies, and finished goods.

False

The goal of a good forecasting technique is to achieve 98.7% accuracy between the forecast and actual demand.

False

The modern day business environment must deal with a more homogenous consumer base, which has caused the evolution of a more "push" oriented environment where suppliers must focus on manufacturing high volumes of standardized goods.

False

The objective of CPFR is to optimize the supply chain by improving demand forecast accuracy, delivering the right product at the right time to the right location, reducing inventories across the supply chain, avoiding stock- outs, and improving customer service. As a result of the many benefits attributed to CPFR, this business practice has been widely adopted.

False

The process of converting a parent item's planned order releases into component gross requirements is referred to as the ERP Implosion.

False

The total annual inventory cost is the sum of the annual purchase cost, the annual holding cost, the annual capacity cost, and the annual ordering cost.

False

The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.

False

The ABC inventory control system categorizes inventory items into three groups, A, B, and C. A items are given highest priority, while C items have the lowest priority. Prioritization may be based on annual dollar usage, shelf life, or sales volume.

True

The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis.

True

The EOQ, also known as the economic order quantity, is the optimal order size in terms of cost because it minimizes the annual total inventory cost. The EOQ is the lot size where inventory holding costs equal annual ordering costs.

True

The continuous review inventory system is more expensive to monitor compared to the periodic review inventory system.

True

The difference between a simple regression forecast and a multiple regression forecast is that simple regression is used when there is only one explanatory (or independent) variable, while multiple regression is used when there are numerous explanatory variables.

True

The goal of a good forecasting technique is to minimize the deviation between actual demand and the forecast.

True

The optimal order quantity for the quantity discount model may exist at a price breakpoint.

True

The periodic inventory review system reviews physical inventory at specific points in time.

True

The primary design objective with lean layouts is to reduce wasted movements of workers, customers, and/ or work- in- process.

True

The resource and operations planning done by operations managers is intended to balance capacity and output.

True

The term "lean production" essentially refers to the Toyota Production System in its entirety.

True

The term Cycle Counting is synonymous with physically counting inventory.

True

When designing a manufacturing or service process, or even during the reengineering of such a process, a Pareto chart would be an essential tool for evaluating the process in terms of its action elements, waiting periods, and process flow.

False

Two reasons ERP implementations have been known to fail include: lack of employee training on the new ERP system and lack of adequate resources to support these complex and time consuming implementations.

True

When a single company that is implementing and ERP system chooses to use one company to provide an operations module, another to provide the sales and marketing application, and yet another company to provide the finance and accounting module, that single company has chosen to utilize the best- of- breed solution.

True

When demand and lead time are constant, reorder point is the demand during lead time.

True

The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the mixed production strategy.

True.

Which of the following would most likely be considered a dependent demand item? A. Bicycle tires used to assemble a bicycle B. Television (TV) C. Couch D. Lawn Mower

A. Bicycle tires used to assemble a bicycle.

The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the: A. Bullwhip effect B. Delphi Method C. CPFR effect D. Mean Deviation

A. Bullwhip effect

Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product? A. Master Production Schedule B. Bill of Materials C. Distribution Requirement Plan D. Resource Requirement Plan

B. Bill of Materials.

"Lean" thinking is a philosophy incorporating tools which seek to optimize: A. Human Resources B. Assets C. Productivity D. All of these

D. All of these

Which one of the following is not a type of qualitative forecasting? A. Sales Force Composite B. Consumer Survey C. Jury of Executive opinion D. Naive Method

D. Naive Method

The following is a term that refers to error- or mistake proofing: A. Kaizen B. Muda C. Lean layouts D. Poka- Yoke

D. Poka- Yoke

Which of the following MRP terms represents a committed order awaiting delivery for a specific period? A. Projected on- hand inventory B. Time Bucket C. Net Requirement D. Scheduled Receipt

D. Scheduled Receipt

Which of the following are among the most important elements of the lean production philosophy? A. Quality Inspections and a standardized product line B. Fully automated assembly lines and a large supplier base C. Large inventories and quality inspections D. Waste reduction and continuous improvement

D. Waste reduction and continuous improvement

Which of the following layouts is primarily designed to process parts, components, or jobs requiring the same or similar processing steps, saving duplication of equipment and labor: A. work centers B. production kanban C. work- in- process D. manufacturing cells

D. manufacturing cells

For a certain loaf of bread it was found that it measured 16 inches in length, 4 inches in height, and 4 inches across, it was also found to weigh 1 pound; all of these measures can be considered attribute data.

False

If you were calculating a forecast using an exponential smoothing model, a calculation using a= 0.2 would be putting greater emphasis on recent data, while a calculation using a= 0.8 would be putting a greater emphasis on past data. thus a lower a is more responsive to changes in demand in the most recent periods.

False

In the Economic Manufacturing Quantity model, the annual consumption rate must be higher than the annual production rate.

False

Inventory turnover ratio shows how many times a form turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

False

Lean production and Six Sigma quality are essentially two terms that mean the same thing.

False

Lean production is an operating philosophy or mindset that essentially attempts to minimize the impact of system variability and flaws in forecasting through the use of high safety stock inventories.

False

MRP is the production planning system intended to develop long- range plans (more than a year away) concerning product families manufactured by the organization.

False

MRP systems are simply a more modern version of the ERP systems of the 1980's.

False

One of the primary elements of lean is keiretsu relationships.

False

Organizations practicing lean production often increase their inventory levels in the long- run in order to create a cushion against variability so that they can investigate and eliminate the weaknesses of their system.

False

Organizations that choose to discontinue use of old and inefficient computer information systems in favor of adopting a modern ERP system are said to have implemented a decentralized database solution.

False

Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs.

False

Service parts sold to the repair shops are examples of dependent demand.

False

Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation.

Tru

An RFID reader does not require direct line of sight to read the information stored in an RFID tag.

True

A lean system is also known as a push system.

False

Which of the following is a Long Range Materials Plan: A. Aggregate Production Plan B. Master Capacity Plan C. Materials Requirement Plan D. Capacity Requirements Plan

A. Aggregate Production Plan

Which of the following is a disadvantage of excessive inventory? A. It hides production and other problems. B. It leads to higher inventory ordering costs. C. It leads to lower average inventory. D. It eliminates cycle stock. E. It reduces the need to conduct cycle count.

A. It hides production and other problems.

Modern supply chains simultaneously pursue the goals of high- quality, fast response, and low cost because customers nowadays want both high levels of quality and responsiveness. A key manufacturing philosophy that emphasizes waste elimination and minimizing inventories to expose problems is: A. Just- In- Time B. Quick Response C. Efficient Consumer Response D. Total Quality Management

A. Just- In- Time

Lean production systems are sometimes referred to as pull systems because demand from customers activates the production actions of the manufacturing facilities. In order for this demand to be communicated to everyone in the supply chain/ manufacturing facility a signal must be passed from downstream processing centers to the upstream processing centers. This system of relaying signals is referred to as a: A. Kanban System B. Semaphore System C. Keiretsu Network D. TQM Network

A. Kanban System

In a bill of materials, items at which level are independent demand items? A. Level 0 B. Level 1 C. Level 2 D. Level 3

A. Level 0

Which of the following indices provided by the Institute for Supply Management (ISM) is considered the most important by economists because it is a composite of five weighted, seasonally adjusted indices? A. Purchasing Managers Index B. Export Orders Index C. Production and Inventory Index D. New Orders Index

A. Purchasing Managers Index

To check the feasibility of the Master Production Schedule, one would look to: A. Rough- Cut Capacity Plan B. Material Requirement Plan C. Capacity Requirement Plan D. Distribution Requirement Plan

A. Rough- Cut Capacity Plan

Inaccurate forecasts can result in negative outcomes like: A. Stockouts and poor responsiveness to market dynamics. B. High Inventory costs of inventory and increased profits. C. Material Shortages and decreased costs of obsolescence. D. Low inventory costs of inventory and stockouts.

A. Stockouts and poor responsiveness to market dynamics.

Which of the following could be considered a master production schedule for a service firm? A. The reservation book utilized by a restaurant B. The employee shift schedule utilized by an auto shop C. A hospital patient's personal information fill D. The recipe book utilized by a chef at a restaurant

A. The reservation book utilized by a restaurant

Which of the following best describes the five S's? A. these were originally Japanese words relating to industrial housekeeping B. five ways to reduce inventories on the shop floor C. these are five different kinds of manufacturing layouts D. refer to methods for reducing setup times

A. these were originally Japanese words relating to industrial housekeeping

Which of the following basic production strategies used for addressing the aggregate planning problem would work best with make- to- order manufacturing firms? A. Capacity Production Strategy B. Chase Production Strategy C. Level Production Strategy D. Backlog Production Strategy

B. Chase Production Strategy

Which of the following MRP terms represents the parts demanded by a parent? A. Gross requirement B. Component C. Net requirement D. Scheduled Receipt

B. Component

Your company is conducting forecasting that revolves around the current recession and expansion of the U.S. Economy. This type of forecasting can be referred to as what component of a time series? A. Trend Variations B. Cyclical Variations C. Seasonal Variations D. Random Variations

B. Cyclical Variations.

The goal of resource planning is to minimize the discrepancy between capacity and: A. Resources B. Demand C. Workload D. Supply

B. Demand

While the philosophy of Six Sigma means different things to different people and is practiced differently in different companies, according to the textbook, two of the more important and agreed- upon elements of Six Sigma are: A. Minimizing inventories and increasing material flow. B. Focusing on the customer and workforce involvement. C. Rewarding employees and keeping defect rates below 2%. D. Minimizing inventories and keeping defect rates below 1%.

B. Focusing on the customer and workforce involvement.

Which company probably played the largest role in the development of the Toyota Production System? A. General Motors B. Ford C. Chrysler D. Boeing

B. Ford

Successful supply chains evolve through stages; the following stage is characterized by an emphasis on cost reduction: A. Internally Focused B. Functional Integration C. Internal Integration D. External Integration

B. Functional Integration

Efficient Consumer Response was initially developed in the 1990's for the following industry: A. Fashion B. Grocery C. Small Electronics D. Automobile

B. Grocery

Companies hold a supply of inventory for all of the following reasons EXCEPT: A. meet variation in product demand B. increase production change/ setup costs. C. allow production scheduling flexibility. D. purchase in bulk to take advantage of quantity discounts. E. maintain independence of operations (decoupling)

B. Increase production change/ setup costs.

Japanese manufacturing firms sometimes create cooperative coalitions with their suppliers in order to provide the suppliers with a certain degree of financial support. What are these cooperative coalitions called? A. Jidoka Networks B. Keiretsu Networks C. Kanban Networks D. Kaizen Networks

B. Keiretsu Networks

According to the textbook, which of the following is NOT a way to closely match supply and demand? A. Holding high amount of inventory B. Maintaining a rigid pricing system C. Utilizing Overtime D. Hiring temporary workers

B. Maintaining a rigid pricing system.

Which of the following consists of different products that share similar characteristics, components, or manufacturing processes? A. Resource Tree B. Product Family C. Dependant Allocation D. Implosion Factor

B. Product Family

The following are all common qualitative forecasting models EXCEPT: A. Jury of Executive Opinion B. Trend Variation C. Delphi Method D. Sales Force Composite

B. Trend Variation

Which of the following is NOT one of the Seven Wastes? A. excess inventories B. environmental waste C. waiting time D. scrap and rework

B. environmental waste

The element of "lean" involving firms working with buyers and customers with the mutual goal of eliminating waste, improving speed, and improving quality is referred to as: A. waste reduction B. lean supply chain relationships C. lean layouts D. continuous improvement

B. lean supply chain relationships

Which of the following is NOT consistent with the lean philosophy? A. Cross- training employees to increase processing flexibility B. Developing a culture of continuous improvement within the organization C. Increasing batch size to take advantage of economies of scale D. Positioning WIP inventories near each processing center

C. Increasing batch size to take advantage of economies of scale

Which of the following is NOT one of the three basic methods used to calculate the available- to- promise quantities? A. Discrete available- to- promise B. Cumulative available- to- promise without looking ahead C. Indiscrete available- to- promise D. Cumulative available- to- promise with looking ahead

C. Indiscrete available- to- promise

The Quick Response program, developed in the 1980's, was an offshoot of the following supply chain concept: A. Efficient Consumer Response B. Six Sigma C. Just- In- Time D. Cross Docking

C. Just- In- Time

Successful supply chains evolve through stages; the internally focused stage characterized by all of the following EXCEPT: A. Functional Silos B. Top- down management C. Long- term Planning D. Internal measures used to monitor performance.

C. Long- term planning

_______, such as lubricants for machines, are used in the production process, but do not become parts of the final products. A. Raw materials B. Work- in- process C. Maintenance, Repair, and Operating Supplies D. Finished Goods E. Cycle Stock

C. Maintenance, Repair, and Operating Supplies.

All of the following are included in the seven wastes EXCEPT: A. overproducing B. Overprocessing C. Overspending D. Waiting

C. Overspending

According to the text, the ability to satisfy customer expectations can be referred to simply as: A. Reliability B. Lean Six Sigma C. Quality D. Durability

C. Quality

The following time- series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time: A. Naive Forecast B. Weighted Moving Average C. Simple Moving Average D. Exponential Smoothing

C. Simple Moving Average

Which of the following quality gurus believed that companies should strive for zero defects and that quality was, in a sense, free since quality improvement programs invariably paid for themselves? A. Juran B. Demning C. Baldrige D. Crosby

D. Crosby

Which of the following statements is FALSE: A. Time Series Forecasting is based on the assumption that the future is an extension of the past. B. Cause- and- Effect forecasting assumes that one or more factors are related to demand and, therefore, can be used to predict future demand. C. All quantitative methods become less accurate as the forecast's time horizon increases. D. It is generally not recommended to use a combination of both quantitative and qualitative methods.

D. It is generally not recommended to use a combination of both quantitative and qualitative methods.

Lean production emphasizes all of the following EXCEPT: A. Continuous Improvement B. Reduction of Waste C. Synchronization of Material Flows D. Large Batch Sizes

D. Large Batch Sizes

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. RRP B. MPS C. RCCP D. MRP

D. MRP

Which of the following cannot be considered as independent demand items? A. wholesale and retail merchandise items. B. maintenance, repair, and operating supplies at a manufacturing company. C. maintenance, repair, and operating supplies at a service firm. D. raw material items that become part of the final product at a manufacturing firm. E. service industry items such as hospital supplies or office supplies for law firms.

D. raw material items that become part of the final product at a manufacturing firm.

Which of the following is not an example of an ordering cost for products purchased from a supplier? A. the cost of transmitting the order B. the cost of receiving the product C. the cost associated with processing the invoice D. the opportunity cost of not ordering from a least cost supplier E. the cost of handling the product

D. the opportunity cost of not ordering from a least cost supplier.

According to the text, a firm should always run its operations at 100% capacity to ensure changes affecting demand can be met.

False

An MRP system has a subassembly with a lot size of 100 units. In terms of filling future requirements, this would mean that planned order releases for the subassembly would always have to be exactly 100 units.

False

Associative forecasting methods are based on opinions and intuition.

False

Carbon neutral organizations do not produce any carbon emissions.

False

Deming's 14 points actually conflict with many Six Sigma concepts.

False

Dependent Demand must be forecasted based on market conditions.

False

Efficient Consumer Response and Keiretsu Relationships are supply chain concepts concerned with speed and flexibility.

False

Electronic Product Code (EPC) is the only RFID standard adopted by the commercial sector and the U.S. Department of Defense.

False

If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.

False

Quantitative forecasting methods are based on opinions and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts.

False

A Master Production Schedule is a medium- range materials plan.

True

A Mixed Production Strategy uses a blend of chase and level strategies by striving to maintain a stable core workforce while using other means like temporary workers to manage short- term high demand.

True

Acceptance sampling is a statistical technique that enables aa reject or accept decision to be made based on information obtained from a representative sample drawn from the population.

True

According to the text, in supply chain, the term "lean" has begun to replace the term "JIT".

True

According to the text, resource planning is the process of determining the production capacity required to meet demand.

True

According to the text, the goal of resource planning is to minimize the discrepancy between an organization's capacity and demand results.

True

According to the text, the ultimate goal of any forecasting endeavor is to have an accurate and unbiased forecast.

True