OP2
Which categories of inventory typically go through a cycle count?
"A" items "C" items "B" items
Using the fixed-order quantity model, what is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $40 and a holding cost per unit per year of $45?
$5,692 Q = square root of ((2 x demand x order cost)/holding cost) = Square root ((2 x 36,000 x 40)/45) = Square root (64,000) = 252.98. Dividing annual demand by Q, 36,000/252.98 = 142.3 orders per year x $40 per order = $5,692 ordering cost per year.
Every 2 minutes a bus departs from AVIS. Flow time is 20 minutes. How many buses are in the system at a time?
(1 bus / 2 minutes) x 20 minutes = 10 buses
Which of the following equations is correct for calculating the required workstation cycle time? (Required output per day)/(Production time per day) (Production time per day)/(Required output per day) (Sum of task times)/(Required output per day) (Production time per day)/(Sum of task times)
(Production time per day)/(Required output per day)
Which of the following is not included as an inventory holding cost? A. Annualized cost of materials B. Handling C. Insurance D. Pilferage E. Storage facilities
A. Annualized cost of materials Holding costs include the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.
Which of the following is NOT a good reason to hold inventory?
As needed to improve company cash flow
Days-of-Supply
Average Inventory/Cost of goods sold x 365
Which of the following products would use a project layout? Bridge Laptop Automobile Mass produced toy
Bridge
work station cycle time formula
C = total production time/ total units needed per day
When a product or service can have more than one defect per unit, which of the following is the most appropriate chart? Range chart Mean chart P-chart C-chart
C-chart
Which process layout is best used for manufacturing liquids?
Continuous
develop the sourcing strategy
Cultivate quantitative and qualitative criteria to evaluate the sourcing process
Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the days-of-supply last year?
Days-of-Supply = Averageinventory/ Costofgoodssold ×365=$1,500,000/$3,750,000×365= 146
The master production schedule is used to plan
End Items
Firms producing functional products are forced to introduce a steady stream of innovations in order to survive.
FALSE
Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.
False Price-break models deal with the fact that, generally, the selling price of an item varies with the order size.
MRP stands for Manufacturing Requirements Planning.
False Material Requirements Planning (MRP)
XYZ Company uses an inventory model where the amount requisitioned is fixed and ordering is triggered by inventory dropping to a specified level. What type of inventory system is XYZ using?
Fixed-order quantity
Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the inventory turn last year?
Inventory turn = CostofgoodssoldAverageinventory=$3,750,000/$1,500,000=2.5
The issue of balancing the level of finished inventory against the level of service to the customer occurs in which type of firm?
Make-to-stock
Rank the production process layouts from lowest- to highest-volume (top to bottom).
Project Workcenter Manufacturing cell Assembly line
Implementing sourcing strategy
Select vendors and products for each business requirement
Which of the following is not a common constraint regarding vendor managed inventory?
Shipping terms
The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.
T
The next level in the planning process down from an aggregate plan is called?
The master production schedule
The next level in the planning process down from an aggregate plan is called? Supply coordination Materials requirements planning Demand forecasting The master production schedule
The master production schedule
Which of the following are the four main issues to address in creating a control chart? Multiple select question. The number of samples The design specifications The frequency of samples The size of the samples The control limits
The number of samples The frequency of samples The size of the samples The control limits
To achieve quality at the source, in general, who is responsible for ensuring that quality specifications are met? The supplier of the raw materials The person who does the work The customer is responsible for ensuring quality Customer service representative
The person who does the work
Which is the best form of ISO certification? There is no best form Third party Second party First party
Third party
Fixed-order quantity inventory models are "event triggered."
True
engineer to order
Work with the customer to design and then make the product
continuous process
assembly line only the flow is continuous such as with liquids
continuous process
assembly line only the flow is continuous such as with liquids. ex: oil refining
Inventory turn is calculated by
dividing cost of goods sold by average inventory value.
What type of products have a life cycle of just a few months?
innovative
Workcenters are often structured to___________ the movement of material.
optimize
project
remain in a fixed location, equipment is moved to the product
Which type of supply process has a mature manufacturing and technology base?
stable
customer order decoupling point
where inventory is positioned to allow entities in the supply chain to operate independently
Which of the following are parts of the material requirements planning system?
- master production schedule -bill of materials -inventory records
organization of product processes
- project - workcenter (jobshop) - manufacturing cell - assembly line - continuous process
which initiative cannot effectively counteract the bullwhip effect -periodic ordering -everyday low price -consumer direct -Vendor management inventory
-periodic ordering
Which types of inventory are included in the average aggregate inventory value? 1. Raw material 2. Work-in-process 3. Finished goods 4. Distribution
1 2 3 4
Firm ABC has an annual demand for 2,000 widgets. Their typical order quantity is 400 units and they maintain a safety stock of 50 units. What is their average inventory?
250
250 people/hour 15 min average time in a store how many customers in the store at any given time?
250 ppl/hour x (15/60 mins) - 62.5 customers
An assembly line must produce 1,000 units in an 8 hour day. Assuming the line operates continuously, what is the required workstation cycle time? 57.6 seconds 28.8 seconds 35.5 seconds 60.0 seconds
28.8 seconds
How many defects per million units are permitted to meet Six Sigma standards? 4.3 3.4 10.0 6.0
3.4
Assuming no safety stock, what is the reorder point (R) given an average daily demand of 100 units and a lead time of 5 days?
500 Reorder point = Average daily demand x Lead time in days = 100 x 5 = 500
The z-score associated with a ___ percent probability of not stocking out is 1.64.
95
Computer cycle counting programs can produce a cycle count notice after which events?
A positive balance but a backorder was created A specified level of activity A zero balance on-hand
Which of the following is an input file necessary to run an MRP system? A. Bill of materials (BOM) file B. Quality management report C. Exception reports D. Planned-order schedules E. Purchasing contracts
A. Bill of materials (BOM) file
Which term describes sampling performed on goods that already exist to determine what percentage of products conform to specifications? Conforming sampling Sampling limits Sampling error Acceptance sampling
Acceptance sampling
Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-order B. Hospitals C. Assemble-to-order D. Aircraft manufacturers E. Oil refineries
C. Assemble-to-order
Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal? A. Economic Order Quantity B. Lot for lot C. Least total cost D. Least unit cost E. ABC analysis
C. Least total cost
inventory turn
COGS / avg. inventory value
Which of the following is variation that is inherent in the process itself? Assignable variation Common variation Controlled variation Real variation
Common variation
Inventory turn
Cost of goods sold/Average inventory
Which of the following is not considered when calculating the order quantity in a fixed-time period model?
Current stock at the supplier
Which of the following is not a step required to make a good? Making Decoupling Delivering Sourcing
Decoupling
What is a legitimate reason for inventory?
Decoupling Risk
Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model? A. C B. TC C. H D. Q E. S
E. S S = Setup cost or cost of placing an order
The Factor Rating Method is a calculation of where to place a distribution center given the distances and volumes between sources and destinations.
False
The costs associated with reduced inventory results in lower profits.
False Savings from reduced inventory results in increased profit.
Which of the following is considered distribution inventory?
Finished goods inventory in a distribution center
Which of the following activities should not be outsourced?
Immature technology Complex computer software Specialized research and development Activities that have lots back-and-forth exchange of information
___ turn is the ratio of costs of goods sold to average inventory value.
Inventory
The long-term relationship between inventory, throughput, and flow time is mathematically related using _______________'s law. The long-term relationship between inventory, throughput, and flow time is mathematically related using 's law.
Little
The long-term relationship between inventory, throughput, and flow time is mathematically related using
Little's law
The issue of balancing the level of finished inventory against the level of service to the customer occurs in which type of firm? Assemble-to-order Make-to-stock Engineer-to-order Make-to-order
Make-to-stock
Which type of firm invests in lean manufacturing programs in order to improve customer service levels for a given inventory investment? Make-to-order Engineer-to-order Make-to-stock Assemble-to-order
Make-to-stock
The step in the planning process down from the master production schedule is called
Material Requirements Planning
Which distribution is used to calculate the probability of producing a defect? Exponential Weibull Poisson Normal
Normal
Which of the following is an innovative product? Personal computer Pens Cereal Diapers
Personal computer
The underlying distribution for the c-chart is which of the following? Gamma Normal Poisson Exponential
Poisson
One purpose of inventory is to provide flexibility in______ ______, this can increase lead times but reduce setup costs.
Production scheduling
Rank the production process layouts from lowest- to highest-volume (top to bottom). Manufacturing cell Project Workcenter Assembly line
Project Workcenter Manufacturing cell Assembly line
What is an example of a Set Up Cost?
Reconfig Machines Driving to the farm every time you want some eggs
Which sourcing process is used for complex items where there are a number of potential vendors? Electronic catalog Request for proposal Spot purchase Strategic alliance
Request for proposal
Which type of supplier relationship should be used when there is a standardized interface between adjacent tasks?
Required coordinated
make to stock
Serve customers "on demand" from finished goods inventory
Logistics involves which of the following management functions?
Shipping of final goods Purchase of production materials Planning of work-in-process Distribution of finished product
Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available?
Specificity
Which type of supply process has a mature manufacturing and technology base? Functional Innovative Evolving Stable
Stable
Which type of activities are a key source of competitive advantage?
Strategic
A high-level map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.
T
A project layout is characterized by a high degree of task ordering.
T
An example of an assemble-to-order firm is Dell Computer.
T
Assemble-to-order means moving the customer order decoupling point from finished goods to components.
T
Break-even analysis can be used to help decide whether to perform a task with a special-purpose machine or with a general-purpose machine.
T
Engineer-to-order firms will work with the customer to design the product and then make it from purchased materials, parts, and components.
T
One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.
T
One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is break-even analysis.
T
One trade-off illustrated by the product-process matrix is between flexibility and cost.
T
Efficiency formula
T (sum of time) / NaC (# workstations x cycle time)
The file containing the complete product description, parts listing, quantity needed and product build sequence is called? The peg record The bill-of-material The inventory log The MPS
The bill-of-material
Decisions Related to Logistics
The problem of deciding how best to transport goods from plants to customers is a complex one and that affects the cost of the product. -Major trade-offs related to the cost of transporting the product, speed of delivery, and flexibility to react to changes are involved. Information systems also play a big role in coordinating activities.
The standard practice in statistical process control for variables is to set control limits to how many standard deviations from the mean? Three One Two Four
Three
According to Little's Law, which of the following can be used to estimate work-in-process inventory? - Process velocity/Flow time - Value added time/Process velocity - Process time/Cycle time - Throughput rate times Flow time - Set up time/Throughput rate
Throughput rate times Flow time
______ _______ are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule
Time fences
are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule.
Time fences
Which of the following is a reason for keeping a supply of inventory? To improve cash flow To meet variation in product demand To build a bank of inventory needed for lean manufacturing To improve suppliers' cash flow
To meet variation in product demand
inventory measures
Total average value of inventory Inventory turns Days of supply
Match each inventory measure with its definition. Total average value of inventory Inventory turn Days-of-supply Cost of goods sold/Average inventory Average Inventory/Cost of goods sold x 365 Sum of raw materials, work-in-progress, and finished goods inventory
Total average value of inventory: Sum of raw material, work-in-process, and finished goods inventory Inventory turn: Cost of goods sold/Average inventory Days-of-supply: Average inventory/Cost of goods sold x 365
Inventory is defined as the stock of any item or resource used in an organization.
True
True or false: A least total cost lot sizing technique is a dynamic approach that continually looks for an optimal lot size where carrying costs and ordering costs are close to equal.
True
True or false: A product can have high design quality with low conformance quality, and vice versa.
True
True or false: By taking advantage of economic purchase order sizes, one can usually achieve lower per-unit shipping costs.
True
True or false: The lot size has little effect on the risk associated with an acceptance sampling plan.
True
Which of the following is not a reason why a firm may choose to outsource an activity?
Turn variable costs into fixed costs
breakeven analysis
a standard approach to choosing among alternative processes or equipment-seeks to determine the point in units produced where a company will start making a profit on the process =FC/($/unit-VC/unit)
If the sample size varies, the standard deviation and upper and lower process control limits should be recalculated only every 200 units. have new limits calculated if equipment is calibrated. remain the same once calculated. be recalculated for each sample.
be recalculated for each sample.
Which of the following is not a major characteristic to be considered when structuring an outsourcing relationship?
collaboration
Cost of goods sold is also referred to as the cost of revenue. cost of inventory. cost of expenses. cost of doing business.
cost of revenue.
A manufacturing cell is generally made up of ___________ machines. dissimilar similar identical
dissimilar
Level 0 items during the explosion process are typically referred to as _____ items, or gross requirements.
end
The master production schedule is used to plan raw materials. end items. supply parts. rework.
end items.
ISO 14000 addresses the need to be _______________ responsible.
environmentally
Customer order decoupling point
inventory is positioned to allow entities in the supply chain to operate independently
are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. Economic order quantity
lot sizes
A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity
low
A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity.
low
A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity. generic low high medium
low
Spot purchases have ________ specificity and ________ transaction costs.
low; low
An item that can be produced and stocked as a subassembly often uses a _____ bill-of-materials for planning.
modular
Inventory turn is a key measure for a business and directly relates to
the financial performance of the firm.
days of supply
the inverse of inventory turns scaled to days
lead time
the time needed to respond to a customer order
innovative products have higher stockout costs than functional products? t/f
true
According to the logistics-system design matrix, which of the following modes of transporting products has the highest capacity and a very low cost? -highway -water -hand delivery -rail
water
which case outsourcing manufacturing is appropriate? 1. the design in manufacturing of products are closely connected and require mutual adaptation 2. the products are modularized designed and assembled together using standard modules
-2 only
Which of the following statements about inventory measures is TRUE? Multiple select question. Days-of-supply measures how long (on average) a firm's inventory can support sales. Total average inventory is the best measure of inventory. Inventory turn and days-of-supply are unrelated measures. Inventory turn compares cost of goods sold to average inventory.
-Days-of-supply measures how long (on average) a firm's inventory can support sales. -Inventory turn compares cost of goods sold to average inventory.
Service Facilites
-Far more common than new factories and warehouses. Much less expensive. -Have multiple sites to maintain close contact with customers. -Location decision is closely tied to the market selection decision. -Decisions are more about maximizing profit rather than minimizing costs.
Logistics
-Logistics is big business, accounting for 8-9% of the U.S. gross domestic product, and growing. -Today's modern, efficient warehouse and distribution centers are the heart of logistics. -These centers are carefully managed and efficiently operated to ensure the secure storage and quick flow of goods, services, and related information from the point of origin to the point of consumption.
In cycle counting, the accuracy level recommended by experts for "A" items is +/-
0.2%.
Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? - 1.388 - 500 - 0.72 - Cannot be determined from the information above - 250
0.72
You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? - 0.833 - None of these - 0.973 - 0.500 - 0.990
0.833 Using equation 6.5, [25 / (6 x 5)] = 0.833.
The total cost of ownership includes: 1. Procurement costs 2. Disposal costs 3. Engineering design costs
1 and 2
Which types of inventory are included in the average aggregate inventory value? 1. Raw material 2. Work-in-process 3. Finished goods 4. Distribution 1, 2, 3, and 4 1, 2, and 3 Only 3 and 4 Only raw materials
1, 2, 3, and 4
Which of the following are assumptions that justify the costs of quality? 1. Failures occur 2. Prevention is cheaper 3. Performance can be measured 1, 2, and 3 only 1 and 2 only 2 and 3 only 1 and 3
1, 2, and 3
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 1,300 1,150 2,450 None of the above
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 fixed-time period inventory model, and given an average daily demand of 300 units, 4 days between inventory reviews, 5 days for lead time, 1,200 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 12 units, what quantity should be ordered?
1,525 q = (300 x (5 + 4) + 1.96 x 12) - 1200 = 2,700 + 23.52 - 1200 = 1,524.52 = about 1,525
List the highest level planning to the lowest level of planning:
1. Aggregate Planning 2. Master Production Schedule 3. Material Requirements Planning
Green Sourcing steps
1. Assess the opportunity 2. Engage sourcing agents 3. Assess the supply base 4. Develop the sourcing strategy 5. Implement sourcing strategy 6. Institutionalizing the sourcing strategy
The master scheduler must consider
1. Never lose sight of the aggregate plan 2. Be involved with customer order promising 3. Trade-off manufacturing, engineering and marketing conflicts
Last year, Ace Electronics had Cost of Goods Sold of $2,500,000. The average inventory value last year was $250,000. What was the inventory turnover for Ace Electronics last year? 10 8 4 6
10
The efficiency of an assembly-line balance must always be less than or equal to _______________ %. The efficiency of an assembly-line balance must always be less than or equal to %.
100
A computer manufacturer offers 3 types of hard disk drives, 2 types of monitors, 4 types of batteries, and 5 choices of operating systems. How many total combinations are possible using these choices? 60 90 120 150
120
The cost of quality has been estimated at what percentage of every sales dollar? 20-25% 5-10% 15-20% 10-15%
15-20%
If annual demand is 8,000 units, the ordering cost is $20 per order and the holding cost is $12.50 per unit per year, what is the optimal order quantity using the fixed-order quantity inventory model?
160 Q = square root of ((2 x demand x order cost)/holding cost) = Square root ((2 x 8,000 x 20)/12.50) = Square root (25,600) = 160
Total quality management became a national concern in the United States during what decade? 1940s 1980s 1990s 2000s
1980s
There are ______ dimensions depicted on a product-process matrix.
2
There are _______________ dimensions depicted on a product-process matrix. dimensions depicted on a product-process matrix.
2
Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the inventory turn last year? 1.0 3.5 2.0 2.5
2.5
The general belief is that the correct cost for a well-run quality management program is under 50% 10% 0% 2.5%
2.5%
In inventory management, the Pareto principle suggests that _____% of the items account for _____% of the total inventory cost.
20 80
In inventory management, the Pareto principle suggests that ___% of the items account for ___% of the total inventory cost.
20,80
Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product.
25
What is the minimum number of sample sets suggested for control charts with variable measurement? 20 30 35 25
25
Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product
25%
Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product. 25% 10% 2% 50%
25%
Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? - 8 - 5 - None of these - 6 - 3
3 (4 + 6 + 7 + 2 + 6 + 5) / 10 = 3.
In the ABC approach, B items account for approximately ___% of the items in inventory.
35
In the ABC approach, B items account for approximately _____% of the items in inventory.
35
"B" items account for approximately _% of the items in inventory.
35%
If it takes a supplier 10 days to deliver an order once it has been placed and the standard deviation of daily demand is 14, what is the standard deviation of usage during lead time?
44.27 the answer is the square root of the sum of the variances which is the square root of 10 x (14 squared) or the square root of 1960 or 44.27.
If the sum of all task times is 100 seconds and the required cycle time is 21 seconds, what is the theoretical minimum number of workstations? 5 4 4.76 5.23
5
Which of the following is the planned-order release using an MRP program if the gross requirement is 670 and the inventory on hand is 600? 670 600 530 70 None of the above
670 600 530 correct 70 None of the above 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." Since 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." 670 - 600 = 70.
For an assembly-line system with 6 workstations, the cycle time is 27 seconds and the sum of task times is 120 seconds. What is the efficiency of this balance? 81.1% 74.1% 77.2% 71.0%
74.1%
Using the assembly-line balancing procedure, which of the following is the required cycle time in minutes per unit if the daily production time is 480 minutes and the required daily output is 50 units? - 480 - 0.104 - Cannot be determined from the information above - 50 - 9.6
9.6 daily production time (480) / daily output (50)
The z-score associated with a _____ percent probability of not stocking out is 1.64.
95
Third-Party Logistics Company
A company that manages all or part of another company's product delivery operations. -There are companies that specialize in logistics, such as UPS, FedEx, and DHL. These global companies are in the business of moving everything from flowers to industrial equipment.
Six Sigma refers to Multiple select question. The number of quality experts each firm should employ. A description of the quality goal of no more than 3.4 defects per million opportunities. The quality award given to the supplier with the fewest defects. A quality improvement philosophy and program.
A description of the quality goal of no more than 3.4 defects per million opportunities. A quality improvement philosophy and program.
Which of the following is an example of a product made with a project layout?
A house
Which category of inventory is managed most closely by the firm?
A items
If a company has an MRP program that can reflect the exact status of each item in real time, this program is called?
A net change MRP system
If a company has an MRP program that can reflect the exact status of each item in real time, this program is called? A peg record An inventory transaction file A net change MRP system A bill-of-material system
A net change MRP system
An MRP system is
A system-driven logic that allows a company to tie the production functions together from a material planning and control view
Which of the following statements best characterizes an MRP system? A system-driven logic that allows a company to tie the production functions together from a material planning and control view. An independent demand system that helps a company to prioritize customer orders based on profit potential. A system that specifies the best transportation mode for inbound materials. A system-driven approach to determine which suppliers are likely meet delivery due dates.
A system-driven logic that allows a company to tie the production functions together from a material planning and control view.
Which of the following is NOT true about a workcenter layout? In a workcenter layout, machines with similar functions are grouped together. A workcenter layout is also called a job shop. A workcenter layout can produce a wide variety of products. A workcenter layout is commonly used for systems with high production volumes.
A workcenter layout is commonly used for systems with high production volumes.
Which of the following is NOT true about a workcenter layout? Multiple choice question. A workcenter layout can produce a wide variety of products. A workcenter layout is commonly used for systems with high production volumes. A workcenter layout is also called a job shop. In a workcenter layout, machines with similar functions are grouped together.
A workcenter layout is commonly used for systems with high production volumes.
Computer cycle counting programs can produce a cycle count notice after which events?
A zero balance on-hand A specified level of activity A positive balance but a backorder was created
From highest percentage to lowest percentage, rank the ABC categories in terms of value of items in inventory: Instructions
A, B, C
A company is planning for its financing needs and uses the basic fixed-order quantity inventory model. Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000, setup cost of $32, a holding cost per unit per year of $4, an EOQ of 400 units, and a cost per unit of inventory of $150? A. $1,501,600 B. $1,498,200 C. $500,687 D. $499,313 E. None of the above
A. $1,501,600 Q = 400. Average Inventory = Q/2 = 200. Holding cost/year = $4. Thus, annual holding cost = $800. Annual set-up cost = 10,000/400 = 25 x $32 = 800. Demand x cost per unit = 10,000 x $150 = 1,500,000. Hence, TC = $1,500,000 + 800 + 800 = $1,501,600.
Using the fixed-time period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity? A. 863 B. 948 C. 1,044 D. 1,178 E. 4,510
A. 863 q = 75 x (10 + 2) + (1.64 x 8) - 50 = 900 + 13.12 - 50 = 863.12 = 863
Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products? A. A items get 15%, B items get 35%, and C items get 50% B. A items get 15%, B items get 45%, and C items get 40% C. A items get 25%, B items get 35%, and C items get 40% D. A items get 25%, B items get 15%, and C items get 60% E. A items get 20%, B items get 30%, and C items get 50%
A. A items get 15%, B items get 35%, and C items get 50% The ABC approach divides this list into three groupings by value: A items constitute roughly the top 15 percent of the items, B items the next 35 percent, and C items the last 50 percent.
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? A. About 27.7 B. About 32.8 C. About 35.8 D. About 39.9 E. About 45.0
A. 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 are fixed-order quantity inventory models? A. Economic order quantity model B. The ABC model C. Periodic replenishment model D. Cycle counting model E. P model
A. Economic order quantity model
Which of the following industry types will not benefit greatly from the application of MRP? A. Fabricate-to-order B. Assemble-to-stock C. Assemble-to-order D. Manufacture-to-order E. None of the above
A. Fabricate-to-order
If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $0.90 and the loss resulting from that unit if it is not sold (Co) is $0.50, which of the following is the probability of the last unit being sold? A. Greater than 0.357 B. Greater than 0.400 C. Greater than 0.556 D. Greater than 0.678 E. None of the above
A. Greater than 0.357 P < = Cu/(Cu + Co) = 0.90/1.40 = 0.643. Since P is the probability that the unit will not be sold and 1 - P is the probability of it being sold, the answer to this question is 1 - 0.643 or 0.357.
A product tree can do which of the following? A. Help to compute component usage B. Reduce product scrap C. Reduce labor overtime D. Reduce regular time labor E. Locate raw material supplies
A. Help to compute component usage
Which of the following is considered a primary report in an MRP system? A. Planned order schedule B. Peg report C. Planning report D. Inventory accuracy report E. Aggregate production plan report
A. Planned order schedule
A BOM file is also called which of the following? A. Product tree B. Stocking plan C. Inventory usage record D. Production parts plan E. Time bucket schedule
A. Product tree
Which of the following is most closely related to the reason a firm might implement MRP? A. So they can order the right parts B. So they can order parts sufficient for immediate use C. So they can insure that parts to arrive prior to when they are needed D. To assure appropriate quality levels E. To keep process costs between the LCL and the UCL
A. So they can order the right parts
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? A. Standard deviation of daily demand B. Number of standard deviations for a specific service probability C. Stockout cost D. Economic order quantity E. Safety stock level
A. Standard deviation of daily demand
Which is the most challenging kind of supply chain to manage according to Hau Lee? A.)Agile supply chain B.)Efficient supply chain C.)Risk-hedging supply chain D.)Erratic supply chain E.)Responsive supply chain
A.) Agile supply chain
The inventory turnover ratio used in measuring supply-chain efficiency is found by the ratio of which of the following? A.) Cost of goods sold/Average aggregate inventory value B.) Fixed costs/Variable costs C.)Sales costs/Marketing costs D.)Cost of goods sold/Cost to sell goods E.)Operations flow costs/Suppliers flow costs
A.) Cost of goods sold/Average aggregate inventory value
The highest interest of an operating characteristic curve is between the and the _______________ LTPD.
AQL
In any inventory system, _____ is important for a smooth production process so that customer orders can be processed as scheduled and not held up because of unavailable products.
Accuracy
Which of the following activities should not be outsourced? Multiple select question. Activities that have lots back-and-forth exchange of information Complex computer software Specialized research and development Immature technology Highly standardized and well understood processes
Activities that have lots back-and-forth exchange of information Complex computer software Specialized research and development Immature technology
From the highest level planning at the top to the lowest level planning at the bottom, rank the following. Aggregate planning Master production schedule Material requirements planning
Aggregate planning Master production schedule Material requirements planning
Which type of supply chain strategy is aimed at being responsive and flexible to customer needs and hedges against pooled inventory and other capacity resources? Responsive supply chains Efficient supply chains Risk-hedging supply chains Agile supply chains
Agile supply chains
Select all the transportation methods listed below that are considered fast Rail-car Container Ship Airplane Barge Pipeline
Airplane Pipeline
What are the five purposes of inventory?
All firms keep a supply of inventory for the following reasons: 1. To maintain independence of operations 2. To meet variation in product demand. 3. To allow flexibility in production scheduling. 4. To provide a safeguard for variation in raw material delivery time. 5. To take advantage of economic purchase order size.
International Logistics
All functions concerned with the movement of materials and finished goods on a global scale.
Which is not true about a Bill of Material (BOM) There is more than one way to create a BOM The BOM has multiple levels Item is coded at the lowest level at which it occurs All of the above are true statements
All of the above are true statements
Factor-Rating Systems
An approach for selecting a facility location by combining a diverse set of factors. Point scales are developed for each criterion. Each potential site then is evaluated on each criterion and the points are combined to calculate a rating for the site. Are perhaps the most widely used of the general location techniques because they provide a mechanism to combine diverse factors in an easy-to-understand format.
In which step of the DMAIC cycle do you determine the most likely causes of defects and understand why defects are generated? Define Measure Analyze Improve
Analyze
Which of the following is/are components of total annual costs in a fixed-quantity inventory system?
Annual holding costs Annual ordering costs Annual purchase costs
MRP would provide the highest benefit to assembly processes such as
Appliances, Motors, and Trucks
The classic "I love Lucy" scene where they are inspecting the chocolates on the assembly line is an example of what type of quality cost? Appraisal External failure Internal failure Prevention
Appraisal
Which of the following is not a dimension of quality? Perceived quality Durability Appraisal Aesthetics
Appraisal
Which of the following is not a reason to use inventory as a safeguard against raw material delivery time variation?
As a supplement to vendor-managed inventory programs
Which of the following is not a reason to use inventory as a safeguard against raw material delivery time variation? An unexpected strike at a vendor's plant As a supplement to vendor-managed inventory programs Shortage of material at the vendor's plant Normal variation in shipping time
As a supplement to vendor-managed inventory programs
Which common layout format refers to the progressive build of a product? Assembly line Manufacturing cell Project layout Workcenter
Assembly line
Which common layout format refers to the progressive build of a product? Multiple choice question. Assembly line Workcenter Manufacturing cell Project layout
Assembly line
Which layout moves product from workstation to workstation at a controlled rate? Assembly line Retail layout Continuous process U-shaped layout
Assembly line
Which layout moves product from workstation to workstation at a controlled rate? Multiple choice question. Continuous process Assembly line U-shaped layout Retail layout
Assembly line
Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? - Manufacturing cell - Assembly line - Project - Workcenter - Continuous process
Assembly line
Which of the following type of work flow is appropriate when production volume is high? Assembly line Manufacturing cell Workcenter Project layout
Assembly line
Which the following describes the layout for items produced through a fixed sequence of workstations? Manufacturing cell Assembly line Project Workcenter
Assembly line
Which the following describes the layout for items produced through a fixed sequence of workstations? Multiple choice question. Project Workcenter Assembly line Manufacturing cell
Assembly line
What is the first step in the process for green sourcing? Engage sourcing agents Assess the opportunity Assess the supply base Develop the sourcing strategy
Assess the opportunity
Which of the following is variation that is caused by factors that can be clearly identified? Assignable variation Common variation Random variation Normal variation
Assignable variation
If a company has more units in the master production schedule than firm customer orders, the residual is called? Liquid inventory Available to promise Ready to ship Customer overstock
Available to promise
If a company has more units in the master production schedule than the firm customer orders then it is called
Available to promise
Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured? A. 1.28 B. 1.64 C. 1.96 D. 2.00 E. 2.18
B. 1.64 Companies using this approach generally set the probability of not stocking out at 95 percent. This means we would carry about 1.64 standard deviations of safety stock,
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? A. 50 B. 100 C. 400 D. 1,000 E. 1,600
B. 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
If annual demand is 35,000 units, the ordering cost is $50 per order and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model? A. 5,060 B. 2,320 C. 2,133 D. 2,004 E. 1,866
B. 2,320 Q = 2,320.5 = Square root of (2 x 35,000 x 50/0.65)
If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time? A. 10 B. 20 C. 40 D. 100 E. 400
B. 20 The standard deviation of usage during lead time is equal to the square root of the sums of the variances of the number of days of lead time. Since variance equals standard deviation squared, the standard deviation of usage during lead time is the square root of 4(10x10) = square root of 400 = 20.
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? A. 421 B. 234 C. 78 D. 26 E. 312
B. 234 78 times 3 = 234
If annual demand is 12,000 units, the ordering cost is $6 per order and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model? A. 576 B. 240 C. 120.4 D. 60.56 E. 56.03
B. 240 240 = Square root of (2 x 12,000 x 6/2.5)
A company has recorded the last six days of daily demand on a single product they sell. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 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)? A. 540 B. 270 C. 115 D. 90 E. 60
B. 270 Average demand is 37 + 115 + 93 + 112 + 73 + 110/6 = 90. Lead time = 3 days so the reorder point is 90 x 3 = 270.
Assuming no safety stock, what is the re-order point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand? A. 550 B. 500 C. 715 D. 450 E. 475
B. 500 Fifty (50) times ten (10) equals 500.
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? A. 909 B. 707 C. 634 D. 500 E. 141
B. 707 Q = 707.1 = Square root of (2 x 50,000 x 25/5)
Using the fixed-time period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity? A. About 1,086 B. About 1,686 C. About 1,806 D. About 2,206 E. About 2,686
B. About 1,686 q = (200 x (5 + 4) + 1.96 x 3) - 120 = 1,800 + 5.88 - 120 = 1,685.88 = about 1,686
If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time? A. About 2.16 B. About 3.06 C. About 4.66 D. About 5.34 E. About 9.30
B. About 3.06 The standard deviation (Equation 11.6) of daily demand = Square root of (14/3) = 2.1602. This number squared is 4.6667. The square root of (2 (days) times 4.6667) = the square root of 9.3333 or 3.055.
Which of the following is usually included as an inventory holding cost? A. Order placing B. Breakage C. Typing up an order D. Quantity discounts E. Annualized cost of materials
B. Breakage Holding costs include the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.
MRP systems seek to achieve which of the following? A. Minimize lot sizes B. Determine the number of dependent demand items needed C. Relieve capacity bottlenecks D. Provide a yardstick for future improvements E. Improve on JIT methods
B. Determine the number of dependent demand items needed
Which of the following is considered a secondary report in an MRP system? A. Planned order schedule B. Exceptions reports C. Inventory record D. Firm orders from known customers E. Engineering change reports
B. Exceptions reports
Which of the following is a perpetual system for inventory management? A. Fixed-time period B. Fixed-order quantity C. P model D. First-in-first-out E. The wheel of inventory
B. Fixed-order quantity The fixed-order quantity model is a perpetual system, which requires that every time a withdrawal from inventory or an addition to inventory is made, records must be updated to reflect whether the reorder point has been reached.
Under the lot-for-lot (L4L) lot sizing technique as used in MRP, we would expect which of the following? A. A consistent lag of supply behind demand B. Minimized carrying costs C. Minimized set-up costs D. A just in time management philosophy E. Minimized quality problems
B. Minimized carrying costs
When developing inventory cost models, which of the following are not included as costs to place an order? A. Phone calls B. Taxes C. Clerical D. Calculating quantity to order E. Postage
B. Taxes
Which of the following is an input to the master production schedule (MPS)? A. Inventory records file B. The aggregate plan C. The bill of materials D. The exception report E. Planned order schedules
B. The aggregate plan
In an MRP program, the program accesses the status segment of an inventory record according to specific periods called which of the following? A. Cubed time units B. Time buckets C. BOM units D. Time modules E. Time lines
B. Time buckets
Which of the following is one of the main purposes of a MRP system? A. Educate personnel in basic work rules B. To determine the amount of materials needed to produce each end item. C. Stimulate the work force D. Decrease labor requirements E. Increase inventory accuracy
B. To determine the amount of materials needed to produce each end item.
Computer inventory systems are often programmed to produce a cycle count notice in which of the following case? A. When the record shows a near maximum balance on hand B. When the record shows positive balance but a backorder was written C. When quality problems have been discovered with the item D. When the item has become obsolete E. When the item has been misplaced in the stockroom
B. 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? A. Economic Order Inventory B. Work-in-process C. Quality units D. JIT Inventory E. Re-order point
B. Work-in-process
A bill-of-material also goes by the acronym ______.
BOM
Which of the following is/are issues a master scheduler must consider?
Be involved with customer order promising. Trade-off manufacturing, engineering and marketing conflicts. Never lose sight of the aggregate plan.
Which of the following is an input to the master production schedule? Bill of materials (BOM) file Inventory records file Exception reports Planned-order schedules None of the above
Bill of materials (BOM) file Inventory records file Exception reports Planned-order schedules correct None of the above
Which of the following is an operational goal of total quality management (TQM)? 1. Careful design of the product or service. 2. Ensuring that the organization's systems can consistently produce the design. 2 only Neither 1 or 2 Both 1 and 2 1 only
Both 1 and 2
Which of the following products would use a project layout? Multiple choice question. Bridge Automobile Mass produced toy Laptop
Bridge
Which of the following terms describes the phenomenon of variability magnification as one moves upstream in the supply chain from customer to producer? Continuous replenishment Normal demand Outsourcing Bullwhip effect
Bullwhip effect
Typically when using ABC classification, the low dollar value, or measure of importance, items are in group _____, while high dollar value items are in group _____.
C A
Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%? A. 1.64 B. 1.96 C. 2.05 D. 2.30 E. None of the above
C. 2.05 Using the Excel function NORMSINV, the z score for a 98% service probability is 2.05.
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 10 days and the number of days between reviews is 15. Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10? A. 25 B. 40 C. 50 D. 73 E. 100
C. 50 the standard deviation of demand over the 25 days of time between reviews and lead time is the square root of (25 x 100) = 50
A company has recorded the last five days of daily demand on their 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)? A. 120 B. 126 C. 630 D. 950 E. 1,200
C. 630 Average demand is 120 + 125 + 124 + 128 + 133/5 = 126. Lead time = 5 days so the reorder point is 126 x 5 = 630.
The Pareto principle is best applied to which of the following inventory systems? A. EOQ B. Fixed-time period C. ABC classification D. Fixed-order quantity E. Single-period ordering system
C. ABC classification
Using the fixed-time period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity? A. About 30.4 B. About 36.3 C. About 42.3 D. About 56.8 E. About 59.8
C. About 42.3 q = 15 x (3 + 1) + (2.05 x 6) - 30 = 60 + 12.3 - 30 = 42.3
Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function? A. Annual purchasing cost, annual ordering cost, fixed cost B. Annual holding cost, annual ordering cost, unit cost C. Annual holding cost, annual ordering cost, annual purchasing cost D. Annual lead time cost, annual holding cost, annual purchasing cost E. Annual unit cost, annual set up cost, annual purchasing cost
C. Annual holding cost, annual ordering cost, annual purchasing cost Total Annual Cost = Annual Purchase Cost + Annual Ordering Cost + Annual Holding Cost.
Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-stock B. Fabricate-to-order C. Assemble-to-stock D. Continuous process E. Service and repair parts
C. Assemble-to-stock
Which of the following is not an assumption of the basic fixed-order quantity inventory model? A. Ordering or setup costs are constant B. Inventory holding cost is based on average inventory C. Diminishing returns to scale of holding inventory D. Lead time is constant E. Demand for the product is uniform throughout the period
C. Diminishing returns to scale of holding inventory 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.)
If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $120 and the loss resulting from that unit if it is not sold (Co) is $360, which of the following is the probability of the last unit being sold? A. Greater than 0.90 B. Greater than 0.85 C. Greater than 0.75 D. Greater than 0.25 E. None of the above
C. Greater than 0.75 P < = Cu/(Cu + Co) = 120/480 = 0.25. Since P is the probability that the unit will not be sold and 1 - P is the probability of it being sold, the answer to this question is 1 - 0.25 or 0.75
Which of the following is an input file necessary to run an MRP system? A. Exception report B. Computer-aided-design files C. Inventory records file D. Personnel files E. Planned order schedule
C. Inventory records file
Which of the following can be used for lot sizing in an MRP system? A. Low-level coding B. Time bucket size C. Least unit cost D. Inventory record file E. Peg inventory
C. Least unit cost
Which of the following is an assumption of the basic fixed-order quantity inventory model? A. Lead times are averaged B. Ordering costs are variable C. Price per unit of product is constant D. Back orders are allowed E. Stock-out costs are high
C. Price per unit of product is constant 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.)
We would expect to see which of the following in an MRP system's inventory status file? A. End items produced B. Late/early delivery records C. Scrap parts D. Labor efficiency E. Computer errors
C. Scrap parts
Firms keep supplies of inventory for which of the following reasons? A. To maintain dependence of operations B. To provide a feeling of security for the workforce C. To meet variation in product demand D. To hedge against wage increases E. In case the supplier changes the design
C. To meet variation in product demand
When considering outsourcing, what should firms be sure to avoid? A.)Losing control of non-core activities which don't distinguish the firm B.) Allowing outsourcing to develop into a substitute for innovation C.) Giving the outsourcing partner opportunities to become a strong competitor D.) Allowing employees transferred to the outsourcing partner to rejoin the firm E.) Adverse corporate tax implications of asset transfers to the outsourcing partner
C.) Giving the outsourcing partner opportunities to become a strong competitor
Which of the following is the ratio of the range of values produced by a process divided by the range of values allowed by the design specification? Control limit Capability index Tolerance Specification limit
Capability index
Which of the following is a plant location techniques that uses a coordinate grid system?
Centroid method
With which of the following goods would a continuous process be used? Computers Houses Chemicals Cars
Chemicals
Which of the following is not a major characteristic to be considered when structuring an outsourcing relationship?
Collaboration
assemble to order
Combine a number of preassembled modules to meet a customer's specifications
Which quality term refers to the degree to which the product or service design specifications are met? Dimension Engineering Conformance Design
Conformance
Which process layout is best used for manufacturing liquids? Project Continuous Manufacturing Cell Assembly line
Continuous
_____________ is used to avoid expensive shut downs by operating 24 hours a day. Multiple choice question. Assembly line Workcenter Project layout
Continuous process
In the acronym DMAIC, what does the C stand for? Conformance Charts Continuous improvement Control
Control
What type of activities are key to the business but do not confer a competitive advantage? Core Integral Strategic Outsourced
Core
Which of the following resources would a firm not outsource?
Core competencies
Which of the following resources would a firm not outsource? Human resources department IT department Manufacturing facility to produce a component Core competencies
Core competencies
What term describes the annual cost for a company to produce the good or services provided to customers? Weeks of supply Cost of goods sold Cost of production Average aggregate inventory value
Cost of goods sold
The location for a manufacturing operation is often ____ focused, while the location for services operations is often ___ focused.
Cost, Revenue/Profit/Customer
Which of the following are some ideas for firms to implement green sourcing programs? Multiple select question. Creating recycling partnerships with suppliers Waste reduction programs that employees can help use Increasing the number of air conditioners in an improperly insulated building Reducing the use of electricity throughout facilities
Creating recycling partnerships with suppliers Waste reduction programs that employees can help use Reducing the use of electricity throughout facilities
Which of the following are sources of demand for products in a material requirements planning system?
Customer orders from sales personnel. Inter-department transactions.
_____ _____ is a physical inventory-taking technique in which inventory is counted frequently, often times on a time-based schedule.
Cycle counting
What is the name of a physical inventory-taking technique that focuses only on certain items and counts more often than once or twice a year?
Cycle counting is a physical inventory-taking technique in which inventory is counted frequently rather than once or twice a year
A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days, and the standard deviation of usage during lead time is 2, which of the following is the desired value of R? A. About 17.9 B. About 19.7 C. About 24.0 D. About 27.3 E. About 31.2
D. About 27.3 Desired z score for service probability coverage of 95% = 1.64. Equation 11.5 is (average daily demand times number of days of lead time) plus (standard deviation during lead time) times (desired z score) = (8 x 3) + (2 x 1.64) = 24 + 3.28 = 27.28 = about 27.3 units
A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired "z" value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R? A. About 6 B. About 16 C. About 61 D. About 66 E. About 79
D. About 66 (average daily demand times number of days of lead time) plus (standard deviation during lead time) times (desired Z score) = (12 x 5) + (3 x 1.96) = 60 + 5.88 = 65.88 = 66 units
One of the main purposes of a MRP system is which of the following? A. Track inventory levels B. Create productive capacity C. Decrease layers of management D. Develop schedules specifying when each component should be ordered or produced. E. Upgrade manufacturing's professionalism
D. Develop schedules specifying when each component should be ordered or produced.
In making any decision that affects inventory size, which of the following costs do not need to be considered? A. Holding costs B. Setup costs C. Ordering costs D. Fixed costs E. Shortage costs
D. Fixed costs In making any decision that affects inventory size, the following costs must be considered. 1. Holding (or carrying) costs. 2. Setup (or production change) costs. 3. Ordering costs. 4. Shortage costs.
Which of the following is not one of the categories of manufacturing inventory? A. Raw materials B. Finished products C. Component parts D. Just-in-time E. Supplies
D. Just-in-time
Which of the following is a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost? A. Economic order quantity B. Lot-for-lot C. Least total cost D. Least unit cost E. Inventory item averaging
D. Least unit cost
Which of the following is not necessary to compute the order quantity using the fixed-time period model with safety stock? A. Forecast average daily demand B. Safety stock C. Inventory currently on hand D. Ordering cost E. Lead time in days
D. Ordering cost 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)
Which of the following are fixed-time period inventory models? A. The EOQ model B. The least cost method C. The Q model D. Periodic system model E. Just-in-time model
D. Periodic system model
Which of the following is considered a primary report in an MRP system? A. Planning reports B. Performance reports C. Exception reports D. Planned order schedules E. Cycle counting reports
D. Planned order schedules
Using the ABC classification system for inventory, which of the following is a true statement? A. The "C" items are of moderate dollar volume B. You should allocate about 50 % of the dollar volume to "B" items C. The "A" items are of low dollar volume D. The "A" items are of high dollar volume E. Inexpensive and low usage items are classified as "C" no matter how critical
D. The "A" items are of high dollar volume The ABC classification scheme divides inventory items into three groupings: high dollar volume (A), moderate dollar volume (B), and low dollar volume (C).
Which of the following is one of the strategic characteristics to consider when deciding how supplier relationships should be structured on the continuum between vertical integration (do not outsource) to arm's length relationships (outsource)? A.) Cost B.) Location C.) Investment D.) Coordination E.) Control
D.) Coordination
Which six sigma tool requires changing each individual variable to determine the most influential one? Cause-and-effect diagrams Pareto Charts Design of experiments (DOE) Flowcharts
Design of experiments (DOE)
What term refers to the inherent value of the product in the marketplace? Conformance Design quality Reliability Performance
Design quality
Which of the following are typical objectives of process control plans? Multiple select question. Identify new design specifications. Detect shifts in the process. Provide information about whether items are meeting design specifications. Develop new processes.
Detect shifts in the process. Provide information about whether items are meeting design specifications.
Which of the following is NOT a step in the process of developing a manufacturing cell? Determine which machines perform the same process. Physically regroup machines into cells. Group parts into families that follow a common sequence of steps. Identify dominant flow patterns for each family.
Determine which machines perform the same process.
Which of the following is NOT a step in the process of developing a manufacturing cell? Multiple choice question. Determine which machines perform the same process. Physically regroup machines into cells. Group parts into families that follow a common sequence of steps. Identify dominant flow patterns for each f
Determine which machines perform the same process.
One of the main purposes of a MRP system is which of the following? Track inventory levels Create productive capacity Decrease layers of management Develop schedules specifying when each component should be ordered or produced. Upgrade manufacturing's professionalism
Develop schedules specifying when each component should be ordered or produced. 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.
_____ inventory includes items in-transit or at a warehouse ready for shipment to the customer.
Distribution
A(n) _____ _____ _____ system is a computer system that integrates application programs from the functional areas of a firm.
E R P
Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80 and a holding cost per unit per year of $4? A. $849 B. $1,200 C. $1,889 D. $2,267 E. $2,400
E. $2,400 1,200 = Square root of (2 x 36,000 x 80/4). Number of orders per year = 36,000/1,200 = 30 x $80 = $2,400
Which of the following is not a production activity report generated by MRP? A. Exception report B. Planning report C. Performance control report D. Planned-order schedules E. Bill of materials report
E. Bill of materials report
Which of the following is an input to the master production schedule? A. Prototype products from product development B. Aggregate component schedule C. Peg reports D. Exception reports E. Forecasts of random demand from customers
E. Forecasts of random demand from customers
Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot size in which these are most nearly equal? A. Kanban B. Just-in-time system C. MRP D. Least unit cost E. Least total cost
E. Least total cost
In a typical inventory status record which of the following would you not expect to see? A. Scrap allowance B. Order quantity C. Gross requirements D. Planned-order releases E. Lost items
E. Lost items
Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? A. Planning bill of materials file B. Modular bill of materials file C. Super bill of materials file D. Exception report file E. Peg record file
E. Peg record file
When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time? A. Normal variation in shipping time B. A shortage of material at the vendor's plant causing backlogs C. An unexpected strike at the vendor's plant D. A lost order E. Redundant ordering systems
E. Redundant ordering systems When material is ordered from a vendor, delays can occur for a variety of reasons: a normal variation in shipping time, a shortage of material at the vendor's plant causing backlogs, an unexpected strike at the vendor's plant or at one of the shipping companies, a lost order, or a shipment of incorrect or defective material.
To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R? A. The product of average daily demand times a standard deviation of lead time B. A "z" value times the lead time in days C. The standard deviation of vendor lead time times the standard deviation of demand D. The product of lead time in days times the standard deviation of lead time E. The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.
E. The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.
Which of the following is not a reason to carry inventory? A. To provide a safeguard for variation in raw material delivery time B. To take advantage of economic purchase-order size C. To maintain independence of operations D. To meet variation in product demand E. To keep the stock out of the hands of competitors
E. To keep the stock out of the hands of competitors
Which of the following is not a lot sizing technique used in MRP systems? A. Lot-for-lot (L4L) B. Economic order quantity (EOQ) C. Least total cost (LTC) D. Least unit cost (LUC) E. Warehouse loading factor (WLF)
E. Warehouse loading factor (WLF)
Which is the correct equation used to calculate economic order quantity (EOQ)? EOQ= √(2HS/D) EOQ= √(2DS/H) EOQ= √(2DH/S) EOQ= √(DS/H)
EOQ= √(2DS/H)
Grocery stores would traditionally use which type of supply chain?
Efficient supply chain
Grocery stores would traditionally use which type of supply chain? Responsive supply chain Agile supply chain Efficient supply chain Risk-hedging supply chain
Efficient supply chain
The placement of which of the following is not determined by production process organization decisions? - Emergency exits - Machines - Workstations - Departments - `Workgroups
Emergency exits
Match the green-sourcing step with the correct action associated. Engage internal sourcing agents Assess the supply base Develop the sourcing strategy Implement sourcing strategy Cultivate quantitative and qualitative criteria to evaluate the sourcing process Engaging new and existing vendors Select vendors and products for each business requirement Involving individuals and groups to help set realistic green goals
Engage internal sourcing agents: Involving individuals and groups to help set realistic green goals Assess the supply base: Engaging new and existing vendors Develop the sourcing strategy: Cultivate quantitative and qualitative criteria to evaluate the sourcing process Implement sourcing strategy: Select vendors and products for each business requirement
assess the supply base
Engaging new and existing vendors
In which of the following industry types would MRP provide high benefits? Multiple select question. Engineer-to-order Make-to-order Assemble-to-stock Assemble-to-order
Engineer-to-order Assemble-to-stock Assemble-to-order
An _______ ______ ______ system is a computer system that integrate application programs from the functional areas of a firm
Enterprise resource planning
Where in a process is there an opportunity for defects? Critical steps or activities Every step or activity Final step or activity First step or activity
Every step or activity
Warranty costs and customer complaints are examples of which type of quality cost? Appraisal costs External failure costs Prevention costs Internal failure costs
External failure costs
A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.
F
A make-to-order firm will work with the customer to design the product and then make it from purchased materials, parts, and components.
F
A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.
F
Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs.
F
Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.
F
The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.
F
The essential issue in satisfying customers in the make-to-stock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.
F
The time needed to respond to a customer's order is called the customer response time.
F
Work-center layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.
F
Two common measures to evaluate supply chain efficiency are the consumer price index and the beta flow system.
FALSE
Which of the following is not considered a major work flow structure? - Work Center - Project - Fabrication - Assembly line - Continuous Flow
Fabrication
Which tool in Six Sigma projects is a structured approach to identify, estimate, prioritize, and evaluate risk of possible failures at each stage of a process? Cause-and-effect diagrams Design of experiments Failure mode and effect analysis Opportunity flow diagrams
Failure mode and effect analysis
A firm's core competency should always be considered a candidate for outsourcing to improve performance.
False
An improvement-driven reason for outsourcing is that it can increase product and service value, customer satisfaction, and shareholder value
False
Capability Sourcing refers to outsourcing the functions that they do best to trusted key partners.
False
In a MTO manufacturing process, the product volumes are usually high and the customization is also high.
False
The fixed-order quantity model has a larger average inventory because it must also protect against stock-out during the review period, T; fixed-time period model has no review period.
False
The total cost of ownership (TCO) is an estimate of the cost of an item that includes all the costs related to the procurement and use of an item, but does not include any of the costs related to disposing of the item after it is no longer useful.
False
True of False: Finished goods purchased by individuals external to the organization are considered dependent demand items.
False
True or false: A firm should consider its core competency as an activity that should be outsourced.
False
True or false: An OC curve should be shallow in the region of most interest.
False
True or false: Companies should only benchmark firms that are in the same industry to get accurate results.
False
True or false: Finished goods purchased by individuals external to the organization are considered dependent demand items.
False
True or false: ISO 9000 recognizes companies each year for outstanding quality management systems.
False
True or false: Sourcing activities remain the same regardless of what is being purchased.
False
True or false: The total work at a workstation is equal to the sum of all tasks to complete a product.
False
Using a modular bill-of-materials will complex the scheduling and control and also makes it difficult to forecast the use of different modules.
False
If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.
False Companies using the probability approach generally set the probability of not stocking out at 95 percent. This means we would carry about 1.64 standard deviations of safety stock.
The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.
False Fixed-time period model has a larger average inventory because it must also protect against stockout during the review period, T; the fixed-order quantity model has no review period.
The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.
False Fixed-time period models generate order quantities that vary from period to period, depending on the usage rates. The standard fixed-time period models assume that inventory is counted only at the time specified for review
Safety stock is not necessary in any fixed-time period system.
False Fixed-time period models generate order quantities that vary from period to period, depending on the usage rates. These generally require a higher level of safety stock than a fixed-order quantity system.
In inventory models, high holding costs tend to favor high inventory levels.
False Holding (or carrying) costs. This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels and frequent replenishment.
Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.
False Independent demand, the need for any one item is a direct result of the need for some other item, usually a higher-level item of which it is part.
In a price break model of lot sizing the lowest cost quantity is always feasible.
False Step 1. Sort the prices from lowest to highest and then, beginning with the lowest price, calculate the economic order quantity for each price level until a feasible economic order quantity is found. By feasible, we mean that the price is in the correct corresponding range. Step 2. If the first feasible economic order quantity is for the lowest price, this quantity is best and you are finished. Otherwise, calculate the total cost for the first feasible economic order quantity (you did these from lowest to highest price) and also calculate the total cost at each price break lower than the price associated with the first feasible economic order quantity. This is the lowest order quantity at which you can take advantage of the price break. The optimal Q is the one with the lowest cost.
The "sawtooth effect," named after turn-around artist Al "chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.
False The "sawtooth effect" relating Q and R in Exhibit 11.5 shows that when the inventory position drops to point R, a reorder is placed.
The average cost of inventory in the United States is 20 to 25 percent of its value.
False The average cost of inventory in the United States is 30 to 35 percent of its value.
Fixed-order quantity inventory models are "time triggered."
False The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time period models are "time triggered."
Fixed-time period inventory models are "event triggered."
False The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time period models are "time triggered."
The fixed-order quantity inventory model favors less expensive items because average inventory is lower.
False The fixed-order quantity model favors more expensive items because average inventory is lower.
Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.
False The fixed-order quantity system focuses on order quantities and reorder points. Procedurally, each time a unit is taken out of stock, the withdrawal is logged and the amount remaining in inventory is immediately compared to the reorder point. If it has dropped to this point, an order for Q items is placed. If it has not, the system remains in an idle state until the next withdrawal.
The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.
False The optimal stocking level, using marginal analysis, occurs at the point where the expected benefits derived from carrying the next unit are less than the expected costs for that unit.
One of the drivers of the direct-to-store (direct distribution) approach is the decrease in trucking industry regulation.
False What accounts for the emergence of the direct-to-store model? Global sourcing and the upstream migration of value-added logistics services are certainly primary drivers.
Shortage costs are precise and easy to measure.
False When the stock of an item is depleted, an order for that item must either wait until the stock is replenished or be canceled. There is a trade-off between carrying stock to satisfy demand and the costs resulting from stockout. This balance is sometimes difficult to obtain, because it may not be possible to estimate lost profits, the effects of lost customers, or lateness penalties.
The MRP program performs its analysis from the bottom up of the product structure trees, imploding requirements level by level.
False The MRP program performs its analysis from the top of the product structure downward, calculating requirements level by level.
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.
False The basic purpose of inventory analysis in manufacturing and stockkeeping services is to specify (1) when items should be ordered and (2) how large the order should be.
Which of the following is considered distribution inventory? Raw material inventory awaiting a machining operation Finished goods inventory in a distribution center Work-in-process inventory Finished goods at a department store waiting to be sold
Finished goods inventory in a distribution center
An assumption in a p-chart calculation is that the sample size is which of the following? Fixed Variable Static Dynamic
Fixed
What is NOT a lot sizing technique used in MRP systems?
Fixed time costs
Which of the following is not a lot sizing technique used in MRP systems? Fixed time costs Economic order quantity Lot-for-lot Least total costs
Fixed time costs
Which multiperiod inventory system is used for high-priced or critical items?
Fixed-order quantity
XYZ Company uses an inventory model where the amount requisitioned is fixed and ordering is triggered by inventory dropping to a specified level. What type of inventory system is XYZ using? Single-period Perpetual First In - First Out (FIFO) Fixed-order quantity
Fixed-order quantity
Which inventory system requires continuous monitoring of inventory levels?
Fixed-order quantity system
Which inventory system requires continuous monitoring of inventory levels? Fixed-order quantity system Fixed-time period system Single period system Time to maintain systems
Fixed-order quantity system
Which of the following is also called a periodic review system?
Fixed-time period
Which of the following is also called a periodic review system? Single-period Fixed-order quantity Perpetual Fixed-time period
Fixed-time period
What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut?
Forward buying
What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut? Forward buying Hedging Buying to forecast Risky buying
Forward buying
Which of the following highlights a dependent demand scenario?
Four tires that are needed to complete the assembly of a car
Which of the following highlights a dependent demand scenario? Gallons of milk purchased at a grocery store Smart phones purchased at a retailer Four tires that are needed to complete the assembly of a car Flowers purchased at a garden center
Four tires that are needed to complete the assembly of a car
Which of the following terms describes a closed facility into which foreign goods can be brought without being subject to the payment of normal import duties?
Free trade zone
Time fences are described as
Frozen, Slushy, or Liquid
What type of products have low profit margins, long product life, and predictable demand? Functional Stable Evolving Innovative
Functional
What type of products include staples that people buy in a wide range of retail outlets? Unique Innovative Functional Common
Functional
Which of the following is not an organizationally driven reason to outsource?
Generate access to new markets
Which of the following is not an organizationally driven reason to outsource? Increase product and service value Generate access to new markets Improve effectiveness Increase flexibility
Generate access to new markets
ISO documents provide detailed requirements for meeting the standards and describing the tools used for improving quality in the firm. These documents are: Specific to a particular industry. Generic, but do not apply to manufacturing. Generic and applicable to any organization. Generic, but do not apply to services.
Generic and applicable to any organization.
What is part of an MRP record?
Gross Requirements, Net Requirements, & Planned Order Receipts
Which of the following is/are a part of an MRP record? Multiple select question. Scheduled repairs Raw material receipts Gross requirements Net requirements Planned order receipts
Gross requirements Net requirements Planned order receipts
Which of the following people was not considered one of the quality gurus? Joseph Juran Henry Ford W. Edwards Deming Philip Crosby
Henry Ford
A major drawback with lot-for-lot sizing is? Low investment costs High capital investments High setup costs Low setup costs
High setup costs
Which are characteristics of a continuous process line? Multiple select question. Highly automated machinery is used. Product is moved from one workstation to the next workstation in a sequence of events. Shutdowns can be expensive. May operate 24 hours a day.
Highly automated machinery is used. Shutdowns can be expensive. May operate 24 hours a day.
Match the inventory costs with their definition. Instructions Holding costs Setup costs Ordering costs Shortage costs Costs associated with initiating production of a product. Costs incurred when a product is not available when ordered by a customer. Costs of shortage, loss, handling, insurance, obsolescence. Costs associated with placing an order with a supplier.
Holding costs: Costs of shortage, loss, handling, insurance, obsolescence. Setup costs: Costs associated with initiating production of a product. Ordering costs: Costs associated with placing an order with a supplier. Shortage costs: Costs incurred when a product is not available when ordered by a customer.
In which step of the DMAIC cycle would you identify ways to remove the cause of defects and confirm key variables? Measure Improve Control Analyze
Improve
Which of the following is an organizationally-driven reason for outsourcing? A.) Improve effectiveness by focusing on what the firm does best B.) Turn fixed costs into variable costs C.) Reduce costs through lowered cost structure and increased flexibility D.) Improve risk management Improve credibility and image by associating with superior providers E.) Improve effectiveness by focusing on what the firm does best
Improve effectiveness by focusing on what the firm does best
Identify the true statements about assembly-line and continuous process layouts. Multiple select question. In a continuous process, a product moves continuously through the process. In an assembly line, the stations are completely independent of each other. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps
In a continuous process, a product moves continuously through the process. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps.
Which is true in regards to a request for proposal and a reverse auction?
In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.
Which is true in regards to a request for proposal and a reverse auction? Both allow the seller to have the majority of control in deciding on the price of goods or services. A reverse auction allows the buyer to inform the seller the price they are willing to pay for services. Both allow the buyer to have the majority of control in deciding on the price of goods or services. In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.
In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.
In making any decision that affects the size of inventory, what are the four categories of cost that must be considered?
In making any decision that affects inventory size, the following costs must be considered. 1. Holding (or carrying) costs. 2. Setup (or production change) costs. 3. Ordering costs. 4. Shortage costs.
A bill-of-materials that uses differences in alignment to indicate the order of assembly of components is using which type of structure?
Indented Structure
A bill-of-materials that uses differences in alignment to indicate the order of assembly of components is using which type of structure? Uneven structure Duplicate structure Component structure Indented structure
Indented structure
Mastertech Furniture Company makes chairs. When Walmart orders finished chairs from Mastertech, it creates what type of demand on inventory?
Independent
What is the term for there being no relationship between demands for various items?
Independent demand In independent demand, the demands for various items are unrelated to each other.
What type of products have a life cycle of just a few months? Innovative Cyclical Functional Seasonal
Innovative
Which of the following is an example of a variable? Inspecting a car's paint finish for blemishes Inspecting a roll of fabric for snags Inspecting a piece of lumber for knotholes Inspecting the diameter of holes drilled into a pipe
Inspecting the diameter of holes drilled into a pipe
Which of the following is not an example of when to use a c-chart? Inspecting a piece of lumber for knotholes Inspecting the diameter of holes drilled into a pipe Inspecting a roll of fabric for snags Inspecting a car's paint finish for blemishes
Inspecting the diameter of holes drilled into a pipe
During which step of the green sourcing process does the actual procurement process begin?
Institutionalize the sourcing strategy
During which step of the green sourcing process does the actual procurement process begin? Implement sourcing strategy Engage sourcing agent Institutionalize the sourcing strategy Develop the sourcing strategy
Institutionalize the sourcing strategy
What are the sources of demand for products in a material requirements planning system?
Inter-department transactions, customer orders from sales personnel, and orders for specific components needed in repair
Which of the following are sources of demand for products in a material requirements planning system? Multiple select question. Inter-department transactions. Customer orders that have been canceled. Customer orders from sales personnel. The master production schedule.
Inter-department transactions. Customer orders from sales personnel.
Which type of quality cost deals with scrap, rework and repair? Prevention costs Appraisal costs Internal failure costs External failure costs
Internal failure costs
____ is the stock of any item or resource used in an organization.
Inventory
_____ is the stock of any item or resource used in an organization.
Inventory
_____ turn is the ratio of costs of goods sold to average inventory value.
Inventory
Little's law relates inventory, throughput rate, and flow time as Inventory = Throughput rate x Flow time Inventory x Throughput rate = Flow time Flow time = Inventory + Throughput rate Inventory = Throughput rate + Flow time
Inventory = Throughput rate x Flow time
An EOQ lot sizing technique will try to minimize the sum of which of the following costs given a fairly constant demand
Inventory holding and setup
Which of the following is influenced by the customer order decoupling point? Multiple select question. Supplier base Quality system Inventory investment Lead time
Inventory investment Lead time
A material requirements planning system interfaces with the master production schedule, bill-of-materials file and ________ _______ ____
Inventory records file
When changes occur because of stock receipts and disbursements, scrap losses, wrong parts and canceled orders, the real-time file capturing these changes is called the:
Inventory transactions file
Engage internal sourcing agents
Involving individuals and groups to help set realistic green goals
The inventory records file contains an _____ ______ data segment that contains a detailed description of the item, lead time information, safety stock levels and other records
Item master
If an end item is ________ or _________, the master production schedule may include major sub-assemblies and/or complex components
Large or Expensive
the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule.
Least total cost
The ______ ____ ____ lot sizing technique is a dynamic approach that adds ordering and inventory carrying costs for each trial lot size, divides the costs by the number of units, and chooses the lot size with the lowest unit cost
Least unit cost
When a service is being provided, who is typically responsible for ensuring quality at the source? Manufacturing manager Service technician Location operations manager Customer
Location operations manager
What term refers to the management functions that support the complete cycle of material flow?
Logistics
What term refers to the management functions that support the complete cycle of material flow? Logistics Supply chain Purchasing Transportation
Logistics
Which of the following is not a broad cost category in total cost of ownership? Logistics Ownership Post-ownership Acquisition
Logistics
The framework used to describe logistics processes is which of the following?
Logistics-system design matrix
______________ are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. Lot sizes Least total cost Demand numbers Economic order quantity
Lot sizes
Setting planned orders to match the net requirements exactly is what type of lot sizing technique? EOQ Least total costs Least unit costs Lot-for-lot
Lot-for-lot
If the percentage of defectives in acceptance sampling is greater than a specified amount, it is termed with which of the following? UCL Acceptable LCL Low quality
Low quality
Which of the following is true about MRP? Multiple select question. MRP is not used for dependent demand items. MRP is used to determine the number of parts, components, and other materials needed to produce a product. MRP is the highest level of planning in most organizations. MRP is an acronym for Material Requirements Planning.
MRP is used to determine the number of parts, components, and other materials needed to produce a product. MRP is an acronym for Material Requirements Planning.
Which of these acronyms are part of Ch 6 Manufacturing Processes (check all that apply) MTO ETO WIP RBI BEP
MTO ETO WIP BEP
Match the advantages of inventory with their definitions. Maintain independence of operations Meet variation in product demand Take advantage of economic purchase order size Accommodate variability in raw material delivery time Provide a buffer to absorb unexpected shortages or disruptions from vendors Acts as a buffer to absorb unexpected periods of high demand Order larger quantities to reduce shipping, receiving, and clerical costs Allow the work center flexibility to work without undue influence from other work centers
Maintain independence of operations: Allow the work center flexibility to work without undue influence from other work centers Meet variation in product demand: Acts as a buffer to absorb unexpected periods of high demand Take advantage of economic purchase order size: Order larger quantities to reduce shipping, receiving, and clerical costs Accommodate variability in raw material delivery time: Provide a buffer to absorb unexpected shortages or disruptions from vendors
According to the inventory control system matrix, if a company has highly independent products and high transaction costs, it is likely to deploy what type inventory control process? Rate-based synchronous systems Materials requirements planning Reorder point Manual two-bin
Manual two-bin
Which layout format groups machines to work on products that have similar processing requirements?
Manufacturing cell
Which layout format groups machines to work on products that have similar processing requirements? Manufacturing cell Project layout Assembly line Workcenter
Manufacturing cell
Which layout format groups machines to work on products that have similar processing requirements? Project layout Workcenter Assembly line Manufacturing cell
Manufacturing cell
Expenditures related to achieving product or service quality include all of the following except: Appraisal costs Manufacturing costs Failure costs Prevention costs
Manufacturing costs
Which statement is true regarding differences between service and manufacturing organizations? Manufacturing organizations must plan and hold inventory. Service organizations produce tangible goods. Service organizations have higher inventory costs.
Manufacturing organizations must plan and hold inventory.
Which are characteristics of a continuous process line? Multiple select question. May operate 24 hours a day. Product is moved from one workstation to the next workstation in a sequence of events. Highly automated machinery is used. Shutdowns can be expensive.
May operate 24 hours a day. Highly automated machinery is used. Shutdowns can be expensive.
MRP systems seek to achieve which of the following? Minimize lot sizes Determine the number of dependent demand items needed Relieve capacity bottlenecks Provide a yardstick for future improvements Improve on JIT methods
Minimize lot sizes correct Determine the number of dependent demand items needed Relieve capacity bottlenecks Provide a yardstick for future improvements Improve on JIT methods 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. MRP is based on dependent demand. Dependent demand is caused by the demand for a higher-level item.
An item that can be produced and stocked as a subassembly often uses a ______ bit-of-materials for planning
Modular
After finding gross requirements, the next step in the MRP explosion process references inventory on hand and scheduled orders to calculate _____ requirements
Net
A ___ requirement is the amount needed when the projected available balance plus the scheduled receipts in a period are not sufficient to cover the ____ requirements
Net, gross
number of work stations needed formula
Nt = sum of task time (t) / cycle time
Identify the true statements about assembly-line and continuous process layouts. Multiple select question. In an assembly line, the stations are completely independent of each other. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps. In a continuous process, a product moves continuously through the process.
Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps. In a continuous process, a product moves continuously through the process.
When safety stock is needed, what is reduced by the safety stock? Projected available balance Forecast for last period On-hand balance Demand from sales
On-hand balance
The total cost of ownership includes: 1. Procurement costs 2. Disposal costs 3. Engineering design costs Only 1 and 2 Only 2 and 3 Only 1 and 3 1, 2, and 3
Only 1 and 2
Which of the following is considered in green sourcing? 1. Using recyclable materials 2. Waste reduction 3. Increase usage Only 1 and 3 1, 2, and 3 Only 1 and 2 Only 2 and 3
Only 1 and 2
The graphical display of the probability of accepting lots with varying percentages of defects is termed? Lot tolerance percent defective Operating characteristic curves P-chart and C-chart Acceptance sampling
Operating characteristic curves
Which costs are not part of the Total Cost of Ownership framework? Taxes Opportunity Costs Energy Costs Finance Costs Disposal Costs
Opportunity Costs
In Fixed-Order Quantity Systems, the amount of inventory that minimizes total costs is called the _________ , ___________ , ____________.
Optimal, order, quantity
Lot sizes are the part quantities issued in the planned order receipt and planned _____ _______ sections of an MRP schedule
Order Release
What term describes moving some of a firm's activities and decisions to outside providers? Production In-sourcing Benchmarking Outsourcing
Outsourcing
Which cost of ownership includes maintenance and ergonomic factors? Post-ownership Ownership These are not part of TCO Acquisition
Ownership
Which of the following control charts must use a sample large enough to allow counting of the attribute? C-chart Range chart Mean chart P-chart
P-chart
Which analytical tool of Six Sigma breaks down a problem into the relative contributions of its components? Run charts Control charts Pareto charts Flow charts
Pareto charts
Which of the following is a form of inventory? Multiple select question. Parts waiting to be assembled Finished products held in a warehouse Raw material held in a warehouse Money owed to a firm by its customers
Parts waiting to be assembled Finished products held in a warehouse Raw material held in a warehouse
The file created by retracing a material requirement upward in the product structure to identify each parent item that created the demand is called a _____ record
Peg
Brand name recognition is an example of which dimension of quality? Features Serviceability Reliability/durability Perceived quality
Perceived quality
Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? Planning bill of materials file Modular bill of materials file Super bill of materials file Exception report file Peg record file
Planning bill of materials file Modular bill of materials file Super bill of materials file Exception report file correct Peg record file The MRP program allows the creation of a peg record file either separately or as part of the inventory record file. Pegging requirements allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand.
Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely using to arrive at this decision?
Price break
The bill-of-material file is also known as
Product structure file and Product tree
Which of the following is not of the criteria that influence manufacturing and warehouse locations planning decisions?
Production Volume
In which production system does the product remain in one place while resources (such as workers or equipment) travel to the product when needed? Workcenter layout Project layout Assembly line Cellular layout
Project layout
In which production system does the product remain in one place while resources (such as workers or equipment) travel to the product when needed? Multiple choice question. Assembly line Project layout Cellular layout
Project layout
_____________ techniques are typically used to manage production processes that follow a project layout structure. Made-to-stock Lean manufacturing Project management Bulk inventory
Project management
Projected balance, the amount of inventory expected at the end of a period, is calculated using which equation? Projected available balance = sum of on-hand inventory + gross requirements - scheduled receipts + planned orders Projected available balance = sum of on-hand inventory + gross requirements - scheduled receipts - planned orders Projected available balance = sum of on-hand inventory + gross requirements + scheduled receipts - planned orders Projected available balance = sum of on-hand inventory - gross requirements + scheduled receipts + planned orders
Projected available balance = sum of on-hand inventory - gross requirements + scheduled receipts + planned orders
Which of the following is a quality management standard developed specifically for the automobile industry? QS-9000 ISO 9000 ISO 140001 TL 9000
QS-9000
Which of the following is a plot of the average of the range within each sample? P chart C chart R-chart XX-chart
R-chart
Which of the following charts is used when the measure for the sample is weight, volume, number of inches or other variable measurements? Multiple select question. R-chart P-chart XX-chart C-chart
R-chart XX-chart
Which of the following is not a step in the process to balance an assembly line? Calculate the efficiency of the balance. Randomly assign tasks to workstations. Determine the theoretical number of workstations. Determine the required workstation cycle time.
Randomly assign tasks to workstations.
Which of the following is defined as the difference between the highest and lowest numbers in a sample? Range Standard deviation Mode Median
Range
The Bullwhip Effect can be prevented if companies all along the value stream: Always buy in bulk at reduced prices Replenish stock with smaller volumes more frequently Coordinate and communicate orders and demand forecasts Avoid placing orders
Replenish stock with smaller volumes more frequently. Coordinate and communicate orders and demand forecasts.
Which type of supplier relationship should be used when there is a standardized interface between adjacent tasks? Required coordinated Intellectual property Vertical integration Strategic control
Required coordinated
A product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain? Agile Efficient Responsive Risk-hedging
Responsive
The first step in the MRP explosion process is? Retrieve the gross requirements for end items from the master schedule. Place part orders for net requirements. Calculate the lead times for all products that have been schedule on the master schedule. Identify the inventory on hand for all parts.
Retrieve the gross requirements for end items from the master schedule.
What is used to periodically check that a process is in statistical control? Scrap parts Sampling The process is only measured in the beginning 100 percent inspection
Sampling
In a typical inventory status record which of the following would you not expect to see? Scrap allowance Order quantity Gross requirements Planned-order releases Lost items
Scrap allowance Order quantity Gross requirements Planned-order releases correct 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.
An EOQ lot sizing technique will try to balance the sum of which of the following costs given a fairly constant demand? Multiple select question. Marketing Transportation Setup Holding costs
Setup Holding costs
Logistics involves which of the following management functions? Multiple select question. Shipping of final goods Purchase of production materials Planning of employee work hours Distribution of finished product Planning of work-in-process
Shipping of final goods Purchase of production materials Distribution of finished product Planning of work-in-process
Which of the following is not a common constraint regarding vendor managed inventory? Required service level Maximum inventory level Billing transaction process Shipping terms
Shipping terms
Shorter cycle time and better risk management are ___________ reasons to outsource
Shorter cycle time and better risk management
If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model?
Single-period
If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model? Single-period LIFO Fixed-order quantity Periodic
Single-period
Southern Printing Corp. produces high-end booklets for university graduations listing all the participating students at a given university. What inventory model would Southern use to optimize the amount of booklet inventory produced for each graduation?
Single-period
What term refers to the philosophy and methods that companies use to eliminate defects in their products and processes? DPMO Design quality Quality Six Sigma
Six Sigma
Which type of time fence allows for changes to a specific product so long as parts are available?
Slushy
Which type of time fence allows for changes to a specific product so long as parts are available? Slushy Frozen Scheduled Liquid
Slushy
What is the preferable sample size in process control involving the measurement of variables? Large Unequal Small Variable
Small
If the process mean shifts away from the nominal value (middle) toward either the higher or lower specification, the capability index will shift which direction? Larger Smaller Median Average
Smaller
Which of the following describes the step where parts are procured from one or more suppliers? Sourcing Delivering Decoupling Making
Sourcing
Place the steps associated with the production process into order (from first to last). Sourcing Making Delivering
Sourcing Making Delivering
Warehouse Design
Special consolidation warehoused are used when shipments from various sources are pulled together and combined into larger shipments with a common destination. This improves the efficiency of the entire system. *Cross-docking*-is an approach used in these consolidation warehouses, where, rather than making larger shipments, large shipments are broken down into small shipments for local delivery in an area. -Retailers receive shipments from many suppliers in their regional warehouses and immediately sort those shipments for delivery to individual stores by using a cross-docking systems coordination by computerized control systems. This results in a minimal amount of inventory being carried in the warehouses. *Hub-and-Spoke Systems*-Systems that combine the idea of consolidation and of cross-docking. -Here the warehouse is referred to as a "hub" and its sole purpose is sorting goods. -Incoming goods are sorted immediately to consolidation areas, where each area is designated for shipment to a specific location. Hubs are located in strategic locations near the geographic center of the region they are to serve to minimize the distance a good must travel.
Which of the following activities should not be outsourced?
Specialized research and development Immature technology Complex computer software Activities that have lots back-and-forth exchange of information
Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available? Bullwhip effect Specificity Uniqueness Outsourcing
Specificity
When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? - Split the task between two workstations - Use a more skilled worker - Speed up the assembly line transfer mechanism - Upgrade the equipment - Assign a roaming helper to support the line
Speed up the assembly line transfer mechanism
In statistical quality control (SQC) terminology, sigma is often called which of the following? Standard deviation Median Mode Sample average
Standard deviation
Which of the following terms describes testing a random sample of output from a process to determine whether the process is producing items within a preselected range? Statistical attribute control Statistical process control Process capability index Process tolerance limits
Statistical process control
Which type of activities are a key source of competitive advantage? Outsourced Noncritical Internal Strategic
Strategic
What term describes the development and management of supplier relationships?
Strategic sourcing
What term describes the development and management of supplier relationships? Bullwhip effect Strategic sourcing Spot purchasing Vendor managed inventory
Strategic sourcing
Total average value of inventory
Sum of raw material, work-in-process, and finished goods inventory
A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of material?
Super
A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of-material? Partial bill-of-material Modular bill-of-material Deluxe bill-of-material Super bill-of-material
Super bill-of-material
What is NOT a part of the material requirements planning system?
Supplier Delivery Schedule
Which of the following is NOT a part of the material requirements planning system? Master production schedule Supplier delivery schedule Bill-of-materials Inventory records
Supplier delivery schedule
A general-purpose machine is less capable than a special-purpose machine in certain tasks but can perform a broader variety of tasks.
T
Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.
T
The closer the customer is to the customer order decoupling point, the more quickly the customer receives the product.
T
The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.
T
The product-process matrix shows the relationship between process structures and product volume and variety characteristics.
T
The term "assembly line" refers to progressive assembly linked by some material handling device.
T
The volume requirements for the product are one determinant of the choice of which process structure to select.
T
Which of the following is the correct total annual cost equation?
TC = DC + (D/Q)s + (Q/2)H
Which of the following is the correct total annual cost equation?
TC = DC + D/Q*S+Q/2*H
Which of the following is a quality management standard developed specifically for the telecommunications industry? ISO 140001 TL 9000 QS-9000 ISO 9000
TL 9000
The total cost of ownership (TCO) can be categorized into three areas: acquisition costs, ownership costs, and post-ownership costs.
TRUE
ISO, international standards for quality management and assurance, was developed by? International Support of Standards The International Organization of Standardization International Suppliers Organization Kaoru Ishikawa
The International Organization of Standardization
Logistics
The art and science of obtaining, producing, and distributing material and product in the the proper place and in the proper quantities.
When placing an order for a single period, which of the following is considered? Multiple select question. The cost of transportation The cost of overestimating demand The cost of placing an order The cost of underestimating demand
The cost of overestimating demand The cost of underestimating demand
Issues in Facility Location
The problem of facility location is faced by both new and existing businesses, and it's solution is critical to a company's eventual success. A important element in designing a company's supply chain is its location of it's facilities. Manufacturing and service companies' location decisions are guided by a variety of criteria defined by competitive imperatives. 1) Proximity to Customers-makes rapid delivery easier 2) Business Climate-can include presence of similar-sized businesses, businesses in the same industry, and other foreign companies 3) Total Costs-object is to minimize overall cost 4) Infrastructure-adequate road, rail, air, and sea transportation along with energy and telecommunications 5) Quality of Labor-educational and skill levels must match needs 6) Suppliers-proximity of important suppliers supports lean production 7) Other Facilities-location of other facilities can influence a location decision 8) *Free Trade Zones*-is typically a closed facility (under the supervision of the customs department) into which foreign goods can be brought without being subject to the normal customs requirements. There are about 260 such free trade zones in the US today. Such specialized also exist in other countries. Manufacturers in free trade zones can use imported components used in production of the final product and delay payment of customs duties until the product is shipped into the host country. 9) Political Risk-risks in both the country of location and the host country influence the decision 10) Government Barriers-barriers in many countries are being removed 11) *Trading Blocs*-is a group of countries that agree on a set of special arrangements governing the trading of goods between member countries. Companies may locate in places affected by the agreement to take advantage of new market opportunities. The Central America Free Trade Agreement (CAFTA) is one of the new trading blocs in our hemisphere. Such agreements influence location decisions, both within and outside trading bloc countries. Firms typically locate, relocate, within a bloc to take advantage of new market opportunities or lower total costs afforded by the trading agreement. Other companies ( those outside the trading bloc countries) decide on locations within the bloc so as not to be disqualified from competing in the new market. 12) Environmental Regulation-these impact a certain industry in a given location and must be included in the decision 13) Host Community- host community's interest is part of the evaluation process 14) Competitive Advantage-the location should provide the company with a competitive advantage
Transportation Modes
There are 6 widely recognized modes of transportation: 1) Highway (Truck): Few products are moved without some HW transportation. Offers great flexibility for moving goods to any location not separated by water. Size of the product, weight, liquid or bulk can all be accommodated with this mode. 2) Water (Ship): Very high capacity and low cost. Transit times are slow, and larger areas of the world are not directly accessible to water carriers. This mode is especially useful for items in bulk such as oil, coal, and chemical products. 3) Air: Fast, but EXPENSIVE. Small, light, and expensive items are applicable for this mode of transportation. 4) Rail (Train): Fairly low-cost, but transit times can be long and subject to variability. The suitability of rail can very depending on the rail infrastructure. European infrastructure is highly developed, making this an attractive alternative compared to trucks. While in the U.S. the infrastructure has declined over the past 50 years, making it an less attractive alternative. 5) Pipeline: Highly specialized and limited to gasses, liquids, and solids in slurry forms. No packaging is needed so the costs per mile are low. The initial cost to build a pipeline are very high. 6) Hand Delivery: This is the last step in many supply chains. Getting the product in the customer's hands is often a slow and costly activity due to the high labor content. -Few companies use one single mode of transportation. Multi-modal solutions are the norm, and finding the correct multi-mode solutions can be a significant problem.
A company that manages all or part of another company's product delivery operations is known as which of the following?
Third-party logistics company
Which of the following is/are issues a master scheduler must consider? Multiple select question. Trade-off manufacturing, engineering and marketing conflicts. Be involved with customer order promising. The firms financing plans. Never lose sight of the aggregate plan. Adjust the raw material supply schedule as needed.
Trade-off manufacturing, engineering and marketing conflicts. Be involved with customer order promising. Never lose sight of the aggregate plan.
Which of the following terms describes a group of countries that agree on a set of special arrangements governing the trading of goods between member countries?
Trading bloc
Which of the following is not a cost associated with inventory management?
Transportation costs
Which of the following is not a cost associated with inventory management? Set up costs Transportation costs Shortage costs Holding costs
Transportation costs
A special linear programming method that is useful for solving problems involving moving products from several sources to several destinations is known as which of the following?
Transportation method
A BOM file is often called a product structure file or product tree because it shows how a product is put together.
True
A fixed-order quantity model is triggered by inventory dropping to a specified level.
True
A process that places all identical parts at the same level in the bills-of-materials simplifies computations. This process is known as low level coding.
True
An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.
True
Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.
True
Fixed-order quantity inventory systems determine the reorder point, R and the order quantity, Q values.
True
Fixed-time period inventory models are "time triggered."
True
Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.
True
If the cost to change from producing one product to producing another were zero the lot size would be very small.
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.
True
In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price.
True
In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
True
In the fixed-time period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.
True
Inventory turn values that are considered good differ by industry and the type of products being handled
True
Logistics is a term that refers to the management functions that support the complete cycle of material flow, from the purchase and internal control of production materials; to the planning and control of work-in-process; to the purchasing, shipping, and distribution of the finished product.
True
MRP require a very accurate BOM to successfully plan material requirements.
True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.
True
One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.
True
One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.
True
One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.
True
One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.
True
One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.
True
One of the drivers of the direct-to-store (direct distribution) approach is the upstream migration of value-added logistics services.
True
Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.
True
Price-break models deal with the fact that the selling price of an item varies with the order size.
True
Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.
True
Safety stock can be defined as the amount of inventory carried in addition to the expected demand.
True
Savings from reduced inventory results in increased profit.
True
Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.
True
The "sawtooth effect," is named after the jagged shape of the graph of inventory levels over time.
True
The Master Production Schedule (MPS) is a disaggregation of the aggregate plan that looks ahead a set number of weeks and is often fixed or "frozen" in the short term.
True
The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.
True
The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.
True
The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.
True
The key difference between a fixed-order quantity inventory model, where demand is known and one where demand is uncertain is in computing the reorder point.
True
True or False: A least total cost lot sizing technique is a dynamic approach that continually looks for an optimal lot size where carrying costs and ordering costs are close to equal
True
True or false: Innovative products have higher profit margins than functional products.
True
True or false: Manufacturing processes are used to make tangible goods.
True
True or false: Services typically have multiple sites to maintain close contact with customer.
True
True or false: Special consolidation warehouses are used when shipments from various sources are pulled together and combined into larger shipments with a common destination.
True
True or false: The average aggregate inventory value is valued at cost.
True
True or false: The economic order quantity depends upon three factors: the annual demand, the setup cost, and the annual holding cost of one unit of inventory.
True
True or false: The effect of setting specification limits on product design allows businesses to monitor processes against these limits.
True
True or false: The longest required task time often defines the shortest possible workstation cycle time for production.
True
True or false: The order quantity in a fixed-order quantity model is the same, regardless if demand is known or uncertain.
True
True or false: The second step in the price-break model may not be necessary if the first feasible economic order quantity is the lowest price.
True
True or false: Total quality management requires companies to deal with all dimensions of products and services that are important to the customer.
True
True or false: Typically, there is a trade-off where quicker response to customer demand comes at the expense of greater inventory investment.
True
True or false: Weeks of supply is the preferred measure of supply chain efficiency when distribution inventory is dominant.
True
True or false: When a vendor makes routine visits to a firm to take orders, a fixed-time period model may be a good choice.
True
True or false: When analyzing a price-break model, it is possible that the economic order quantity that is calculated is either higher or lower than the range to which the price corresponds.
True
True or false: When safety stock is expected to be on-hand, the average inventory value calculation is (Q/2 + SS)C.
True
True or false: When safety stock is expected to be on-hand, the average inventory value calculation is (Q/2+SS)*C.
True
Using the probability approach we assume that the demand over a period of time is normally distributed.
True
When stocked items are sold, the optimal inventory decision using marginal analysis is to stock that quantity where the probable profit from the sale or use of the last unit is equal to or greater than the probable losses if the last unit remains unsold.
True
You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.
True
A _______________ line layout can increase operator access and improve workstation time. line layout can increase operator access and improve workstation time.
U-shaped
_______________ and ________________ specification limits define acceptable parameters and the target value of a process.
Upper Lower
Which of the following is not a way to reduce the required time for a task? Work overtime Share the task among several workstations Use a less skilled worker Product redesign
Use a less skilled worker
Which of the following is not a type of time fence described in the text? Variable Frozen Slushy Liquid
Variable
_______________ are characteristics that can be measured numerically, such as weight, length, or diameter.
Variables
What do Six Sigma programs seek to reduce in processes? Standardization Redundancy Excess Variation
Variation
When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used?
Vendor managed inventory
When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used? Electronic catalog Reverse auction Spot purchase Vendor managed inventory
Vendor managed inventory
Which of the following is one of the dimensions depicted on a product-process matrix? Service Time Cost Volume
Volume
Which of the following represents the axes of the Logistics-System Design Matrix?
Volume Cost Speed of delivery
Which two product characteristics help determine the appropriate manufacturing process Volume demanded (high or low) Specifications (detailed or simple) Customization (unique or standard) Value of Finished Goods
Volume demanded (high or low) Customization (unique or standard)
According to the logistics-system design matrix, which of the following modes of transporting products has the highest capacity and a very low cost?
Water
Which of the following is a policy and control of an inventory system? When stock should be replenished The payment terms associated with buying the stock from vendors Who should order the stock How one will finance the stock
When stock should be replenished
Which of the following is/are manufacturing inventory items?
Work-in-process Finished products Component parts in manufacturing
Which of the following is a basic type of process structure? - Process matrix - Manual assembly - Process flow diagram - Product matrix - Workcenter
Workcenter
Which work flow structure is appropriate for a process with great flexibility to produce a variety of products? Workcenter Continuous process Manufacturing cell Project layout
Workcenter
When larger samples are needed for finer variations in a process, which chart would be better suited? C-chart XX P-chart R-chart
X
Which two control charts are typically used together? Multiple select question. XX-chart C-chart P-chart R-chart
XX-chart R-chart
Are the inventory turnover and weeks of supply measures related to one another? Yes, they can be added together for a true result. Yes, one is a multiple of the other. No, they are not related. Yes, they are mathematically inverses.
Yes, they are mathematically inverses.
manufacturing cell
a dedicated area where products that are similar in processing requirements are produced -formed by allocating dissimilar machines to cells that are designed to work on similar products
lean manufacturing
a means of achieving high levels of customer service with minimal inventory investment
manufacturing process flow design
a method to evaluate the specific processes that material follow as they move through the plant -focus should be on the identification of activities that can be minimized or eliminated
Least unit cost provides _________ as an advantage when taking variable ordering costs and setup costs into account. a shorter computation a simple return on investment a quick reference a more complete analysis
a more complete analysis
Outside of determining parts, components, and materials, MRP provides independent demand for products being produced. a schedule for when each of these should be produced or ordered. a forecast for the next 6 months. the total plan for all capital investments needed.
a schedule for when each of these should be produced or ordered.
Which of the following are inventory holding costs? a) storage facility lease b) opportunity cost of capital c) requisition d) I.T. network lease e) insurance
a) storage facility lease and b) opportunity cost of capital and e) insurance
Which of the following highlights a dependent demand scenario? a) the four tires needed to complete a car b) flowers purchased at a garden center c) smart phones purchased at a retailer d) gallons of milk purchased at a grocery store
a) the four tires needed to complete a car
Problem 6-17 Some tasks and the order in which they must be performed according to their assembly requirements are shown in the following table. These are to be combined into workstations to create an assembly line. The assembly line operates 13 hours per day. The output requirement is 1,800 units per day. (TASK) (b/4) (TIME) A — 20 G C 13 B A 7 H D 8 C A 14 I E 7 D B 16 J F, G 9 E B 15 K H, I 6 F C 14 L J, K 4 a. What is the workstation cycle time? b. balance the line using the longest task time based on the 1,800-unit forecast, stating which tasks would be done in each workstation. c. What is the efficiency of your line balance? (Round your answer to 1 decimal place.) d. After production was started, Marketing realized that they understated demand and must increase output to 1,900 units. There are two options: reduce cycle time or work overtime. Please identify the following:
a. 26 seconds per unit b. c. 85.3 d. reduce cycle time to 25 (13 x 3600)/1900 = 25 overtime 43 minutes ((1900-1800) x 26 sec) = 2600 sec / 60 sec = 43 minutes
Firms invest in lean manufacturing programs in order to assemble products after a customer has placed an order. ensure that products are highly customized. achieve high customer service with minimum levels of inventory investment. design products after a customer has placed an order.
achieve high customer service with minimum levels of inventory investment.
Workcenters with large amounts of interdepartmental traffic are often placed adjacent to each other. far away from each other. in areas where few machines are located. near exits.
adjacent to each other.
Workcenters with large amounts of interdepartmental traffic are often placed Multiple choice question. adjacent to each other. in areas where few machines are located. far away from each other. near exits.
adjacent to each other.
Which type of supply chain strategy is aimed at being responsive and flexible to customer needs and hedges against pooled inventory and other capacity resources?
agile supply chains
A flexible line layout may improve assembly-line balance by decreasing operator interactions. placing workstations in a straight line layout. increasing task times. allowing work sharing among employees.
allowing work sharing among employees.
assembly drawing
an exploded view of the product showing its component parts
An _______________ _______________ arranges processes according to the sequence of steps by which the product is manufactured. arranges processes according to the sequence of steps by which the product is manufactured.
assembly line
An _____ arranges processes according to the sequence of steps by which the product is manufactured.
assembly line
What is the first step in the process for green sourcing?
assess the opportunity
If a company has more units in the master production schedule than firm customer orders, the residual is called?
available to promise
Which of the following is considered distribution inventory? a) work-in-process inventory b) finished goods inventory in a distribution center c) inventory at a vendor's facility awaiting shipment d) raw material inventory awaiting a machining operation
b) finished goods inventory in a distribution center
Which inventory system requires continuous monitoring of inventory levels? a) fixed-time period system b) fixed-order quantity system c) single period system
b) fixed-order quantity system
Which of the following is also called a periodic review system? a) perpetual b) fixed-time period c) fixed-order quantity d) single-period
b) fixed-time period
If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model? a) fixed-order quantity b) single-period c) periodic d) LIFO
b) single-period
When calculating the reorder point for a fixed-quantity model with safety stock, the value "z" represents a) the standard deviation of demand during the lead time b) the number of standard deviations associated with a given service probability c) the expected number of stockouts each period d) the average daily demand
b) the number of standard deviations associated with a given service probability
An assembly line is to operate eight hours per day with a desired output of 300 units per day. The following table contains information on this product's task times and precedence relationships: TASK TIME b/4 A 50 — B 40 A C 45 A D 25 A E 60 B, C F 35 C, D G 25 E, F H 50 G b. What is the required workstation cycle time to meet the desired output rate? (Round your answer to the nearest whole number.) c. Balance this line using the longest task time. (Leave no cells blank - be certain to enter "0" wherever required.) d. What is the efficiency of your line balance, assuming it is running at the cycle time determined in part b? (Round your answer to 1 decimal place.)
b. Workstation cycle time 96 correct seconds per unit c. Work Station Task Idle Time I A-C 1 II B-D 31 III E-F 1 IV G-H 21 d. Efficiency 85.9 %
MRP systems tend to work best in companies where products are made in _____ using the same productive equipment.
batches
MRP systems tend to work best in companies where products are made in_____________, using the same productive equipment.
batches
Stock carried to absorb variation in demand is known as ____ stock.
buffer
Which of the following terms describes the phenomenon of variability magnification as one moves upstream in the supply chain from customer to producer
bullwhip effect
which describes the phenomenon of variability magnification as one moves from customer to producer? -continuous replenishment -outsourcing -bullwhip effect -normal demand
bullwhip effect
Which letter denotes the maximum number of defective items that can be found in the sample before the lot is rejected? a c b n
c
Which category of inventory is managed most closely by the firm? a) all items are managed the same b) "C" items c) "A" items d) no items
c) "A" items
Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely using to arrive at this decision? a) cycle count b) inventory turns c) price break d) time-period
c) price break
When price varies the order size, the first step in the analysis process is to a) determine if the extreme prices are acceptable to management b) choose the highest price level and determine if the EOQ is feasible c) sort the prices from highest to lowest and calculate the EOQ for each price level
c) sort the prices from highest to lowest and calculate the EOQ for each price level
When placing an order for a single period, which of the following is considered? a) the cost of transportation b) the cost of placing an order c) the cost of underestimating demand d) the cost of overestimating demand
c) the cost of underestimating demand and d) the cost of overestimating demand
Customer order decoupling points Multiple select question. can impact inventory investment. determine lead times. are not a necessary supply chain production process. allow manufacturers to see every customer purchase.
can impact inventory investment. determine lead times.
When the mean and standard deviation of a process is operating such that the control limits are acceptable relative to specification limits, the process is said to be capable. within range. acceptable. out of range.
capable.
Lumpiness, or the tendency for uneven production, further down the creation sequence is cause by items being withdrawn from inventory in single items. not possible with an ERP system in place. caused by items being withdrawn from inventory in lots.
caused by items being withdrawn from inventory in lots.
assemble to order
combine a number of preassembled modules to meet a customer's specifications ex: Dell computers, subway sandwich - decoupling point: components -enables flexibility in combining components -define a customers order in terms of alternative components because these are carried in inventory
There are two aspects to analyzing the data for benchmarking, they are Multiple select question. identifying performance measures and using the exact system for your firm. comparing actual processes. asking the firm analyzed to implement their process for your firm. comparing performance of the process against certain measures.
comparing actual processes. comparing performance of the process against certain measures.
The term sourcing implies a more ________ process suitable for products that are strategically purchased.
complex
The term sourcing implies a more ________ process suitable for products that are strategically purchased. modest simple complex tactical
complex
Fixed-order quantity models assume there is _________ tracking of inventory.
continual
One program for automatically resupplying customers on a regular basis is _______________ _______________.
continuous replenishment
One program for automatically resupplying customers on a regular basis is __________ _________
continuous replenishment
One program for automatically resupplying customers on a regular basis is ___________
continuous replenishment
what types of activities are key to the business but do not confer a competitive advantage? -core -outsourced -integral -strategic
core activities
Which of the following is an input file necessary to run an MRP system? Bill of materials (BOM) file Quality management report Exception reports Planned-order schedules Purchasing contracts
correct Bill of materials (BOM) file Quality management report Exception reports Planned-order schedules Purchasing contracts
The economic order quantity (EOQ) lot sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.
correct False EOQ assumes that parts are used continuously during the period. The lot sizes generated by EOQ do not always cover the entire number of periods. For example, the EOQ might provide the requirements for 4.6 periods (when another EOQ would be needed).
Low level coding in MRP indicates the exact status of each item managed by the system in "real time."
correct False Low-level coding (is where) each item is placed at the lowest level at which it appears in the structure hierarchy.
In a net change MRP program, a change in one item will result in a completely new inventory plan and schedule for every item in the master production schedule.
correct False Net change systems are "activity" driven and requirements and schedules are updated whenever a transaction is processed that has an impact on the item. Net change enables the system to reflect in "real time" the exact status of each item managed by the system.
"Projected available balance" is a term referring to unsold finished goods inventory.
correct False Projected available balance is the amount of inventory (not just unsold finished goods) that is expected as of the end of a period.
An input to the material requirements planning (MRP) system is an exception report.
correct False This BOM file is one of the three main inputs to the MRP program. (The other two are the master schedule and the inventory records file.)
A product tree can do which of the following? Help to compute component usage Reduce product scrap Reduce labor overtime Reduce regular time labor Locate raw material supplies
correct Help to compute component usage Reduce product scrap Reduce labor overtime Reduce regular time labor Locate raw material supplies 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.
A BOM file is also called which of the following?
correct Product tree Stocking plan Inventory usage record Production parts plan Time bucket schedule The BOM file is often called the product structure file or product tree because it shows how a product is put together.
A master production schedule is an input to a material requirements planning (MRP) system.
correct True Generally, the master schedule deals with end items and is a major input to the MRP process.
A lot-for-lot (L4L) lot sizing technique does not take into account setup costs or capacity limitations.
correct True 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.
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.
correct True 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 is based on dependent demand
correct 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.
MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.
correct True MRP provides the schedule specifying when each of these items should be ordered or produced.
Time fences are periods of time having some specified level of opportunity for the customer to make changes.
correct True Management defines time fences as periods of time having some specified level of opportunity for the customer to make changes.
Net change MRP systems are "activity" driven.
correct True Net change systems are "activity" driven and requirements and schedules are updated whenever a transaction is processed that has an impact on the item. Net change enables the system to reflect in "real time" the exact status of each item managed by the system.
The master production schedule states the number of items to be produced during specific time periods.
correct True The master production schedule states the number of items to be produced during specific time periods.
The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to become more "lumpy."
correct True The requirements of dependent demand items tend to become more and more lumpy as we go farther down into the product creation sequence.
The three main inputs to an MRP system are the bill of materials, the master schedule and the inventory records file.
correct True This BOM file is one of the three main inputs to the MRP program. (The other two are the master schedule and the inventory records file.)
Computing the quantity of each component that goes into a finished product can be done by expanding (or exploding) each item in a product structure file and summing at all levels.
correct True To compute the amount of each item needed at the lower levels, each item would need to be expanded ("exploded") and summed. A more efficient procedure is to store parts data in simple single-level lists. That is, each item and component is listed showing only its parent and the number of units needed per unit of its parent.
What term describes the annual cost for a company to produce the good or services provided to customers?
cost of goods sold
costs of goods sold is also known as
cost of revenue
which is an approach used in consolidation warehouses, where, rather than making larger shipments, large shipments are broken down into mixed shipments for local delivery in an area? -third party logistics -cross docking -location services -hub and spoke systems
cross docking
To calculate the reorder point for a fixed-order quantity model with safety stock, all of the following are required except
current inventory level.
The point in the supply chain where inventory is positioned to allow the preceding processes to operate independently is the
customer order decoupling point.
The point in the supply chain where inventory is positioned to allow the preceding processes to operate independently is the manufacturing independence point. forecast level. customer order independence point. customer order decoupling point.
customer order decoupling point.
Lead time can vary based on ______. Multiple select question. the total inventory costs. customization of the product being produced. location of the manufacturing facility. the amount of customer satisfaction.
customization of the product being produced. location of the manufacturing facility.
Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as _ demand. a) forecasted b) dependent c) marketing d) independent
d) independent
manufacturing cell
dedicated area where a group of similar products are produced
Each step or activity, when using six sigma, a company performs represents an opportunity for a(n) _________ to occur. mishap cost defect inspection
defect
Statistically, regardless of lot size, the probability of defects remains the same assuming that Multiple select question. there are no defects. defects are randomly spread throughout. each sample size is adjusted. the lot is randomly chosen.
defects are randomly spread throughout. the lot is randomly chosen.
assembly chart
defines how parts fit together, their order of assembly, and overall flow pattern ex: putting IKEA furniture together diagram + step by step instruction
Calculation of the reorder point for a fixed-quantity model with safety stock requires that one know the average daily _____ and the _____ time.
demand lead
Calculation of the reorder point for a fixed-quantity model with safety stock requires that one know the average daily_____ and the _____ time.
demand, lead
process flowchart
denotes what happens to the product as it progresses through the production facility -helps determine cost of making the product
When the number of needed items are computed based on the number of HIGHER-LEVEL items produced, one is operating in a(n) __________ demand environment.
dependent
When then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n) _____ demand environment.
dependent
Fixed-time period is an inventory control method where firms place orders periodically, but the order quantity is ___________ every time.
different
A manufacturing cell is generally made up of ___________ machines. Multiple choice question. similar identical dissimilar
dissimilar
Inventory turn is calculated by dividing cost of goods sold by average inventory value. dividing average inventory value by cost of goods sold. dividing prices for raw goods by the quantity ordered. dividing current inventory by average inventory value.
dividing cost of goods sold by average inventory value.
The required workstation cycle time is determined by dividing the production time per day by the required output per day. dividing required output per day by the production time per day. multiplying the production time per day by the required output per day. observing the process to determine its current cycle time.
dividing the production time per day by the required output per day.
Inventory classifications of A, B and C are based on
dollar value or measure of importance.
Grocery stores would traditionally use which type of supply chain?
efficient supply chain
A firm that works with the customer to design a product but has less control over materials and steps in manufacturing until the product has been designed is known as a(n) _______________-to-order. A firm that works with the customer to design a product but has less control over materials and steps in manufacturing until the product has been designed is known as a(n) -to-order.
engineer
The economic order quantity (Qopt) occurs when the annual ordering and holding costs are .
equal
The economic order quantity (QoptQopt) occurs when the annual ordering and holding costs are _____.
equal
If Acme groceries wanted a 0.95 probability of not stocking out, the "z" value that would be used in the calculation to find the safety stock is _______.
equal to 1.64, located in the z chart.
When the manufacturing process and underlying technology are still under development and rapidly changing, it is known as a(n) ___________ supply process.
evolving
When the manufacturing process and underlying technology are still under development and rapidly changing, it is known as a(n) ___________ supply process. innovative functional stable evolving
evolving
Demand is termed as independent if it comes from sources _____ to the firm and is not related to other _____.
external products
Demand is characterized as independent if comes from sources _ to the firm and is not related to other _.
external, products
Demand is characterized as INDEPENDENT if it comes from sources _________ to the firm and is NOT related to other ____________.
external, products.
True or false: Sourcing activities remain the same regardless of what is being purchased.
false
creating assortment is one of the economic benefits provided by warehouses t/f
false
Improved return on assets and generation of cash are ___________ reasons to outsource
financial
If manufacturing equipment within a facility produces at different rates, one can use inventory to maintain _______________ of operations.
flexibility
little law
flow of items through production process inventory = throughput rate x flow rate
What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut?
forward buying
what is used to describe a practice where a customer purchases excess parts in advance? -hedging -risky buying -forward buying -buying to forecast
forward buying
Staple products that customers buy in a wide range of retail outlets are known as __________ products.
functional
Staple products that customers buy in a wide range of retail outlets are known as _______________ products.
functional
What type of products have low profit margins, long product life, and predictable demand?
functional
What type of products include staples that people buy in a wide range of retail outlets?
functional
what type of products include staples that people buy in a wide range of retail outlets? -common -unique -functional -innovative
functional
A fixed-time period inventory model carries a ____ level of safety stock than a fixed-order quantity system.
higher
A fixed-time period inventory model carries a _____ level of safety stock than a fixed-order quantity system.
higher
Process limits relate to how consistent the process is for making a product. the design of a part. the number of trade-offs involved in determining the upper and lower specification limits. how consistent the process is with 100% inspection.
how consistent the process is for making a product.
Strategic sourcing is focused on the ________ needs of a business.
immediate
Strategic sourcing is focused on the ________ needs of a business. forecasted future immediate historical
immediate
Shorter cycle time and better risk management are driven reasons to outsource.
improvement
Which of the following is NOT a major economic benefit provided by warehouses?
increased flow time
Green sourcing is not only for developing new technologies, but also for
increasing the use of recyclable materials.
If manufacturing equipment within a facility produces at different rates, one can use inventory to maintain _____ of operations.
independence
Campbell's Soup makes products for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand.
independent
Campbell's Soup makes products for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand. marketing forecasted dependent independent
independent
which is not a cause of the bullwhip effect -rationing and shortage gaming -order batching -information sharing -demand forecasting updating
information sharing
A single period _ model helps in situations where a company is trying to produce the optimal quantity of inventory for a single event minimizing overproduction costs and potential lost revenues.
inventory
A single-period _____ model helps in situations where a company is trying to produce the optimal quantity of inventory for a single event, minimizing overproduction costs and potential lost revenues.
inventory
The set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be is called a(n) _____ system.
inventory
Using complex lot-sizing techniques, larger lot sizes can cause an increase in __________, complicating plant logistics. inventory setup costs supplier costs demand
inventory
Weeks of supply is a measure of how many weeks' worth of __________ is in the system at a particular point in time
inventory
Weeks of supply is a measure of how many weeks' worth of __________ is in the system at a particular point in time.
inventory
When calculating the order quantity in a fixed-time period model with safety stock, the formula is Order Quantity = Average demand over the vulnerable period + safety stock - _____ currently on-hand.
inventory
The current amount of inventory (on-hand quantity plus on-order minus backordered) is known as the
inventory position.
The current amount of inventory (on-hand quantity plus on-order minus backordered) is known as the inventory demand. inventory position. inventory available. inventory level.
inventory position.
A material requirements planning system interfaces with the master production schedule, bill-of-materials file and __________
inventory records file.
A material requirements planning system interfaces with the master production schedule, bill-of-materials file and __________. product demand. inventory records file. forecasted sales. customer purchase order.
inventory records file.
When changes occur because of stock receipts and disbursements, scrap losses, wrong parts and canceled orders, the real-time file capturing these changes is called the peg record file. bill-of-material file. inventory transactions file. inventory backlog file.
inventory transactions file.
The ratio of cost of good sold to average inventory value is known as
inventory turnover
The ratio of cost of good sold to average inventory value is known as asset turnover. employee turnover. inventory turnover. receivables turnover.
inventory turnover.
The inventory records file contains information such as Multiple select question. item description. list of authorized suppliers. lead time. planned order releases. safety stock.
item description. lead time. planned order releases. safety stock.
In a fixed-time period inventory model, the average demand over the vulnerable period depends on the review cycle (T) and the constant ___ time (L).
lead
In a fixed-time period inventory model, the average demand over the vulnerable period depends on the review cycle (T) and the constant _____ time (L).
lead
The time between placing an order and receiving the item(s) is called the
lead time
The time between placing an order and receiving the item(s) is called the reorder point. lead time. demand variation. cycle count.
lead time.
The time required to respond to a customer order is known as response period. lead time. response time. order time.
lead time.
The practice of achieving high levels of customer service with a minimal inventory investment is known as _______________ manufacturing. The practice of achieving high levels of customer service with a minimal inventory investment is known as manufacturing.
lean
The _____ _____ _____ method is a dynamic approach that adds ordering and inventory carrying costs for each trial lot size, divides the costs by the number of units, and chooses the lot size with the lowest unit cost.
least unit cost
One of the limitations with least total coast (LTC) is the influence by the size of the manufacturing site. length of the planning horizon. number of parts ordered. selection of suppliers.
length of the planning horizon.
In a fixed-time period system, inventory monitoring happens _ frequently than in a fixed-order quantity system.
less
In a fixed-time period system, inventory monitoring happens _____ frequently than in a fixed-order quantity system.
less
In a fixed-time period system, inventory monitoring happens ______ frequently than in a fixed-order quantity system.
less
What term refers to the management functions that support the complete cycle of material flow?
logistics
throughput rate
long term average rate of flow through process
Firms enter into _____________ relationships with vendors, this changes "how many is ordered" to "how many is delivered" with each order.
long-term
Firms enter into _____________ relationships with vendors, this changes "how many is ordered" to "how many is delivered" with each order. short-term slow turn-time quick turn-time long-term
long-term
spot purchases have _ specificity and _ transaction costs
low and low
A process that places all identical parts at the same level in the bills-of-materials simplifies computations. This process is known as
low level coding
A supply of materials at a work center allows workers to use just-in-time production techniques. order materials more frequently. take frequent breaks from production. maintain independence of operations.
maintain independence of operations.
The master production schedule typically deals with end items, but can be broken down to __________ if the item is large or expensive. inexpensive components work-in-process major subassemblies single use
major subassemblies
A map showing the flow of materials through a manufacturing system is known as a _______________-to-_______________ process map. A map showing the flow of materials through a manufacturing system is known as a -to- process map.
make stock
make to order
make a customer's order from raw material
make to order
make the customer's product from raw materials, parts, and components ex: cars or boeing's process for making aircraft
Firms whose product is built directly from raw materials and components in response to a customer are known as engineer-to-order. make-to-stock. assemble-to-order. make-to-order.
make-to-order.
Work in process is considered ________ inventory
manufacturing
Work-in-process is considered ______ inventory.
manufacturing
Work-in-process is considered a _ inventory.
manufacturing
A _______________ _______________ layout uses dedicated areas for production of similar products. layout uses dedicated areas for production of similar products.
manufacturing cell
When a company groups dissimilar machines to work on products that have similar processing requirements, it's using a(n) ___________ layout
manufacturing cell
inventory
material held by arm for future use
When attempting to balance an assembly-line, the amount of idle time across workstations should be _________________. maximized minimized the projected monthly sales unimportant
minimized
Group C items may only be ordered _____ or _____ due to their low importance and value.
monthly bimonthly
Group C items may only be ordered ___ or ___ due to their low importance and value.
monthly, bimonthly
In the beginning, it is best to have _______________ frequent sampling until confidence builds in the process.
more
If inventory turn is known, days-of-supply is calculated by
multiplying the inverse of inventory turn by 365 days.
In an assemble-to-order system, the total number of unique combinations possible is calculated by
multiplying the number of options for each choice together.
In an assemble-to-order system, the total number of unique combinations possible is calculated by multiplying the number of options for each choice together. determining the number of options offered for the most popular item. adding the number of choices together. adding the number of options for each choice together.
multiplying the number of options for each choice together.
After finding gross requirements, the next step in the MRP explosion process references inventory on hand and scheduled orders to calculate _____ requirements.
net
Workcenters are often focused on
one type of operation
In fixed-order quantity systems, the amount of inventory that minimizes total costs is called the _____ _____ _____.
optimal order quantity
Workcenters are often structured _______________ to the movement of material. Workcenters are often structured to the movement of material.
optimize
The ultimate goal of any MRP lot sizing approach is to balance the setup or _____ costs and the _____ costs associated with meeting the net requirements generated by the MRP planning process.
order holding
Push ordering is an example of: -channel alignment -demand forecast updating -order batching -forward buying
order batching
the ultimate goal of any MRP lot sizing approach is to balance the setup or _______________ costs and the ______________costs associated with meeting the net requirements generated by the MRP planning process.
order, holding
As it relates to inventory, a buyer's time expended to prepare the purchase order for more material is considered a(n) ____ cost. ordering holding buffer execution
ordering
The managerial and clerical costs to prepare purchase or production orders are called
ordering costs.
The managerial and clerical costs to prepare purchase or production orders are called shortage costs. ordering costs. logistics costs. holding costs.
ordering costs.
In a single period model, Co represents the cost per unit associated with the estimating of demand.
over
In a single period model, CoCorepresents the cost per unit associated with the _____ estimating of demand.
over
The file created by retracing a material requirement upward in the product structure to identify each parent item that created the demand is called a _____ record.
peg
Which of the following would be located on the MPS plan? Multiple select question. vehicle engine purchased for a production line. pens ordered from an office supply company. pen caps ordered by a pen manufacturer from a supplier. a new vehicle purchased from an automotive dealer.
pens ordered from an office supply company. a new vehicle purchased from an automotive dealer.
Which of the following is an innovative product?
personal computer
The _______________ relationship identifies the restrictions imposed by product design and process technologies. relationship identifies the restrictions imposed by product design and process technologies.
precedence
On an assembly-line, the order in which tasks must be performed is called the __________. successor relationship precedence relationship workstation order path
precedence relationship
Safety stock inventory levels are determined by the _____ of stock out at a given desired service level.
probability
Safety stock inventory levels are determined by the _______ of stock out at a given desired service level.
probability
Safety stock inventory levels are determined by the ________ of stock out at a given desired service level.
probability
The ______________-_______________ matrix shows when different production process types are used in relation to product volume and standardization. matrix shows when different production process types are used in relation to product volume and standardization.
product process
Which of the following is not a quality management principle in ISO 9000? process approach customer focus continual improvement product design
product design
The __________-_______ matrix shows when different production process types are used in relation to product volume and standardization.
product process
The bill-of-material (BOM) file is also known as a Multiple select question. product structure file. product recipe. assembly instruction. product tree.
product structure file. product tree.
A framework depicting when the different production process types are typically used depending on volume and standardization is known as the
product-process matrix.
A framework depicting when the different production process types are typically used depending on volume and standardization is known as the product-volume matrix. process-cost matrix. process-time matrix. product-process matrix.
product-process matrix.
One purpose of inventory is to provide flexibility in _______________ _______________, this can increase lead times but reduce setup costs.
production scheduling
To determine the required workstation cycle time, an analyst needs to know the _______________ _______________ per day and the required _______________ per day (in units). To determine the required workstation cycle time, an analyst needs to know the per day and the required per day (in units).
production time output
how production processes are organized
project workcenter (job shop) manufacturing cell assembly line continuous process
Cost of quality (COQ) is a primary function for the quality control department. manufacturing manager. customer service supervisor. supply chain manager.
quality control department.
Some benefits of an ERP system are Multiple select question. quality management can develop inspection points for products during manufacturing. manufacturing knows about orders as soon as they are entered. human resources knows how many employees to schedule. sales can track all the details of an order.
quality management can develop inspection points for products during manufacturing. manufacturing knows about orders as soon as they are entered. sales can track all the details of an order.
A fixed-order _ model uses a reorder point, R, to trigger an order of an optimal amount of product, labeled Q.
quantity
A fixed-order _____ model uses a reorder point, R, to trigger an order of an optimal amount of product, labeled Q.
quantity
In companies using a fixed-order quantity model, a consistent inventory level is used as a trigger to order more product. This inventory level is called the
reorder point.
In companies using a fixed-order quantity model, a consistent inventory level is used as a trigger to order more product. This inventory level is called the ordering guideline. point of entry. execution threshold. reorder point.
reorder point.
Inventory turn is the expected number of times that inventory is _ over a year.
replaced
A solicitation for a detailed proposal from a vendor is called a _______________ for _______________.
request proposal
A solicitation for a detailed proposal from a vendor is called a ________for _________
request proposal
A solicitation for a detailed proposal from a vendor is called a ___________ for ___________
request for proposal
Which sourcing process is used for complex items where there are a number of potential vendors?
request for proposal
which sourcing process demands high transaction costs? -electronic catalog -request for proposal -spot purchase -vendor managed inventory
request for proposal
A product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain?
responsive
a product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain? -responsive -agile -risk hedging -efficient
responsive
The calculated theoretical number of workstations should be ____________________. greater than three. rounded up to the next highest integer. calculated using the first task. rounded down to the nearest integer.
rounded up to the next highest integer.
Stock carried to absorb variation in demand is known as _______________ stock.
safety
Acme Company carries an additional level of inventory beyond the expected demand during reorder lead times. This additional inventory is known as
safety stock.
Acme Company carries an additional level of inventory beyond the expected demand during reorder lead times. This additional inventory is known as safety stock. backorder stock. raw material. just-in-case supplies.
safety stock.
The purpose of _______________ is to find when the process has changed in some nonrandom way.
sampling
When a customer audits its supplier in regards to ISO certification, this form of certification is referred to as ____________. customer third party first party second party
second party
A price-break model suggests that the _____ price of an item varies with order _____.
selling size
A price-break model suggests that the _ price of an item varies with order _.
selling, quantity
make to stock
serve customers from finished goods inventory ex: things sold in retail like televisions, clothing, packaged food -essential issue in satisfying customers is to balance level of inventory against level of customer service -use lean manufacturing to achieve higher service levels for a given inventory investment -decoupling point is FG inventory
The EOQ is the Quantity where the ___ costs equal the ___ costs.
set-up order
Delta Company uses special equipment and personnel to changeover production runs quickly. The costs associated with this changeover approach are considered carrying costs. rapid stock costs. purchasing costs. setup costs.
setup costs.
ISO 9000 standards are based on the _______________ quality management principles.
seven
When a customer cancels an order because of item backlogs, that lost revenue is a(n) _____ cost.
shortage
When a customer cancels an order because of item backlogs, the lost revenue is a(n) _____ cost.
shortage
Workcenter (job shop)
similar equipment or functions are grouped together
workcenter (job shop)
similar equipment or functions are grouped together -most common is to arrange the centers in a way that optimizes the movement of material -sometimes referred to as a department and is focused on a particular type of operation
For a process to be considered six sigma capable, the design specification limits are _______________ standard deviations away from the process mean.
six
Which type of time fence allows for changes to a specific product so long as parts are available
slushy
When price varies with the order size, the first step in the analysis process is to
sort the prices from lowest to highest and calculate the EOQ for each price level.
Production process
source, make, deliver
Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available?
specificity
which is a sourcing term to describe how monnon an item is / how many substitutes may be available -outsourcing -specificity -bullwhip effect -uniqueness
specificity
operation and route sheet
specifies operations and process routing -helps determine cost of making the product
which type of supply process is one where the manufacturing and technology base are mature? -functional -stable -evolving -innovative
stable
which is not a benefit provided by cross docking -reduced demand -reduced flow time -increased inventory turnover -stockpiling to accommodate seasonal demand
stockpiling to accomodate seasonal demand -- tranditional warehouses
Design quality is considered a(n) __________ for the firm. strategic decision unimportant decision service decision insignificant cost
strategic decision
What term describes the development and management of supplier relationships?
strategic sourcing
A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of-material?
super
The bullwhip effect can be reduced by __________- efforts among members of the supply chain.
synchronizing
The bullwhip effect can be reduced by _______________ efforts among members of the supply chain.
synchronizing
In services, inventory generally refers to any ____ good and the ____ necessary to administer the service.
tangible, supplies
In services, inventory generally refers to any ____ good and the ______ necessary to administer the service.
tangible, supplies
In a project layout, a high degree of __________ is common. workcenter design assembly line work process cell formation task ordering
task ordering
In a project layout, a high degree of __________ is common. Multiple choice question. process cell formation workcenter design assembly line work task ordering
task ordering
Since it is not easy to determine how well a sampling plan discriminates between good and bad quality, you should always examine __________ before using a sampling plan. the P-chart an R-chart the C-chart the OC curve
the OC curve
When choosing how often to take samples, there is a trade-off between the costs of sampling and the number of employees in the quality department. the readings from the last set of samples. the amount of time it takes to get the sample. the benefit of adjusting the system.
the benefit of adjusting the system.
ISO 14000 has a three-pronged approach that includes Multiple select question. the development of environmentally friendly products and services. environmental management requirements. standards for monitoring air, water, and soil. the cheapest cost for raw materials among all suppliers.
the development of environmentally friendly products and services. environmental management requirements. standards for monitoring air, water, and soil.
A purist view of the cost of quality is one that references all costs until 100% perfection is attained. A less stringent viewpoint is defined as the difference between 100% perfection and the industry standard. the difference between expected excellent performance and the current costs. whatever it takes to reach 100% perfection. not attainable in today's society.
the difference between expected excellent performance and the current costs.
Inventory turn is a key measure for a business and directly relates to the supply chain manager's performance. the quality of management. the price paid for raw materials. the financial performance of the firm.
the financial performance of the firm.
If ordering costs and setup costs remain constant then _________ is the easiest method for lot sizing. the lowest total cost method any method the least unit cost method the lot-for-lot method
the lowest total cost method
When calculating the reorder point for a fixed-quantity model with safety stock, the value "z" represents
the number of standard deviations associated with a given service probability.
When placing an order for a single period, the order quantity should be increased as long as
the probability of selling what is ordered is less than or equal to Cu/Cu+Co
When placing an order for a single period, the order quantity should be increased as long as the probability of selling what is ordered is less than or equal to Co/Cu-Co the probability of selling what is ordered is greater than Cu/Cu+Co the probability of selling what is ordered is less than or equal to Cu/Cu+Co
the probability of selling what is ordered is less than or equal to Cu/Cu+Co
project
the product remains in a fixed location -manufacturing equipment is moved to the product -high degree of task ordering -layout may be developed by arranging materials according to their assembly priority
THis is not true about the bullwhip effect
the size of orders increases as the order moves from retailers to wholesalers to manufacturers to suppliers
Total average value of inventory
the sum of the value (at cost) of the raw material, work-in process, and finished goods inventory
time between plane takeoffs can be at least 3 minutes. after take off, run time is 45 seconds. planes wait an average of 4 minutes and 15 seconds. on average there are 15 planes taking of per hours. How many planes are on the runway at once?
throughput rate: 15 planes/hour flow time: 4 min 15 sec + 45 sec -> 5 minutes inventory: 15 planes/hour x (5 min/60) = 1.25 planes
_____ _____ are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule.
time fences
At any point in time, an MRP system can access the status segment of the inventory record according to specific time periods commonly known as
time buckets
At any point in time, an MRP system can access the status segment of the inventory record according to specific time periods commonly known as low-level coding system. product part matrix. bill-of-material. time buckets.
time buckets.
Little's Law provides a convenient way to calculate WIP inventory with this equation: Inventory = Throughput time x Flow time. What is Flow Time? WIP Inventoy average rate that items come out of the process time for a single unit to go end-to-end Cycle time
time for a single unit to go end-to-end
flow time
time for one unit to get through a process
The fixed-time period models are ____ triggered while the fixed-order quantity models are ____ triggered.
time; event
An estimate of all expenses incurred while procuring and using an item is the _______________ cost of ownership.
total
The sum of annual purchasing costs, annual ordering costs, and annual holding costs is known as the
total annual cost.
The sum of annual purchasing costs, annual ordering costs, and annual holding costs is known as the total inventory cost. total order cost. total annual cost. annual product cost.
total annual cost.
An estimate of all costs related to the procurement and use of an item is the
total cost of ownership
An estimate of all costs related to the procurerment and use of an item is the
total cost of ownership
An estimate of all costs related to the procurerment and use of an item is the total purchase price. total cost of ownership. final cost. landed cost.
total cost of ownership.
A production process map is built by
tracking the flow of material through the system.
A production process map is built by tracking the flow of material through the system. determining where inventory is purchased. identifying where value is added to materials. identifying where labor is utilized.
tracking the flow of material through the system.
Coke's bottling facility which mixed drink ingredients, adds water, and fills up cans and bottles with the drink should be located closer to markets t/f
true
True or false: Innovative products have higher profit margins than functional products.
true
True or false: The average aggregate inventory value is valued at cost
true
True or false: The economic order quantity depends upon three factors, the annual demand, the setup cost, and the annual holding cost of one unit of inventory.
true
True or false: When analyzing a price-break model, it is possible that the lowest price (highest quantity) will be the best choice even if the EOQ model solution for this price is infeasible.
true
cross docking is used in consolidation warehouses and targets for local delivery in area t/f
true
which is not a reason why a firm may choose to outsource an activity? -turn variable costs into fixed costs -improve risk management -shorten cycle time -improve quality
turn variable costs into fixed costs --> turn fixed costs into variable costs
Which of the following is not a reason why a firm may choose to outsource an activity?
turn variable into fixed costs
The re-order point is measured in terms of
units quantity
production process mapping
useful to understand how material flow and inventory is held
In constructing any inventory model, there has to be a functional relationship between the
variable of interest and the measure of effectiveness.
In constructing any inventory model, there has to be a functional relationship between the variable of interest and the measure of effectiveness. average product costs and average daily lead time. order cycle time and transportation costs. annual demand and lead time in days.
variable of interest and the measure of effectiveness.
Standardization on the product-process matrix refers to the amount of product being produced. the volume the process is designed to produce. raw materials shared between processes. variations in the product.
variations in the product.
When the supplier takes full responsibility to manage items for the customer, the supplier is performing
vendor managed inventory.
When the supplier takes full responsibility to manage items for the customer, the supplier is performing outsourcing activities. helpful activities. vendor managed inventory. strategic sourcing.
vendor managed inventory.
When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used
vendor management theory
The cost of quality involves the cost of Multiple select question. supplies. warranties. rework. scrap.
warranties. rework. scrap.
When measurements from periodic samples stay _______________ the control limits, the process can be assumed to be working properly.
within
assembly line
work processes are arranged according to the progressive steps by which the product is made
engineer to order
work with the customer to design and make the product ex: buildings built to specification -customer order decoupling point could be in either raw materials at the manufacturing site or the supplier inventory
In a _______________ layout, machines are grouped according to type or function and parts travel to the appropriate location for processing. layout, machines are grouped according to type or function and parts travel to the appropriate location for processing.
workcenter
In a_____ layout, machines are grouped according to type or function and parts travel to the appropriate location for processing.
workcenter
When parts are moved on a conveyor that passes a series of workstations in a uniform time interval, this is called the ___________________. workstation cycle time assembly-line balance assembly-line design workstation task
workstation cycle time
The time between successive units coming off the end of an assembly line is referred to as assembly-line balancing. line balancing. process flow. workstation cycle time.
workstation cycle time.
Are the inventory turnover and weeks of supply measures related to one another?
yes they are mathematically inverses
