Posttest

When expediting purchased parts that are needed from the supplier before the original due date, a buyer should first try to do which of the following? Offer to de-expedite another part that is needed later than the original due date. Increase safety lead time by one week. Buy all the parts from an alternate source. Offer to pay a premium.

Offer to de-expedite another part that is needed later than the original due date. When expediting work at a supplier, an effective method is to reduce the supplier's load on some other order before expediting an order. Since the supplier has limited capacity, rescheduling out load would be an effective technique to get the supplier to accept the expedite without incurring special expedite costs. While it is an alternative, it most like will result in excess costs because the suppler is not the prime supplier. The buyer should pay a premium only as a last resort. Increasing safety time will not assist in managing the expedite and will, in the long term, result in the purchase of excess inventories.

Which of the following is an appropriate use of the statement of cash flows for a company? Calculate net income Evaluate the owners' share of the organization Measure the performance of company operations Predict the organization's ability to pay its debts

Predict the organization's ability to pay its debts The statement of cash flows is a financial statement showing the flow of cash into and out of an organization. It helps predict future cash flows, evaluate management decisions, and predict ability to pay debts and dividends. The net income is calculated on the income statement, not the statement of cash flows. The owners' share (owners' equity) is calculated on the balance sheet, not the statement of cash flows. The statement of cash flows does not measure performance.

In designing a forecasting system, which of the following is the primary consideration? The purpose of the forecast must be adequately defined. The data must be derived from the correct sources. The form of the data must be suitable for compilation. The sample must be representative.

The purpose of the forecast must be adequately defined. The overriding consideration in forecast system design is ensuring the forecast reflects the purpose planners feel meets company requirements. The other answers are all necessary for forecasts to work effectively, but they are not the prime consideration.

Expediting can be a positive response to business growth and A function that manufacturing companies should make permanent A source of operational risk when operations is constantly stressed to meet ever growing demand A good way to augment ever changing schedules that the ERP system may have difficulty managing A solid replacement for a push shop floor control system

A source of operational risk when operations is constantly stressed to meet ever growing demand Business growth, although seemingly positive, becomes a risk when operations has to stretch or be reconfigured to deal with larger volumes, often leading to a loss of focus.

Which of the following documents provide opportunities to reduce paperwork with supplier partners? I. Receiving documents II. Purchase requisitions III. Purchase orders IV. Invoices II and III only I, II, III, and IV I, II, and III only I and IV only

I, II, III, and IV All four of the purchasing documents listed constitute paperwork for the purchasing function. By automating or reducing the about of labor needed to generate each document, paperwork with supply partners can be reduced.

Effective execution control can improve customer service in which of the following ways? I. By reducing lead time II. By replenishing finished inventory on schedule III. By improving component availability I only I and III only II and III only I, II, and III

I, II, and III All three options can improve customer service. Shorter lead times enable customers to get products faster and provide competitive advantage to the company. Competing orders on schedule is absolutely critical in meeting customer delivery expectations. By having the necessary components and materials on hand to build products, companies can meet customer due dates and service objectives.

Reductions in which two of the following production variables form the best performance measure of a material requirements plan? I. Setup time II. Number of action messages III. Average queue IV. Component shortages I and II II and III II and IV III and IV

II and IV Option II is correct because reduction in the number of action messages implies that the MRP system is working efficiently. Option IV is correct because the primary role of MRP is to ensure that there are no shortages of components for manufacturing. Option I is incorrect because MRP treats the item lead time as a fixed element in the MRP calculation and, therefore, have no direct effect MRP efficiency. Option III is a measurement of released orders before an operation and is not directly a component of MRP processing.

The proper sequence to follow when applying benchmarking processes is to Identify and adapt best practice then continue to benchmark best in class and best in world Engage finance to find how much this change has influenced the latest balance sheet After adapting best in class, immediately seek out best in world characteristics and try to emulate those Find from key end item customers if they see improvement

Identify and adapt best practice then continue to benchmark best in class and best in world One of the most widely used methods for gauging how well a company is executing its strategy entails benchmarking. Benchmarking involves contrasting the company's performance of particular activities and business processes against "best in industry" and "best in world" performers.

Simmons sells a broad range of herbs and spices for health and cooking. The weekly order to the distribution center replenishes the individual items sold each week due to lack of storage capacity. The order may be modified by the store based on upcoming sales promotions or seasonality. Which of the following measures of customer service is of MOST value to the store? On-time shipment Line items shipped complete Order cycle time Correct items shipped

Line items shipped complete While the correct items are shipped, the quantities may be incomplete. The order may arrive on time but not have the proper items or quantities.

A scheduler uses the critical ratio to determine the priority of jobs AA, BB, CC, and DD. Beginning November 20, the following schedule exists: Job - Due Date - Lead Time Remaining (hours) AA - Nov 23 - 24 BB - Nov 22 - 24 CC - Nov 23 - 16 DD - Nov 22 - 16 The plant has an 8-hour workday. Which of the following jobs should be scheduled first? AA BB CC DD

BB The critical ratio is calculated as (due date - current date) / manufacturing lead time remaining. The order with the lowest critical ratio is run first. When applied to the four orders, the critical ratios are as follows: AA = 23-20 = 3 / (24/8hrs.) = 1 BB = 22-20 = 2 / (24/8hrs.) = .66 CC = 23-20 = 3 / (16/8hrs.) = 1.5 DD = 22-20 = 2 / (16/8hrs.) = 1

When a company embarks on a path of major or breakthrough improvement for a specific task the best place to start is with Customers who categorize the company as a major supplier Suppliers who categorize the company as a major customer Benchmarking best in class performers Benchmarking best in world performers

Benchmarking best in class performers One of the most widely used methods for gauging how well a company is executing its strategy entails benchmarking. Benchmarking involves contrasting the company's performance of particular activities and business processes against "best in industry" and "best in world" performers.

In the theory of constraints planning and control system, which of the following techniques facilitates the capacity control function? Rope Drum schedule Buffer management Pace of throughput

Buffer management The buffer ensures that the process will never be starved for needed inventory. This buffer of inventory represents the amount of time that the inventory in the buffer protects the constraint from disruptions. The rope pulls production to the constraint for necessary processing. The drum of the system refers to the pace of production going through the constraint.

When the number of a company's distribution centers serving a geographical area increases but the level of customer service remains the same, the result is generally a decrease in aggregate inventory levels. a decrease in the company's investment in real property. an increase in transportation costs. an increase in delivery lead times.

an increase in transportation costs. More service centers will increase transportation costs because there will be more LTL miles. More service centers will decrease delivery lead times. The company will have to increase its investment in real property for the new service centers. The increase in service centers means that aggregate channel inventories will increase.

The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called smoothing demand filtering regression time series decomposition

demand filtering Demand filtering is a method of controlling variations by providing a check that limits the amount of the variation from one period to the next. A demand filter typically is a ratio of the new demand to the average of the old demand.

Which of the following is likely to be the most important order winner for a producer of custom-designed, low-volume products? image design capability price/cost delivery speed

design capability Companies that build custom-designed products normally will be competing based on the special capabilities or attributes of the product made to a specific customer specification. Custom-designed products usually are very expensive to build and prices are high. Custom-made products normally have an extended lead time. A custom-designed product focuses on the special functions needed by the customer where image plays a very minimal part.

Analyzing capital investments by estimating future cash flows and translating them into equivalent amounts in today's terms is called average return on investment analysis payback analysis internal rate of return analysis discounted cash flow analysis

discounted cash flow analysis Discounted cash flow analysis is a method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.

The supplier in a new product introduction can reduce time to market by automating production processes developing new technology making hard tooling early involvement

early involvement Getting the supplier involved early in the design process significantly assists in cutting design and production lead times for the components and materials needed to build the new product. Simply automating processes does not necessarily result in quicker new product release. Making tooling is only one of the steps performed by the supplier. Developing new technology does not necessarily result in quicker new product release.

The practice of reducing the forecast by actual customer orders is known as: demand commitment available-to-promise forecast consumption order integration

forecast consumption Available-to-promise is incorrect because it is defined as the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The question is the definition of forecast consumption, which is the correct answer.

Which of the following factors would be LEAST useful in determining the sales and operations plan time horizon? order backlog capacity acquisition lead time business plan cumulative lead time

order backlog The order backlog provides the data relating to orders that have been booked by the company. The planning horizon must be at least as long as the cumulative lead time to build the finished goods in the plan. The other answers are incorrect because they require long-term planning horizons.

A make-to-order company believes that reducing customer lead time will result in a competitive advantage and increased sales. The sales and operations planning process should authorize an increase in: finished product inventory levels the sales forecast work in process production

production Increasing sales will require production to produce more.

Planning of additional materials in excess of what is needed to satisfy gross requirements is also known as: pipeline inventory forward scheduling independent demand safety stock

safety stock Forward scheduling is incorrect because it describes a scheduling technique where the scheduler proceeds from a known start date and computes the completion date for the order. Pipeline inventory is incorrect because it refers to the amount of inventory that is currently in the supply or distribution pipeline. Independent demand is incorrect because it describes the demand arising from customer orders for a company's finished goods.

A product is subject to only a distributor sales channel. Which of the following is used to identify the necessity of providing feedback to distributors regarding the feasibility of meeting their demand as forecasted for a seasonal product? aggregate forecast of all distributors sales and operations planning master scheduling of end items customer relationship management

sales and operations planning Sales and operations planning (S&OP) provides a snapshot into how well the sales and operations plans are progressing. A pure distribution channel does not have a master schedule. Aggregating all channel forecasts will provide no information on how well these forecasts are performing over time.

Increased output is best achieved by doing which of the following? implementing flexible manufacturing systems simplifying design using expert systems using computer-aided design

simplifying design Making the production process easier, visible, and fool-proof enables operators and production equipment to effectively increase output, reduce wastes, and increase quality. The other answers are incorrect because a dependence on automation does not ensure productivity increases if the production environment is not prepared to effectively deploy them in support of lean production techniques.

What is the efficiency percentage for this employee? Hours in attendance: 10 Direct hours on production: 8 Standard hours per piece: 1 Pieces produced: 10 80% 100% 125% 133%

125% Based on the above data, the actual direct hours of output (hours charged) is 8 hours. The standard direct hours of output (standard hours times piece produced) is 10 hours. Efficiency = 10 / 8 = 125%.

Item: X Lead Time: 2 On-hand: 4 Period: Forecast, Customer orders, Projected Available balance, Master production schedule 1: 10, 5, 9, 20 2: 5, 2, 2, - 3: 20, 1, 1, 20 4: 12, -, 9, 20 5: 12, -, 17, 20 Lot size: 20, Safety stock: 0, Demand time fence: 3, Planning Time Fence: 5 A company received a new order for 25 units, shippable immediately. If it is assumed that previous customer orders have higher priority and that no rescheduling is possible within the first three periods, the new order should be scheduled in which of the following ways? 5, 3, 17 17, 0, 8 19, 0, 6 20, 0, 5

17, 0, 8 This question uses discrete ATP for the answer. ATP for period 1 is calculated as On-Hand (or PAB) + Supply - Demand (Customer Orders) up to the next MPS receipt. (Note: ATP ignores the forecast and focuses on customer orders only.) The PAB is calculated only in those periods with a MPS receipt. Starting numbers: On Hand = 4; MPS receipt = 20; Demand (Customer Orders) = 7 (5 in period 1, 2 in period 2) 4+20-7 =17 Therefore, 17 can be promised in Period 1. Since there is no ATP in period 2, ATP is 0. The remaining 8 are then promised from period 3 17, 0, 8.

An order is received for 3600 items to be produced in a process that has an unavoidable scrap loss of 10 percent. What quantity should be started? 3600 3960 4000 4360

4000 The calculation is as follows: 3600 / (1 - .10) 4000 units.

A factory works 3 shifts with 5 machines on each shift, 8 hours per shift, 5 days a week, with no overtime scheduled. If utilization is 90% and efficiency is 80%, the calculated rated weekly capacity would be: 600 432 480 540

432 The calculation is as follows: 3 shifts x 5 machines x 8 hours x 5 days x 90% utilization x 80% efficiency = 432.

A company seeking to increase flow and improve critically constrained resources in its supply chain would train employees on which of the following principles of theory of constraints management? Consider all constraints simultaneously when establishing schedules. Process batch sizes must be fixed. Flow and capacity should be balanced. Utilization and activation of a resource are the same.

Consider all constraints simultaneously when establishing schedules. For a process to be improved, all of the subprocesses must be reviewed and improved together. By improving one subprocess only, planners may cause a new constraint somewhere downstream in the overall process flow. According to TOC a resource is being fully utilized only if it contributes to the entire process or operation creating more output. A process can be activated in the sense that it is working, but it may only be creating stock or performing other non-value added activity. In TOC the size of the process batch should be variable, not fixed. Flow, not capacity should be balanced. It is more important to reduce throughput time rather than achieving a notional capacity balance between stages of processes.

Valid reasons to carry safety stock for a manufactured item include which of the following situations? I. Its replenishment time is long compared with the total end-product lead time. II. There are frequent engineering changes in the end products when this part is used. III. A lack of process control results in highly variable yields. I only III only I and III only I, II, and III

I and III only Option I is correct because, as replenishment time increases, so does variability and the need to cover for unplanned demand. Option III is correct because, as variability in production output occurs, the probability of stock increases requiring safety inventories. Option II is incorrect because stocking inventory for products that go through many engineering changes will result in significant amounts of obsolete inventories.

Which of the following order-winning criteria typically lie within the jurisdiction of the manufacturing function? Competitive pricing Delivery reliability Aftermarket service Product design leadership

Delivery reliability The other answers belong to marketing, product engineering, sales, and customer service functions.

Managing consignment inventory is an essential function of which of the following processes? Master scheduling Forecasting Demand management Capacity management

Demand management Demand management is the function of recognizing and managing all demands for products, including consigned inventory in customers' locations. Master scheduling is concerned with the planning and management of all finished goods that are built by the plant. Forecasting is concerned with determining the future demand on products subject to independent demand. Capacity management is concerned with determining the optimal allocation of plant production resources to build products.

Which of the following is the most important consideration when implementing an information system to control shop floor operations? Encouraging users to operate independently with a minimal amount of training Providing staff specialists with the information needed to control production operations Supporting differentiation between functional areas and production operations Ensuring shop personnel have input into choice or design of new technology

Ensuring shop personnel have input into choice or design of new technology An effective information system should place as much responsibility for managing production operations with factory personnel. This requires then that these personnel have input into designing the system that they will be required to use. A fundamental goal of an information system is to integrate and not separate business functions. It is important to place as much responsibility as possible for operations in the hand of factory personnel. An integrated information system requires everyone in the organization to act as a team driven by mutually supporting goals and objectives.

A properly implemented material requirements planning system should result in a reduction of which of the following? I. Inventory II. Engineering changes III. Expediting I only I and III only II and III only I, II, and III

I and III only Options I and III relate to reductions in inventory and expediting when a MRP system is successfully installed. Option II is invalid because MRP will not reduce engineering changes. The task of reducing engineering changes belongs to marketing and product development.

In a manufacturing environment using a push system, which of the following planning tools would most likely drive the process? MRP-based production activity control Reorder point control DRP-based inventory management Lean-based production methods

MRP-based production activity control In a production environment, MRP is used to identify production and then to push production orders to the plant floor and then to continuously reschedule them until completion. DRP is considered as pull system whereby demand from satellite warehouses is placed on supplying facilities. A lean production system is driven foremost by the demand pull of customer requirements entering the plant. Reorder points are a very poor planning method for production control and should not be used.

A focused competitive strategy would be best described as: Providing products that are unique in ways that are valuable to a wide range of customers Providing products to a narrow piece of the total market Providing lower costs than rivals in incorporating upscale attributes Providing low cost leadership

Providing products to a narrow piece of the total market A focused competitive strategy means that a company would "focus" its products and marketing efforts to appeal to a narrow market segment where it feels it has an overwhelming competitive advantage. Low cost leadership is normally used to compete in a mass market, not a narrow market. The products and service offering a targeted at a narrow and not a broad market segment. The marketing strategy is not to compete with low cost products but rather to offer unique products that match exactly the market segment requirements. Competition could be focused on product attributes, but not on low costs.

A firm develops the sales and operations plan for a horizon of 18 months. The first two months are frozen. Changes of up to 5% in either supply or demand for a product family are allowed in months 3 through 6. Changes from 5% to 10% in supply or demand are allowed in months 6 through 12. The operations plan indicates that the critical resources are fully committed for the first 12 months of the horizon. The sales staff has requested an 8% increase in the demand plan for one product family in month 9. Which of the following responses to the sales request is most appropriate? Determine whether capacity can be added in time to meet the demand. Accept the request because the change is within the 5% to 10% limit for a product family. Require a corresponding decrease in the demand plans for other product families. Reject the request because capacity is fully committed and the increase cannot be met.

Require a corresponding decrease in the demand plans for other product families. Since the request is beyond the 6 month boundary, the change can be accommodated. However, since capacities are fully booked, the only option available is to decrease demands for other products to accommodate the increase to the product family. There is insufficient capacity available to simply accept the change. There is no increase in capacity possible. It may be possible to decrease other product families and accommodate the proposed change.

Which of the following would not be considered an operational function within a distribution environment? Setting inventory levels Forecasting demand Picking customer orders Determining safety stock levels

Setting inventory levels Setting inventory levels is a tactical planning function set during the sales and operations planning (S&OP) process. The other answers are operational functions.

The equation used to calculate actual labor hour requirements is Standard hours divided by (efficiency x utilization) Standard hours divided by (efficiency minus utilization) Standard hours x (efficiency x utilization) Standard hours divided by utilization

Standard hours divided by (efficiency x utilization) The question asks what are the actual labor hours, not what would be the standard capacity. As such, the calculation would first multiply the efficiency (either by work center or product) by the utilization (by work center) for the product to be built. Next, the standard hour to build the product would be determined. Finally, the actual hours would have to be determined by factoring in the efficiency and utilization. This would be done by dividing the standard hours by the efficiency and utilization.

Which of the following is the MOST important reason why stock out duration is important when considering the customer service level? Stock out duration is immaterial as it is not related to the number of exposures to stock out. Stock out duration is most likely associated with the number of orders shipped late. Stock out duration is assumed to be constant so variability affects customer service level. Stock out duration is important because customer service isn't 100% until all line items ship.

Stock out duration is immaterial as it is not related to the number of exposures to stock out. Stock out duration is the amount of time an item is stocked out and is not available for sales. Stock out duration directly impacts the number of orders that are shipped on time. The stock out duration is relative and not constant. Stock out duration is not the measurement used to calculate customer service. Stock out duration is directly related to the number of exposures to stock out.

If it is assumed that final products and lower-level subassemblies are made both to stock and to order, which of the following final assembly schedule (FAS) practices should be adopted? The shipping schedule should correspond to the FAS with the required offset. The planning horizon of the FAS should be shorter than that of the master production schedule. Commitment to FAS should be made as early as possible. Order promising should not be tied to the FAS.

The planning horizon of the FAS should be shorter than that of the master production schedule. The question describes an assemble-to-order (ATO) environment. In an ATO environment the master schedule and the FAS are not the same thing. The MPS must produce the subassemblies and have them ready for any customer ATO order where they are brought together and finished. The FAS is said to relieve the MPS plan. The FAS should be committed as late as possible. The actual ship date is determined by the customer order and not the finishing schedule which might be earlier than but no later than the ship date. The date on the order will drive the latest date that the FAS can be scheduled.

Which of the following best describes the results of total quality control? The cost of scrap and rework is below budget. The product meets the expectations of the customer. The number of inspection stations is decreased in the production process. Statistical tests of production identify sources of defects.

The product meets the expectations of the customer. The end-results of a total quality control effort should always be meeting the product quality expectations of the customer.The other answers are all true outputs of the total quality control effort, they are useless if the end result does not meet customer expectations.

A company is considering the adoption of a highly automated form of manufacturing technology that will have a major impact on its production process. Which of the following situations will most likely cause the longest delay in the implementation of this new technology? The company has too few skilled technicians and experienced implementers of this type of new technology. The proposed changes will cause a mismatch between products and processes. This technology conflicts with the company's capabilities and culture. The necessary support and maintenance systems do not currently exist and must be developed.

This technology conflicts with the company's capabilities and culture. All four of the possible answers will hinder the speedy implementation of a complex technology. Maintenance systems, products and processes, and new people skills will all be needed to implement the new technology and the less the company has of each the longer it will take to fully implement the new technology. However, technology conflict with the company's existing capabilities and culture will most likely cause the longest delay because this has to do with changing the people side of the organization.

Which of the following problems can be identified and adjusted at the rough-cut capacity planning level? Overloads at all work centers Excessive queues at suppliers Total hours of load in excess of plant capacity Underloads at all work centers

Total hours of load in excess of plant capacity Rough-cut capacity planning provides planners with the ability to easily identify overloads and underloads at critical work centers in the plant. Rough-cut capacity planning does not consider all work centers only key bottlenecks or critical work centers. Rough-cut does not manage the workloads of suppliers.

When allocated on the basis of historical direct labor hours, overhead will be properly absorbed if which of the following is true? Fixed costs decrease. Total volume remains unchanged. Total volume increases. Total volume decreases.

Total volume remains unchanged. If production volume remains stable, then the standard overhead that was originally calculated will also remain stable. A, B, and D are incorrect because changes to volume and fixed costs will require a new calculation of overhead absorption.