SCMA Part 3
5) A work center had actual input of 280 hours and actual output of 270 hours. What is the change in backlog? A) 10 B) -10 C) 0 D) 1.037 E) Unable to determine with the given information
A) 10
8) Which of the following best describes a gross material requirements plan? A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started B) an intermediate range plan for the scheduling of families of products C) a chart illustrating whether capacity has been exceeded D) a table that corrects scheduled quantities for inventory on hand E) a schedule showing which products are to be manufactured and in what quantities
A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started
2) The fixed-period inventory system requires more safety stock than a fixed-quantity system because: A) a stockout can occur during the review period as well as during the lead time. B) this model is used for products that have large standard deviations of demand. C) this model is used for products that require very high service levels. D) replenishment is not instantaneous. E) setup costs and holding costs are large.
A) a stockout can occur during the review period as well as during the lead time.
4) Disaggregation: A) breaks the aggregate plan into greater detail. B) transforms the master production schedule into an aggregate plan. C) calculates the optimal price points for yield management. D) converts product schedules and labor assignments to a facility-wide plan. E) is an assumption required for the use of the transportation model in aggregate planning.
A) breaks the aggregate plan into greater detail.
5) The correct sequence from longest to smallest duration scheduling is: A) capacity planning, aggregate planning, master schedule, short-term scheduling. B) aggregate planning, capacity planning, master schedule, short-term scheduling. C) master schedule, capacity planning, aggregate planning, short-term scheduling. D) master schedule, aggregate planning, capacity planning, short-term scheduling. E) capacity planning, master schedule, aggregate planning, short-term scheduling.
A) capacity planning, aggregate planning, master schedule, short-term scheduling.
5) Which of the following is NOT tracked by scheduling optimization systems used in retail stores? A) cars parked in the parking lot B) individual store sales C) transactions D) units sold E) customer traffic
A) cars parked in the parking lot
3) The objective of aggregate planning is to meet forecast demand while ________ over the planning period. A) minimizing cost B) maximizing service level C) minimizing stock out D) minimizing fixed cost E) all of the above
A) minimizing cost
15) If an assignment problem consists of 5 workers and 4 projects: A) one worker will not get a project assignment. B) one project will be assigned two workers. C) the fifth worker will split time among the four projects. D) one project will not get a worker assigned. E) The problem cannot be solved by assignment method.
A) one worker will not get a project assignment.
5) Which of the following is a requirement of Q systems? A) perpetual inventory system B) constant order spacing C) variable lead time D) constant demand E) all of the above
A) perpetual inventory system
4) Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) mission-related planning E) strategic planning
A) short-range plans
10) Which of the following dispatching rules ordinarily gives the best results when the criterion is lowest time for completion of the full sequence of jobs? A) shortest processing time (SPT) B) critical ratio (CR) C) first in, first out (FIFO) D) first come, first served (FCFS) E) longest processing time (LPT)
A) shortest processing time (SPT)
21) A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is: A) unchanged. B) increased by less than 50%. C) increased by 50%. D) increased by more than 50%. E) cannot be determined
B) increased by less than 50%.
5) Industries in which revenue management techniques are easiest to apply are those where: A) use tends to be predictable, and pricing tends to be fixed. B) use tends to be predictable, and pricing tends to be variable. C) use tends to be uncertain, and pricing tends to be fixed. D) use tends to be uncertain, and pricing tends to be variable. E) All of the above, i.e., there is no difference.
B) use tends to be predictable, and pricing tends to be variable.
17) Which of these aggregate planning strategies is a capacity option? A) back ordering B) using part-time workers C) counterseasonal product mixing D) changing price E) promotion
B) using part-time workers
1) Which of the following is NOT required to be known in order to schedule process-focused facilities? A) the sequence of work B) which workers are assigned to each work center C) the time required for each item D) the capacity of each work center E) the availability of each work center
B) which workers are assigned to each work center
10) There are two jobs to be assigned to two workers. The profit for worker A on job 1 is $5 and on job 2 is $8. The profit for worker B on job 1 is $10 and on job 2 is $12. How should the work be divided using the assignment method? A) worker A assigned to job 1 and worker B assigned to job 2 B) worker A assigned to job 2 and worker B assigned to job 1 C) worker A gets both jobs 1 and 2 D) worker B gets both jobs 1 and 2 E) unable to determine
B) worker A assigned to job 2 and worker B assigned to job 1
4) Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level? A) .5 B) 0 C) .07 D) 1 E) unable to determine given only the above information
C) .07
11) If job 5 takes 3, 4 or 5 hours to be completed by workers A, B, and C, respectively, what would the row values for job 5 be after performing Step 1A of the assignment method? A) 3, 4, 5 B) 8, 9, 10 C) 0, 1, 2 D) 6, 7, 8 E) 1, 4/3, 5/3
C) 0, 1, 2
17) Eight jobs have been sequenced at a single work center. Total processing time for the eight jobs is 34 hours, and total flow time for the sequence is 85 hours. For this schedule, utilization is ________ and the average number of jobs in the system is ________. A) 100 percent; 10.625 B) low; .0941 C) 0.400 or 40 percent; 2.5 D) 0.235 or 23.5 percent; 4.25 E) maximized; minimized
C) 0.400 or 40 percent; 2.5
14) A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? A) 16 B) 70 C) 110 D) 183 E) 600
C) 110
9) If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level will require how much safety stock? A) 7 units B) 10 units C) 13 units D) 16 units E) 26 units
C) 13 units
17) In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity? A) 24 B) 100 C) 141 D) 490 E) 600
C) 141
11) In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time? A) 15 units B) 100 units C) 154 units D) 500 units E) 13,125 units
C) 154 units
12) An order for 110 units of Product A has been placed. There are currently 60 units of Product A on hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements for B? A) 20 B) 120 C) 180 D) 240 E) 440
C) 180
12) Which of the following is an aid used to monitor jobs in progress? A) a Gantt load chart B) the assignment method C) a Gantt schedule chart D) Johnson's rule E) a Gantt progress chart
C) a Gantt schedule chart
11) The short-term scheduling activity called "loading": A) assigns dates to specific jobs or operations steps. B) specifies the order in which jobs should be done at each center. C) assigns jobs to work centers D) assigns workers to jobs. E) assigns workers to machines.
C) assigns jobs to work centers
9) All EXCEPT which of the following statements about ABC analysis are true? A) In ABC analysis, inventory may be categorized by measures other than dollar volume. B) ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume. C) ABC analysis is an application of the Pareto principle. D) ABC analysis suggests that all items require the same high degree of control. E) ABC analysis suggests that there are the critical few and the trivial many inventory items.
D) ABC analysis suggests that all items require the same high degree of control.
14) If an assignment problem consists of 6 workers and 7 projects: A) one worker will not get a project assignment. B) one worker will be assigned two projects. C) each worker will contribute work toward the seventh project. D) one project will not get a worker assigned. E) The problem cannot be solved by assignment method.
D) one project will not get a worker assigned.
4) What is the objective of scheduling? A) maximize quality B) minimize cost C) minimize response time D) prioritize and allocate demand to available facilities E) minimize lead time
D) prioritize and allocate demand to available facilities
13) In MRP, the number of units projected to be available at the beginning of each time period refers to: A) net requirements. B) scheduled receipts. C) planned order releases. D) projected on hand. E) the amount necessary to cover a shortage.
D) projected on hand.
9) Which of the following is NOT one of the four main types of inventory? A) raw material inventory B) work-in-process inventory C) maintenance/repair/operating supply inventory D) safety stock inventory E) finished-goods inventory
D) safety stock inventory
5) Aggregate planning would entail which of the following production aspects at BMW for a 12-month period? A) number of cars with a hi-fi stereo system to produce B) number of two-door vs. four-door cars to produce C) number of green cars to produce D) total number of cars to produce E) B, C, and D
D) total number of cars to produce
28) Which of the following is NOT consistent with level scheduling? A) varying the use of subcontracting B) finding alternative work for employees during low-demand periods C) using built-up inventory to meet demand requirements D) varying production levels and/or work force to meet demand requirements E) All of the above are inconsistent with the pure level strategy.
D) varying production levels and/or work force to meet demand requirements
18) Which of the following aggregate planning strategies is known to lower employee morale? A) yield management B) counterseasonal product and service mixing C) changing inventory levels D) varying work force size by hiring or layoffs E) back ordering during high demand periods
D) varying work force size by hiring or layoffs
12) The minimum record accuracy required for successful MRP is approximately which of the following? A) lower than 90% B) 90% C) 95% D) 97% E) 99%
E) 99%
11) A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A) "pseudo" B) planning C) modular D) low-level E) A and B
E) A and B
4) What is the difference between P and Q inventory systems? A) order size B) order spacing C) maximum service level D) lead time length E) A and B
E) A and B
14) Distortion in MRP systems can be minimized when safety stock is held at the: A) purchased component or raw material level. B) work-in-process level. C) finished goods level. D) A and B E) A and C
E) A and C
8) Which of the following is not an effectiveness criterion for scheduling? A) minimizing customer waiting time B) minimizing completion time C) minimizing WIP inventory D) maximizing utilization E) maximizing flow time
E) maximizing flow time
31) When quantity discounts are allowed, the cost-minimizing order quantity: A) is always an EOQ quantity. B) minimizes the sum of holding and ordering costs. C) minimizes the unit purchase price. D) may be a quantity below that at which one qualifies for that price. E) minimizes the sum of holding, ordering, and product costs.
E) minimizes the sum of holding, ordering, and product costs.
5) Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A) about 18 B) about 24 C) about 32 D) about 38 E) more than 40
E) more than 40
4) Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones? A) housing costs B) material handling costs C) labor cost D) investment costs E) pilferage, scrap, and obsolescence
E) pilferage, scrap, and obsolescence
5) Aggregate planning for service firms that provide intangible output deals mainly with: A) smoothing the production rate and finding the optimal size of the workforce. B) capital investment decisions. C) centralized purchasing. D) centralized production. E) planning for human resource requirements and managing demand.
E) planning for human resource requirements and managing demand.
1) A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishable inventory in services.
TRUE
1) Aggregate planning occurs over the medium or intermediate future of 3 to 18 months.
TRUE
12) Finding an ideal mixed strategy is complicated by the huge number of possible strategies.
TRUE
2) A Gantt load chart shows the loading and idle time of several departments, machines, or facilities.
TRUE
3) A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level? A) .60 B) .20 C) .84 D) .40 E) unable to determine given the above information
A) .60
11) An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. What are the net requirements for C? A) 115 B) 175 C) 240 D) 690 E) 700
A) 115
4) A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level? A) 41 B) 55 C) 133 D) 140 E) 165
A) 41
6) The jobs listed below need to be completed. Assume that it is now day 140. If the jobs are sequenced according to the shortest processing time rule, what is the average completion time? Job Processing Time (days) Job due date (days) A 20 180 B 30 200 C 10 175 D 16 230 E 18 210 A) 47.6 days B) 60.2 days C) 94.0 days D) 2.5 days E) 238.0 days
A) 47.6 days
1) Which of the following items is mostly likely managed using a single-period order model? A) Christmas trees B) canned food at the grocery store C) automobiles at a dealership D) metal for a manufacturing process E) gas sold to a gas station
A) Christmas trees
7) What directly results from disaggregation of an aggregate plan? A) a master production schedule B) priority scheduling C) a transportation matrix D) a capacity-demand matrix E) detailed work schedules
A) a master production schedule
21) Which of the following aggregate planning strategies is a demand option? A) changing price B) subcontracting C) varying production levels D) changing inventory levels E) using part-time workers
A) changing price
20) What is the priority rule that sequences jobs using the smallest ratio of due date from today to processing time? A) critical ratio B) earliest due date C) first come, first served D) longest processing time E) shortest processing time
A) critical ratio
7) EDD stands for what? A) earliest due date B) earliest design date C) earliest detrimental date D) earliest decision date E) economic date determination
A) earliest due date
6) Q is to ________ systems as P is to ________ systems. A) fixed quantity, fixed period B) variable demand, constant demand C) variable lead time, variable demand D) variable quantity, variable period E) quality, price
A) fixed quantity, fixed period
16) In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A) increase by about 41%. B) increase by 100%. C) increase by 200%. D) increase, but more data is needed to say by how much. E) either increase or decrease.
A) increase by about 41%.
10) Which of the following is NOT a key benefit of MRP? A) increased quality B) better response to customer orders C) faster response to market changes D) improved utilization of facilities and labor E) reduced inventory levels
A) increased quality
2) The main trait of a single-period model is that: A) inventory has limited value after a certain period of time. B) it has the largest EOQ sizes. C) the order quantity should usually equal the expected value of demand. D) supply is limited. E) the cost of a shortage cannot be determined accurately.
A) inventory has limited value after a certain period of time.
16) By convention, what is the top level in a product structure? A) level 0 B) level 1 C) level T D) level 10 E) level 100
A) level 0
4) Which of the following lot-sizing techniques results in the lowest holding costs? A) lot-for-lot B) EOQ C) POQ D) Wagner-Whitin algorithm E) the quantity discount model
A) lot-for-lot
6) What lot-sizing technique is generally preferred when inventory holding costs are extremely high? A) lot-for-lot B) EOQ C) POQ D) the Wagner-Whitin algorithm E) All of the above are appropriate for the situation.
A) lot-for-lot
5) In MRP, system nervousness is caused by: A) management's attempt to continually respond to minor changes in production requirements. B) the use of the lot-for-lot approach. C) management's marking part of the master production schedule as "not to be rescheduled". D) the use of phantom bills of material. E) management's attempt to evaluate alternative plans before making a decision. Answer: A
A) management's attempt to continually respond to minor changes in production requirements.
9) What is a scheduling technique used to achieve an optimum, one-to-one matching of tasks and resources? A) the assignment method B) Johnson's rule C) the CDS algorithm D) the appointment method E) the reservation method
A) the assignment method
16) Three jobs are to be assigned to three machines. Cost for each job-machine combination appears in the table below. Perform the first two steps of the assignment method (subtract the smallest number in each row and subtract the smallest number in each column; then cover with straight lines). At this point in the problem-solving process: Machine A Machine B Machine C Job 1 11 14 6 Job 2 8 10 11 Job 3 9 12 7 A) the row for Job 1 contains the values 5, 6, and 0. B) calculations are complete, and the problem is ready for an optimal set of assignments. C) the column for Machine B indicates that it should be retired. D) Job 1 should be performed on Machine B. E) Job 1 should be performed on Machine A.
A) the row for Job 1 contains the values 5, 6, and 0.
32) Which of the following actions is consistent with the use of level scheduling? A) use inventory to meet demand requirements B) use overtime to meet higher-than-average demand requirements C) vary production levels to meet demand requirements D) vary work force to meet demand requirements E) none of the above
A) use inventory to meet demand requirements
23) A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs. A) $400 B) $800 C) $1200 D) Zero; this is a class C item. E) Cannot be determined because the unit price is not known.
B) $800
7) A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units, and in period 2, demand is 150 units. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 50 hours of overtime are available for $15/hour each period. If holding costs are $2 per unit each period, how many hours of regular employment should be used in period 1? (Assume demand must be met in both periods 1 and 2 for the lowest possible cost and that production is 1 unit per hour.) A) 100 B) 125 C) 150 D) 50 E) none of the above
B) 125
24) A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order: A) all 4000 units at one time. B) 200 units per order. C) every 20 days. D) 10 times per year. E) none of the above
B) 200 units per order.
30) A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem? A) 61 B) 245 C) 300 D) 306 E) 490
B) 245
18) Five welding jobs are waiting to be processed. Their processing times and due dates are given below. Using the critical ratio dispatching rule, in which order should the jobs be processed? All dates are specified as days from today. Job Processing Time (days) Job due date (days) A 4 7 B 2 4 C 8 11 D 3 5 E 5 11 A) B, D, A, E, C B) C, D, A, B, E C) C, E, A, D, B D) E, B, A, D, C E) B, D, A, C, E
B) C, D, A, B, E
7) A work center is interested in limiting work-in-process by not allowing production to start again until the current batch is finished. The best solution most likely involves: A) MRP. B) ConWIP cards. C) Gantt charts. D) Johnson's rule. E) the assignment method.
B) ConWIP cards.
26) An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE? A) One hundred is the reorder point, and 14 is the order quantity. B) Fourteen is the reorder point, and 100 is the order quantity. C) The number 100 is a function of demand during lead time. D) Fourteen is the safety stock, and 100 is the reorder point. E) None of the above is true.
B) Fourteen is the reorder point, and 100 is the order quantity.
27) Which of the following statements regarding the production order quantity model is TRUE? A) It applies only to items produced in the firm's own production departments. B) It relaxes the assumption that all the order quantity is received at one time. C) It relaxes the assumption that the demand rate is constant. D) It minimizes the total production costs. E) It minimizes inventory.
B) It relaxes the assumption that all the order quantity is received at one time.
15) Which of the following dispatching rules tends to minimize job flow time? A) FCFS: first come, first served B) SPT: shortest processing time C) EDD: earliest due date D) LPT: longest processing time E) FCLS: first come, last served
B) SPT: shortest processing time
6) Which of the following statements regarding Amazon.com is FALSE? A) The company was opened by Jeff Bezos in 1995. B) The company was founded as, and still is, a "virtual" retailer with no inventory. C) The company is now a world-class leader in warehouse automation and management. D) The company uses both United Parcel Service and the U.S. Postal Service as shippers. E) Amazon obtains its competitive advantage through inventory management.
B) The company was founded as, and still is, a "virtual" retailer with no inventory.
6) Which of the following is TRUE regarding services scheduling? A) The critical ratio sequencing rule is widely used for fairness to customers. B) The emphasis is on staffing levels, not materials. C) Reservations and appointments are often used to manipulate the supply of services. D) Labor use can be intensive, and labor demand is usually stable. E) All of the above are true.
B) The emphasis is on staffing levels, not materials.
5) Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A) The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. C) The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. D) The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. E) All of the above are true.
B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.
8) Which of the following statements regarding lot-sizing is TRUE? A) EOQ principles should be followed whenever economical. B) Too much concern with lot-sizing results in false accuracy. C) Lot-for-lot cannot be modified for scrap allowance or process constraints. D) The Wagner-Whitin algorithm simplifies lot size calculations. E) All of the above are true.
B) Too much concern with lot-sizing results in false accuracy.
3) Distribution resource planning (DRP) is: A) a transportation plan to ship materials to warehouses. B) a time-phased stock replenishment plan for all levels of a distribution network. C) a shipping plan from a central warehouse to retail warehouses. D) material requirements planning with a feedback loop from distribution centers. E) a material requirements planning package used exclusively by warehouses.
B) a time-phased stock replenishment plan for all levels of a distribution network.
14) Which of these is among the demand options of aggregate planning? A) subcontracting B) back-ordering during high-demand periods C) changing inventory levels D) varying workforce size E) varying production rates through overtime or idle time
B) back-ordering during high-demand periods
23) Which choice below best describes the counterseasonal product demand option? A) producing such products as lawnmowers and sunglasses during the winter B) developing a mix of products that smoothes out their demands C) lowering prices when demand is slack D) using subcontractors only when demand is excessive E) the breaking of the aggregate plan into finer levels of detail
B) developing a mix of products that smoothes out their demands
12) Cycle counting: A) is a process by which inventory records are verified once a year. B) eliminates annual inventory adjustments. C) provides a measure of inventory turnover. D) assumes that all inventory records must be verified with the same frequency. E) assumes that the most frequently used items must be counted more frequently.
B) eliminates annual inventory adjustments.
5) Under which of the following do planning tasks associated with production planning and budgeting, as well as setting employment, inventory, and subcontracting levels, typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) demand options E) strategic planning
B) intermediate-range plans
6) Forward scheduling is the scheduling of: A) the end items or finished products. B) jobs as soon as the requirements are known. C) the start items or component parts. D) the final operation first beginning with the due date. E) jobs according to their profit contributions.
B) jobs as soon as the requirements are known.
6) To use revenue management strategies, a business should have which combination of costs? A) high variable and high fixed B) low variable and high fixed C) high variable and low fixed D) low variable and low fixed E) either A or B
B) low variable and high fixed
8) Firms making many different final products use ________ to facilitate production scheduling. A) planning bills B) modular bills C) phantom bills D) overdue bills E) gross requirements bills
B) modular bills
20) A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is: A) three times as large. B) one-third as large. C) nine times as large. D) one-ninth as large. E) cannot be determined
B) one-third as large.
9) Which lot-sizing technique orders the quantity needed during a predetermined time between orders? A) economic order quantity B) periodic order quantity C) lot-for-lot D) time fencing E) part-period balancing
B) periodic order quantity
7) For the lot-sizing technique known as lot-for-lot to be appropriate: A) future demand should be known for several weeks. B) setup cost should be relatively small. C) annual volume should be rather low. D) item unit cost should be relatively small. E) the independent demand rate should be very stable.
B) setup cost should be relatively small.
13) Dependence on an external source of supply is found in which of the following aggregate planning strategies? A) varying production rates through overtime or idle time B) subcontracting C) using part-time workers D) back ordering during high demand periods E) hiring and laying off
B) subcontracting
15) In the service sector, which of the following aggregate planning strategies might direct your client to a competitor? A) using part-time workers B) subcontracting C) changing inventory level D) varying production rates through overtime or idle time E) varying work force size by hiring or layoffs
B) subcontracting
22) In aggregate planning, which one of the following is not a basic option for altering demand? A) promotion B) subcontracting C) back ordering D) pricing E) personal selling
B) subcontracting
10) ABC analysis is based upon the principle that: A) all items in inventory must be monitored very closely. B) there are usually a few critical items, and many items that are less critical. C) an item is critical if its usage is high. D) more time should be spent on class "C" items because there are many more of them. E) as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items.
B) there are usually a few critical items, and many items that are less critical.
8) An advantage of the fixed-period inventory system is that: A) safety stock will be lower than it would be under a fixed-quantity inventory system. B) there is no physical count of inventory items when an item is withdrawn. C) no inventory records are required. D) orders usually are for smaller order quantities. E) the average inventory level is reduced.
B) there is no physical count of inventory items when an item is withdrawn.
22) For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item? A) $1.50 B) $2.00 C) $3.00 D) $150.00 E) not enough data to determine
C) $3.00
3) A firm practices a pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and layoff cost is $5 per unit. Over the next year, what will be the sum of hiring and layoff costs? A) $500 B) $2,500 C) $7,500 D) $7,000 E) $12,500
C) $7,500
6) A work center had planned outputs of 10, 15, 13, and 20 hours with actual outputs of 12, 14, 13, and 18 hours. What is the cumulative deviation in output? A) 0 B) 1 C) -1 D) 58 E) Unable to determine with the given information
C) -1
29) The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem? A) 139 B) 174 C) 184 D) 365 E) 548
C) 184
4) What is the typical time horizon for aggregate planning? A) less than a month B) up to 3 months C) 3 to 18 months D) over one year E) over 5 years
C) 3 to 18 months
10) An order for 110 units of Product M has been placed. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net requirements for N? A) 150 B) 170 C) 300 D) 320 E) 440
C) 300
10) If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires how much safety stock? A) 28 units B) 30 units C) 49 units D) 59 units E) 114 units
C) 49 units
24) Which of the following statements about aggregate planning is TRUE? A) An advantage of the counterseasonal product and service mixing option is that it matches seasonal fluctuations without hiring/training costs. B) In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand. C) A pure chase strategy allows lower inventories when compared to a pure level scheduling. D) A disadvantage of subcontracting is that it may require skills or equipment outside the firm's areas of expertise. E) The option of varying workforce size by hiring or layoffs is used where the size of the labor pool is small.
C) A pure chase strategy allows lower inventories when compared to a pure level scheduling.
13) Five jobs are waiting to be processed. Their processing times and due dates are given below. Using the earliest due date dispatching rule, in which order should the jobs be processed? Job Processing Time (days) Job due date (days) A 4 7 B 2 4 C 8 11 D 3 5 E 5 8 A) C, E, A, D, B B) A, B, C, D, E C) B, D, A, E, C D) C, B, A, E, D E) B, D, A, C, E
C) B, D, A, E, C
13) Which of the following statements regarding control of service inventories is TRUE? A) Service inventory is a fictional concept, because services are intangible. B) Service inventory needs no safety stock, because there's no such thing as a service stockout. C) Effective control of all goods leaving the facility is one applicable technique. D) Service inventory has carrying costs but no setup costs. E) Good personnel selection, training, and discipline are easy.
C) Effective control of all goods leaving the facility is one applicable technique.
4) Which of the following is FALSE concerning enterprise resource planning (ERP)? A) It attempts to automate and integrate the majority of business processes. B) It shares common data and practices across the enterprise. C) It is inexpensive to implement. D) It provides and accesses information in a real-time environment. E) ERP software promises reduced transaction costs.
C) It is inexpensive to implement.
26) Which of the following statements regarding aggregate planning is TRUE? A) In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon. B) A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies. C) Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon. D) Because service firms have no inventory, the pure chase strategy does not apply. E) A disadvantage of the option of changing inventory levels is that it forces abrupt production changes.
C) Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.
25) Five jobs are waiting for processing through two work centers. Their processing time (in minutes) at each work center is contained in the table below. Each job requires work center Sigma before work center Delta. According to Johnson's rule, what sequence of jobs will minimize the completion time for all jobs? Job Sigma Delta R 40 10 S 25 30 T 50 20 U 35 35 V 55 15 A) R-S-T-U-V B) S-V-T-R-U C) S-U-T-V-R D) V-R-U-S-T E) R-V-T-S-U
C) S-U-T-V-R
6) Which of the following statements regarding Wheeled Coach is FALSE? A) Wheeled Coach has found competitive advantage through MRP. B) Wheeled Coach builds ambulances in a repetitive process. C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise. D) Wheeled Coach's MRP system maintains excellent record integrity. E) Low inventory and high quality are two positive outcomes of Wheeled Coach's use of MRP.
C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise.
15) Low-level coding means that: A) a final item has only a few levels in the BOM structure. B) the code being used is the code for the lowest level in the BOM structure. C) a component item is coded at the lowest level at which it appears in the BOM structure. D) the top level of the BOM is below level zero and that BOMs are not organized around the finished product. E) the lowest-paid staff member in the production department performs the coding.
C) a component item is coded at the lowest level at which it appears in the BOM structure.
8) The assignment method is: A) a method to highlight overloads in a given work center. B) a computerized method of determining appropriate tasks for an operation. C) a form of linear programming for optimally assigning tasks or jobs to resources. D) the same thing as the Gantt schedule chart. E) a method for achieving a balance between forward and backward scheduling.
C) a form of linear programming for optimally assigning tasks or jobs to resources.
6) Which of the following is NOT one of the four things needed for aggregate planning? A) a logical overall unit for measuring sales and output B) a method to determine the relevant costs C) a mathematical model that will minimize costs over the intermediate planning period D) an aggregate demand forecast for an intermediate planning period E) All of these are needed for aggregate planning.
C) a mathematical model that will minimize costs over the intermediate planning period
2) Which of the following characteristics makes revenue management UNATTRACTIVE to organizations that have perishable inventory? A) demand can be segmented B) service can be sold in advance of consumption C) capacity is easily changed D) variable costs are low and fixed costs are high E) demand fluctuates
C) capacity is easily changed
9) Orders are processed in the sequence in which they arrive if (the) ________ rule sequences the jobs. A) earliest due date B) slack time remaining C) first come, first served D) critical ratio E) Johnson's
C) first come, first served
13) If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand: Q* = A) is smaller than the holding cost per unit. B) is zero. C) is one-half of the economic order quantity. D) is affected by the amount of product cost. E) goes down if the holding cost per unit goes down.
C) is one-half of the economic order quantity.
19) Which critical ratio value implies that a job is already late? A) more than 100 B) 1 C) less than 1 D) 10 E) 3.4
C) less than 1
5) A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period), it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that: A) the January requirement is below level production of 420 units. B) level production is approximately 1000 units per day. C) level production of 420 units per day is below the January requirement. D) level production is approximately 420 units per month. E) the firm must hire workers between December and January.
C) level production of 420 units per day is below the January requirement.
3) Which of the following is NOT one of the successful techniques for controlling the cost of labor in services? A) accurate scheduling of labor-hours to assure quick response to customer demand B) an on-call labor resource that can be added or deleted to meet unexpected demand C) little flexibility in worker hours to decrease the burden on management D) flexibility of individual worker skills that permits reallocation of available labor E) flexibility in rate of output or hours of work to meet changing demand
C) little flexibility in worker hours to decrease the burden on management
6) Top executives tend to focus their attention on which type of forecasts? A) short-range B) intermediate-range C) long-range D) weather E) the forecast for the next day's absentee levels
C) long-range
12) Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)? A) Wagner-Whitin B) EOQ C) lot-for-lot D) POQ E) Silver-Meal
C) lot-for-lot
3) Frito-Lay uses aggregate planning to match capacity with demand because of the ________ associated with its specialized processes. A) high variable cost and high fixed cost B) high variable cost and low fixed cost C) low variable cost and high fixed cost D) low variable cost and low fixed cost E) none of the above
C) low variable cost and high fixed cost
30) Which of the following is NOT an advantage of level scheduling? A) stable employment B) lower absenteeism C) matching production exactly with sales D) lower turnover E) more employee commitment
C) matching production exactly with sales
6) MRP II is accurately described as: A) MRP software designed for services. B) MRP with a new set of computer programs that execute on microcomputers. C) material resource planning. D) an enhancement of MRP that plans for all levels of the supply chain. E) a new generation of MRP software that extends MRP to planning and scheduling functions.
C) material resource planning.
10) A paint company mixes ten different base colors into 3,000 different color options. If production scheduling is organized around the ten different base colors , then the bills of material are classified as which of the following? A) phantom B) planning C) modular D) low-level E) A and B
C) modular
4) What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement? A) net requirements planning B) time fencing C) pegging D) backtracking E) leveling
C) pegging
27) In level scheduling, what is kept uniform from month to month? A) product mix B) inventory levels C) production/workforce levels D) demand levels E) sub-contracting levels
C) production/workforce levels
12) Sequencing (or dispatching): A) assigns dates to specific jobs or operations steps. B) assigns jobs to work centers. C) specifies the order in which jobs should be done at each center. D) assigns workers to jobs. E) assigns workers to machines.
C) specifies the order in which jobs should be done at each center.
19) Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A) price cuts or discounts B) promotion C) subcontracting D) counterseasonal products or services E) advertising
C) subcontracting
7) A material requirements plan contains information with regard to all of the following EXCEPT: A) quantities and required delivery dates of all subassemblies. B) quantities and required delivery dates of final products. C) the capacity needed to provide the projected output rate. D) inventory on hand for each final product. E) inventory on hand for each subassembly.
C) the capacity needed to provide the projected output rate.
5) If a load report (resource requirements profile) shows a work center scheduled beyond capacity: A) the company must add capacity by enlarging the facility. B) the company must add capacity by such tactics as overtime and subcontracting. C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting. D) the aggregate plan must be revised. E) the Wagner-Whitin algorithm should be used to rebalance the load.
C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting.
6) What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A) modular bills B) time phasing C) time fences D) lot sizing E) closed loop system
C) time fences
10) The two most basic inventory questions answered by the typical inventory model are: A) timing of orders and cost of orders. B) order quantity and cost of orders. C) timing of orders and order quantity. D) order quantity and service level. E) ordering cost and carrying cost.
C) timing of orders and order quantity.
16) Average completion time for a schedule sequence at a work center is the ratio of: A) total processing time to the number of jobs. B) total flow time to total processing time. C) total flow time to the number of jobs. D) total processing time plus total late time to the number of jobs. E) total flow time plus total late time to the number of jobs.
C) total flow time to the number of jobs.
15) Most inventory models attempt to minimize: A) the likelihood of a stockout. B) the number of items ordered. C) total inventory-based costs. D) the number of orders placed. E) the safety stock.
C) total inventory-based costs.
5) The jobs listed below need to be completed. Assume that it is now day 140. If the jobs are sequenced according to the longest processing time rule, what is the lateness of job A? Job Processing Time (days) Job due date (days) A 20 180 B 30 200 C 10 175 D 16 230 E 18 210 A) 0.0 days B) 24.0 days C) 7.4 days D) 10.0 days E) 11.6 days
D
6) A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete. A) 5 B) 4 C) 6 D) 7 E) unable to determine with the above information
D) 7
8) Which of the following statements about ABC analysis is FALSE? A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have. C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
28) Which of these statements about the production order quantity model is FALSE? A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. C) Average inventory is less than one-half of the production order quantity. D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E) None of the above is false.
D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity.
9) Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.
D) All of the above are true.
13) What is a method of input-output control that uses a system of cards to limit the amount of work at a work center and also to control lead time and monitor backlog? A) the assignment method B) backward scheduling C) forward scheduling D) ConWIP cards E) level material use
D) ConWIP cards
11) Five jobs are waiting to be processed. Their processing times and due dates are given below. Using the shortest processing time dispatching rule, in which order should the jobs be processed? Job Processing Time (days) Job due date (days) A 4 7 B 7 4 C 8 11 D 3 5 E 5 8 A) A, B, C, D, E B) C, E, A, D, B C) B, D, A, E, C D) D, A, E, B, C E) C, E, A, B, D
D) D, A, E, B, C
11) Which of the following is TRUE regarding the POQ lot-sizing method? A) Each POQ interval is recalculated at the time of the order release. B) Each order quantity and POQ interval are recalculated at the time of the order release. C) The POQ interval and all order quantities remain fixed throughout the planning horizon. D) Each order quantity is recalculated at the time of the order release. E) POQ lot sizes are always at least as large as the EOQ lot sizes would be.
D) Each order quantity is recalculated at the time of the order release.
19) Which of the following statements about the basic EOQ model is FALSE? A) If the setup cost were to decrease, the EOQ would fall. B) If annual demand were to double, the number of orders per year would increase. C) If the ordering cost were to increase, the EOQ would rise. D) If annual demand were to double, the EOQ would also double. E) All of the above statements are true.
D) If annual demand were to double, the EOQ would also double.
25) Which choice best describes level scheduling? A) Daily production is variable from period to period. B) Subcontracting, hiring, and layoffs manipulate supply. C) Price points are calculated to match demand to capacity. D) Inventory goes up or down to buffer the difference between demand and production. E) Overtime is used to handle seasonal demand fluctuations.
D) Inventory goes up or down to buffer the difference between demand and production.
11) Which of the following is NOT an assumption of the economic order quantity model shown below? Q* = A) Demand is known, constant, and independent. B) Lead time is known and constant. C) Quantity discounts are not possible. D) Production and use can occur simultaneously. E) The only variable costs are setup cost and holding (or carrying) cost.
D) Production and use can occur simultaneously.
2) Which of the following statements regarding MRP in services is TRUE? A) MRP is for manufacturing only, and it is not applicable to services. B) MRP can be used in services, but only in those that offer very limited customization. C) MRP only works in services for demand that is independent. D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling. E) None of the above is true.
D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling.
32) Which of the following statements about quantity discounts is FALSE? A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. B) In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available. C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D) The larger the annual demand, the less attractive a discount schedule will be. E) The smaller the ordering cost, the less attractive a discount schedule will be.
D) The larger the annual demand, the less attractive a discount schedule will be.
24) Five jobs are waiting for processing through two work centers. Their processing time (in minutes) at each work center is contained in the table below. Each job requires work center Alpha before work center Beta. According to Johnson's rule, which job should be scheduled first in the sequence? Job Alpha Beta R 20 10 S 25 35 T 50 20 U 15 35 V 55 75 A) R B) S C) T D) U E) V
D) U
27) Five jobs are waiting for processing through two work centers. Their processing time (in minutes) at each work center is contained in the table below. Each job requires work center Alpha before work center Beta. According to Johnson's rule, what is the optimum sequence of jobs and the minimum time for completion of all jobs? Job Alpha Beta R 20 10 S 25 35 T 50 20 U 15 35 V 55 75 A) V-T-S-U-R; 225 B) U-R-T-S-V; 175 C) R-S-T-U-V; 240 D) U-S-V-T-R; 200 E) R-U-T-S-V; 175
D) U-S-V-T-R; 200
5) It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when and how large of an order should be placed to meet the requirement of 300 As? A) Week 1, 300 As B) Week 1, 40 As C) Week 5, 40 As D) Week 4, 40 As E) Week 4, 300 As
D) Week 4, 40 As
8) If demand is not uniform and constant, then stockout risks can be controlled by: A) increasing the EOQ. B) spreading annual demand over more frequent, but smaller, orders. C) raising the selling price to reduce demand. D) adding safety stock. E) reducing the reorder point
D) adding safety stock.
5) Which of the following is the term used for intermediate-range capacity planning with a time horizon of three to eighteen months? A) material requirements planning B) enterprise resource planning C) strategic planning D) aggregate planning E) job scheduling
D) aggregate planning
4) Revenue (or yield) management is best described as: A) a situation where management yields to labor demands. B) a situation where the labor union yields to management demands. C) a process designed to increase the rate of output. D) allocation of scarce resources to customers at prices that will maximize revenue. E) management's selection of a product mix yielding maximum profits.
D) allocation of scarce resources to customers at prices that will maximize revenue.
14) Among the advantages of cycle counting is that it: A) makes the annual physical inventory more acceptable to management. B) does not require the detailed records necessary when annual physical inventory is used. C) does not require highly trained people. D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory. E) does not need to be performed for less expensive items.
D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory.
3) Enterprise resource planning (ERP): A) seldom requires software upgrade or enhancement. B) does not integrate well with functional areas other than operations. C) is inexpensive to implement. D) automates and integrates the majority of business processes. E) all of the above
D) automates and integrates the majority of business processes.
16) Which of the following aggregate planning strategies is a capacity option? A) influencing demand by changing price B) counterseasonal product mixing C) influencing demand by extending lead times D) changing inventory levels E) influencing demand by back ordering
D) changing inventory levels
6) The purpose of safety stock is to: A) replace failed units with good ones. B) eliminate the possibility of a stockout. C) eliminate the likelihood of a stockout due to erroneous inventory tally. D) control the likelihood of a stockout due to variable demand and/or lead time. E) protect the firm from a sudden decrease in demand.
D) control the likelihood of a stockout due to variable demand and/or lead time.
2) A recent advance in short-term scheduling that makes use of expert systems and simulation in solving dynamic scheduling problems is: A) forward scheduling. B) backward scheduling. C) infinite scheduling. D) finite capacity scheduling. E) progressive scheduling
D) finite capacity scheduling.
7) Short-term schedules are prepared: A) directly from the aggregate plans. B) directly from the capacity plans. C) from inventory records for items that have been used up. D) from master schedules, which are derived from aggregate plans. E) from the purchasing plans.
D) from master schedules, which are derived from aggregate plans.
5) Which of the following is NOT a key direct benefit from effective internal or external scheduling? A) lower cost B) greater use of assets C) more dependable delivery D) higher quality E) added flexibility
D) higher quality
31) A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. Which of the following tactics would be most representative of following a chase strategy? A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100-unit difference D) lay off workers to match the 200-unit difference E) implement a lower price point to increase demand
D) lay off workers to match the 200-unit difference
7) What is the effort to plan the coordination of demand forecasts with functional areas of the firm and its supply chain? A) enterprise resource planning B) material requirements planning C) capacity planning D) sales and operations planning E) new product development
D) sales and operations planning
7) The proper quantity of safety stock is typically determined by: A) using a single-period model. B) carrying sufficient safety stock so as to eliminate all stockouts. C) multiplying the EOQ by the desired service level. D) setting the level of safety stock so that a given stockout risk is not exceeded. E) minimizing total costs.
D) setting the level of safety stock so that a given stockout risk is not exceeded.
3) A disadvantage of the fixed-period inventory system is that: A) it involves higher ordering costs than the fixed quantity inventory system. B) additional inventory records are required. C) the average inventory level is decreased. D) since there is no count of inventory during the review period, a stockout is possible. E) orders usually are for larger quantities.
D) since there is no count of inventory during the review period, a stockout is possible.
10) Forward scheduling: A) begins with a delivery date, then offsets each operation one at a time, in reverse order. B) has the same meaning as "finite loading." C) is often used in service environments such as catering a banquet or scheduling surgery. D) starts the schedule as soon as the job requirements are known. E) produces a schedule only if it meets the due date.
D) starts the schedule as soon as the job requirements are known.
4) "An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes which of the following? A) the linear decision rule B) simulation C) the management coefficients model D) the transportation method E) graphical methods
D) the transportation method
6) Which of the following aggregate planning methods does not work if hiring and layoffs are possible? A) the linear decision rule B) simulation C) the management coefficients model D) the transportation method E) graphical methods
D) the transportation method
14) Flow time represents the time: A) an order spends waiting for processing at a work center. B) an order spends being processed at a work center. C) an order spends moving from one work center to another. D) to complete an order, including time spent in processing and in waiting. E) none of the above
D) to complete an order, including time spent in processing and in waiting.
8) Which of the following would NOT generally be a motive for a firm to hold inventories? A) to decouple various parts of the production process B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C) to take advantage of quantity discounts D) to minimize holding costs E) to hedge against inflation
D) to minimize holding costs
12) What is the primary purpose of the basic economic order quantity model shown below? Q* = A) to calculate the reorder point, so that replenishments take place at the proper time B) to minimize the sum of carrying cost and holding cost C) to maximize the customer service level D) to minimize the sum of setup cost and holding cost E) to calculate the optimum safety stock
D) to minimize the sum of setup cost and holding cost
29) Which of the following is consistent with a pure chase strategy? A) vary production levels to meet demand requirements B) vary work force to meet demand requirements C) vary production levels and work force to meet demand requirements D) little or no use of inventory to meet demand requirements E) All of the above are consistent with a pure chase strategy.
E) All of the above are consistent with a pure chase strategy.
3) Which of the following is an element of inventory holding costs? A) housing costs B) material handling costs C) investment costs D) pilferage, scrap, and obsolescence E) All of the above are elements of inventory holding costs.
E) All of the above are elements of inventory holding costs.
7) Which of the following is a function of inventory? A) to decouple various parts of the production process B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C) to take advantage of quantity discounts D) to hedge against inflation E) All of the above are functions of inventory
E) All of the above are functions of inventory
26) Which of the following is a limitation of rules-based dispatching systems? A) Rules need to be revised to adjust to changes in orders, product mix, and so forth. B) Rules may not recognize idle resources. C) Rules may not recognize bottleneck resources D) Rules may not be able to prioritize two jobs with identical due dates. E) All of the above are limitations.
E) All of the above are limitations.
25) Which of the following statements regarding the reorder point is TRUE? A) The reorder point is that quantity that triggers an action to restock an item. B) There is a reorder point even if lead time and demand during lead time are constant. C) The reorder point is larger than d × L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true.
E) All of the above are true.
4) Capacity planning in closed-loop MRP: A) utilizes feedback about workload from each work center. B) may make use of resource requirements profiles (load reports). C) may smooth work center loads with such tactics as overlapping and lot splitting. D) does not add capacity, but rather seeks effective use of existing capacity. E) All of the above are true.
E) All of the above are true.
9) Which of the following statements regarding the gross material requirements plan is TRUE? A) It shows total demand for an item. B) It shows when an item must be ordered from a supplier or when production must be started. C) It combines a master production schedule with the time-phased schedule. D) It requires several inputs, including an accurate bill of material. E) All of the above are true.
E) All of the above are true.
18) Which of the following statements about the basic EOQ model is TRUE? A) If the ordering cost were to double, the EOQ would rise. B) If annual demand were to double, the EOQ would increase. C) If the carrying cost were to increase, the EOQ would fall. D) If annual demand were to double, the number of orders per year would increase. E) All of the above statements are true.
E) All of the above statements are true.
22) What does the use of the shortest processing time sequencing rule generally produce? A) maximum average lateness B) maximum utilization C) maximum effectiveness D) minimum average flow time E) B and D
E) B and D
5) Service level is: A) the probability of stocking out. B) the probability of not stocking out. C) something that should be minimized in retail. D) calculated as the cost of a shortage divided by (the cost of shortage + the cost of overage) for single-period models. E) B and D
E) B and D
8) Using LPT priority would result in what sequence for Jobs A, B, C, and D if their process times are 4, 6, 5, and 2 respectively? A) ABCD B) DCBA C) DACB D) DABC E) BCAD
E) BCAD
3) If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock? A) 8 units B) 10 units C) 16 units D) 64 units E) Cannot be determined without lead time data.
E) Cannot be determined without lead time data.
4) Which of the following statements regarding scheduling at Delta Airlines is FALSE? A) About one flight in twenty is disrupted by weather events. B) Schedule changes at one airport have a ripple effect that may have impacts in many others. C) Delta's high-tech computer and communications system is located in Atlanta. D) Delta's rapid rescheduling uses mathematical scheduling models. E) Delta's rapid rescheduling promotes air safety and limits traveler inconvenience, but has not resulted in money savings for Delta.
E) Delta's rapid rescheduling promotes air safety and limits traveler inconvenience, but has not resulted in money savings for Delta.
10) What does the POQ interval equal? A) the number of periods of average demand covered by the safety stock B) the same number of periods that are on the "not to be rescheduled" side of the time fence C) EOQ / maximum gross requirement D) the number of periods until the incoming projected on hand runs out E) EOQ / average demand per period
E) EOQ / average demand per period
21) Which of the following is an advantage of the FCFS dispatching rule when used in services? A) FCFS maximizes utilization. B) FCFS minimizes the average number of jobs in the system. C) FCFS minimizes the average lateness of all jobs. D) FCFS maximizes the number of jobs completed on time. E) FCFS seems fair to customers.
E) FCFS seems fair to customers.
23) When a set of jobs must pass through two workstations whose sequence is fixed, ________ is the sequencing rule most commonly applied. A) critical ratio B) earliest due date C) first come, first served D) slack time remaining E) Johnson's rule
E) Johnson's rule
4) Which of the following statements regarding aggregate planning in services is FALSE? A) Approaches to aggregate planning differ by the type of service provided. B) Some service organizations conduct aggregate planning in exactly the same way as manufacturing firms, but with demand management taking a more active role. C) Aggregate planning in some service industries may be easier than in manufacturing. D) Labor is the primary aggregate planning vehicle. E) Level scheduling is far more common than using a chase strategy.
E) Level scheduling is far more common than using a chase strategy.
9) Which of the following statements best compares modular bills and phantom bills? A) Both pertain to assemblies that are not inventoried. B) There is no difference between the two. C) Both pertain to assemblies that are inventoried. D) Modular bills are used for assemblies that are not inventoried, unlike phantom bills. E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.
E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.
7) Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation? A) The material plan must meet both schedule requirements and facility capabilities. B) The plan must be executed as designed. C) Inventory investment must be minimized. D) Excellent record integrity must be maintained. E) The process must adhere to stringent quality control standards.
E) The process must adhere to stringent quality control standards.
3) Revenue management is MOST likely to be used in which one of the following situations? A) a fast food restaurant with wide demand fluctuations during the day B) a dental clinic that wants to fill its appointment book C) a firm with a good counterseasonal product mix D) a shipping company that can change its fleet size easily E) an airline attempting to fill "perishable" seats at maximum revenue
E) an airline attempting to fill "perishable" seats at maximum revenue
11) ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A) item quality B) unit price C) the number of units on hand D) annual demand E) annual dollar volume
E) annual dollar volume
7) Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability D) lead times E) cost of individual components
E) cost of individual components
6) If safety stock is desired, it should be built into which portion of MRP? A) any B) none C) raw materials D) finished goods E) either C or D
E) either C or D
6) An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following? A) production rates B) labor levels C) inventory levels D) overtime work E) facility capacity
E) facility capacity
9) Which of the following considers process capacity when scheduling? A) cap loading B) constrained loading C) capacitated loading D) backward loading E) finite loading
E) finite loading
8) Which of the following is NOT an input to S&OP? A) capacity decisions B) supply-chain support C) workforce D) inventory on hand E) master production schedule
E) master production schedule
20) Which of the following aggregate planning options attempts to manipulate product or service demand? A) inventories B) part-time workers C) subcontracting D) overtime/idle time E) price cuts
E) price cuts
7) Which of the following should be higher in P systems than Q systems? A) lead time B) demand C) order size D) order spacing E) safety stock
E) safety stock
7) Which of the following would most likely fall under the scope of only an operations manager? A) research and development B) new product plans C) capital investments D) facility location/capacity E) setting inventory levels
E) setting inventory levels
1) ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.
FALSE
1) According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.
FALSE
1) Earliest due date is a shop floor dispatching (sequencing) rule that relates the time available to complete a job to the amount of work left to be completed.
FALSE
1) In MRP, a "bucket" refers to a fixed order quantity, such as an EOQ.
FALSE
1) Plans for new product development generally fall within the scope of aggregate planning.
FALSE
1) Scheduling optimization systems used in retail stores typically track customer traffic in 4-hour time increments.
FALSE
1) The objective of aggregate planning is usually to meet forecast demand while smoothing employment and driving down inventory levels over the planning period.
FALSE
1) With forward scheduling, jobs are scheduled as late as possible within the time allowed by the customer due dates.
FALSE
10) The level scheduling strategy allows lower inventories than the pure chase strategy.
FALSE
2) "Phantom bills" are bills of material for subassemblies that do not exist in reality.
FALSE
2) Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
FALSE
2) One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.
FALSE
2) Safety stock in inventory systems depends only on the average demand during the lead time.
FALSE
2) Short-term scheduling is important to efficiency and to cost reduction, but its impact is not of strategic importance.
FALSE
2) The EOQ model is best suited for items whose demand is dependent on other products.
FALSE
2) The aggregate planning process usually includes dispatching of individual jobs.
FALSE
2) The critical ratio sequencing rule prioritizes the jobs based on the importance or value of the customers who have placed the orders.
FALSE
3) ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.
FALSE
3) Gantt charts are useful for scheduling jobs, but not for loading them.
FALSE
3) In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately.
FALSE
3) MRP is an excellent tool for scheduling components with variable lead times.
FALSE
3) Process-focused facilities and repetitive facilities generate forward-looking schedules, but process-focused facilities do this with JIT and kanban while repetitive facilities generally use MRP.
FALSE
3) Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.
FALSE
4) A dependent demand item is so called because its demand is dependent on customer preferences.
FALSE
4) At the economic order quantity, holding costs are equal to product costs.
FALSE
4) Cycle counting is an inventory control technique exclusively used for cyclical items.
FALSE
5) In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.
FALSE
5) Work-in-process inventory is devoted to maintenance, repair, and operating materials.
FALSE
6) By convention, the top level in a product structure is designated level 1.
FALSE
8) Advertising and promotion are methods of manipulating product or service supply in aggregate planning.
FALSE
9) Because service firms do not inventory their output, a pure chase strategy is not appropriate.
FALSE
9) In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.
FALSE
3) MRP can be effective only if very accurate lot sizes are calculated in advance.
False
1) DRP is a time-phased stock-replenishment plan for all levels of a distribution network.
TRUE
1) Delta uses mathematical short-term scheduling techniques and a high-tech nerve center to manage the rapid rescheduling necessary to cope with weather delays and similar disruptions.
TRUE
1) Finite capacity scheduling provides the user with graphical interactive computing, which is the technique's primary advantage over rule-based scheduling.
TRUE
1) Firms may discover that, rather than adapting ERP to the way they do business, they have to adapt the way they do business to accommodate the ERP software.
TRUE
1) Graphical techniques are easy to understand and use, but are not well-suited for generating optimal strategies.
TRUE
1) If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.
TRUE
1) If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced.
TRUE
1) Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.
TRUE
1) One question that operations managers must answer when generating an aggregate plan is whether prices or other factors should be changed to influence demand.
TRUE
1) Service level is the complement of the probability of a stockout.
TRUE
1) Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.
TRUE
1) Techniques for controlling the cost of labor in services include accurate scheduling of labor hours to assure quick response to customer demand, on-call labor for unexpected demand, flexibility of labor skills for reallocation of available labor, and flexibility in rate of output or hours of work to meet changing demand.
TRUE
1) The constant work-in-process (ConWIP) card aids input-output control by limiting the amount of work in a work center.
TRUE
1) The demand for automobiles would be considered as independent demand.
TRUE
1) The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.
TRUE
1) The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.
TRUE
1) Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.
TRUE
11) Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.
TRUE
2) A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
TRUE
2) Aggregate planning for fast food restaurants is very similar to aggregate planning in manufacturing, but with much smaller units of time.
TRUE
2) Aggregate planning in manufacturing ties organizational strategic goals to a production plan.
TRUE
2) Closed-loop MRP systems allow production planners to move work between time periods to smooth the load or to at least bring it within capacity.
TRUE
2) Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the master production schedule.
TRUE
2) Gross material requirements do not take into account the amount of inventory on hand.
TRUE
2) In ABC analysis, "A" items are the most tightly controlled.
TRUE
2) In general, the lot-for-lot approach should be used whenever economical.
TRUE
2) In services, the scheduling emphasis is usually on staffing levels, not materials.
TRUE
2) MRP is generally practiced on items with dependent demand.
TRUE
2) One criterion for developing effective schedules is minimizing completion time.
TRUE
2) The supply-chain systems that result from using ERP in the grocery industry are called efficient consumer response (ECR) systems.
TRUE
2) The transportation method of linear programming is an optimizing approach to aggregate planning.
TRUE
2) Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."
TRUE
3) Because of the significance of labor in the scheduling of services, behavioral and social issues, wage and hour laws, and union contracts all complicate the scheduling process.
TRUE
3) Dispatching rules are typically judged by four effectiveness criteria: average completion time, utilization, average number of jobs in the system, and average job lateness.
TRUE
3) One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.
TRUE
3) Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.
TRUE
3) Reduced inventory levels and faster response to market changes are both benefits of MRP.
TRUE
3) The benefits of effective scheduling include lower cost, faster throughput, and dependable delivery.
TRUE
3) The strategies of aggregate planning are broadly divided into demand options and capacity options.
TRUE
3) When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.
TRUE
4) In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.
TRUE
4) In manufacturing scheduling, physical inventories of goods can buffer variations in demand, but service scheduling normally lacks that buffer because services are generally consumed at the same time they are delivered.
TRUE
4) Johnson's rule sequences a set of jobs through two different machines or work centers in the same order.
TRUE
4) One function of inventory is to take advantage of quantity discounts.
TRUE
4) The assignment method provides an optimum, one-to-one assignment of jobs to resources.
TRUE
4) The time-phased product structure, unlike the bill of material, adds the concept of lead times.
TRUE
5) If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G.
TRUE
5) One advantage of cycle counting is that it maintains accurate inventory records.
TRUE
5) The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.
TRUE
5) When developing an aggregate plan, one of the adjustable elements of capacity is the extent of subcontracting.
TRUE
6) In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.
TRUE
6) In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger production/order quantity than in an otherwise identical EOQ problem.
TRUE
6) One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.
TRUE
7) Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.
TRUE
7) The reorder point is the inventory level at which action is taken to replenish the stocked item.
TRUE
7) The use of part-time workers as an aggregate planning option may be less costly than using full-time workers, but it may also reduce quality levels.
TRUE
8) In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.
TRUE