Yang Ops Exam 2

A firm uses exponential smoothing to forecast demand. In period 10 the forecast was 100 and the actual was 90. If à is equal to .10, then what is the forecast for period 11?

99

A make‑or‑buy decision in a purchasing department focuses on who can make the items for the lowest cost, highest quality, and with the fastest delivery.

True

A seasonal factor is the amount of correction needed in a time series to adjust for the season of the year.

True

A traditional measure for evaluating performance of materials managers is the level and value of in‑house inventories.

True

Aggregate Production planning considers the following variables: work force size, inventory levels, production rate.

True

Inventory may be classified as raw materials, finished products, component parts, supplies, and work-in-process.

True

JIT manufacturing has made purchasing departments key players in the success of manufacturing companies.

True

N/A

True

One forecasting approach is employing statistical techniques founded on the assumption that past history is indicative of future expectations.

True

One of the first requirements for a production plan is to have a demand forecast upon which to base the plan.

True

Periodically an actual physical count of stock must be made to assure that the records and actual stock agree.

True

Production departments must ordinarily go through the purchasing department to communicate with suppliers.

True

Just‑in‑Time (JIT) purchasing usually includes this practice:

developing long‑term supplier relationships

Changing an alpha value in single exponential smoothing from .2 to .5 would make:

forecasts more dependent on most recent actual.

In aggregate production planning, the most used method is:

heuristic approaches.

The instrument that authorizes the purchasing department to buy the goods or services is the:

purchase requisition

Which of the following is a mixed strategy for absorbing demand fluctuations in aggregate production planning?

using overtime, inventory, and subcontracting

Same as in (34), with order cost of $20 and holding costs of $2/unit/year, weekly demand is 100 and 50 weeks in the work year, and the item costs $10 per unit. If 200 are ordered each time, then what will be the total annual holding cost.

200

Given the production plan above, how many units at least need to be produced in February?

240

A forecasting model yields the following forecasts as compared to the actual. Forecast: 10 10 20 30 40 50 60 Actual: 7 11 23 35 42 56 66 Which one of the following is the MAD for this forecasting model?

3.71

A firm desires to control inventory levels so as to minimize the sum of holding and order costs. It costs the firm $20 to place an order. The firm estimates its inventory carrying costs at $2/unit/year. Weekly demand is 100 units and there are 50 weeks in the work year. The item costs $10 per unit. What quantity of the item should be ordered each time?

316

A company is using single exponential smoothing. Last month they predicted a sale of 1,000 cases of a certain chemical. The () value they have been using is .1. Because they sold 800 cases, they are predicting a sale this month of:

980

Inventory Holding Cost is $10/unit/month. Beginning inventory of Month 1 is 100 units. Hiring (Firing) Cost is $100 ($200) per worker. Each worker produces 10 units per month. There are 20 workers at the end of month 0. Month 1 2 3 4 5 6 Demand 300 300 400 300 300 400 A firm must plan production for the next six months. From the information given above,which of the following is the minimum level of average production rate which will meet demand for the next six months?

317

Given the plan above, which of the following is beginning inventory of March?

420

A firm can order an item at two costs. As shown below, the larger order quantity yields a quantity discount. Weekly demand is 200 units. The inventory holding cost rate is 20%. The cost to place an order is $10/order. There are 50 weeks per year. Quantity Cost/unit < 500 $10 > 500 $ 8 What is the economic order quantity to minimize total cost?

500

Annual demand for the radio is 10,400 units, holding cost is $3 per unit/year, and ordering cost is $50. What is the order quantity using simple EOQ model?

589

Demand for the product is nonseasonal with a mean of 200 units per week. The standard deviation of the demand during the lead times is 40 units. The lead time for the item is a constant of 3 weeks. With a confidence level of 95% (=5% with z=1.96), what will be the reorder point (R) of the system?

678.4

A firm uses exponential smoothing to forecast demand. In period 10 the forecast was 90 and the actual was 100. If à is equal to .10, then what is the forecast for period 11?

91

Which method of forecasting is the most used?

Exponential smoothing

A major drawback to exponential smoothing is that a large amount of historical data must be stored.

False

A moving average will give a quick response if a large number of observations are averaged.

False

All inventory decisions should be based on cost minimization.

False

An analysis of multi-item inventory situations will generally show that the annual dollar volume of sales is evenly distributed over all the items.

False

In a fixed-order quantity system, the danger of stockout can occur at any time except during lead time.

False

In classifying items as A, B, and C items, a good ratio is 40%, 40%, 20%. 19.For control purposes, a critical item may be classified A or B, regardless of its dollar value.

False

One of the differences between a product and a service is that the service may be carried in inventory while the product may not.

False

Purchasing managers negotiate supplier contracts, but do not directly select suppliers.

False

Warehousing is the management of materials while they are in storage and in transit.

False

Which of the following are related to the ABC inventory control principle? I. Allocate control resources to the high dollar volume items. II. Order slow moving items less frequently. III. Typically 80% of the annual dollar volume of inventory exists in 20% of the items. IV. Order the high dollar volume items more frequently.

I, II, III, and IV

The Aggregate Production Plan does which of the following?

It plans the production of families of products.

Rough Cut Capacity Planning does which of the following:

It verifies the load for work centers.

The M in BOM stands for which of the following?

Material

Which of the following would NOT be a good measure of the performance of materials managers:

None of the alternatives is correct; they are all good measures.

Which of the following is not a component of demand in a typical time series model?

Peak demand for period

All of the following are major activities of materials management EXCEPT:

Repairing

A basic assumption of the EOQ model is that shipments will arrive at exactly one time point.

True

The basis for the ABC classification system in determining which item should receive the greatest control is:

The annual dollar usage for each item.

Exponentially smoothed forecasting models are an example of which of the following forecasting techniques?

Time series analysis

What is the purpose of classifying items into group, when using the ABC type inventory planning system?

To establish the appropriate degree of control over each item.

At the optimal point of EOQ, total holding cost and order cost are equal.

True

Compared to the basic EOQ model Q* = (2DS/H)1/2, the inclusion of a shortage cost into the model has the effect of making Q* larger.

True

Distribution management is the management of the shipment of products through the distribution system to customers.

True

Hierarchical production planning (HPP) tailors the product and planning structure to the organization.

True

Holding costs include costs for handling, insurance, theft, and breakage.

True

In forecasting, a tracking signal measures how well the forecast is keeping pace with trends (both the error size and direction) in demand.

True

In general, more clout with suppliers when materials are scarce is an advantage of the centralization of purchasing.

True

Service level refers to the percentage of satisfied customers as well as the ratio of units supplied to units demanded.

True

The basic logic in ABC type analysis is that generally, very few items are very important and the bulk of items are relatively unimportant.

True

The item purchase cost can be disregarded in determining the EOQ if quantity discounts are not available.

True

The master production schedule is usually fixed over the next six months.

True

The objective of production planning on an aggregate basis is to determine size of inventories, the total work force, and total production.

True

The primary objective of inventory control models is to determine an "optimal" inventory level through answering: what/when/and how much to order for each stock item.

True

When using moving averages and a trend exits, the forecast will lag-behind the actual.

True

In an ABC inventory classification, which items consist of roughly the top 15 percent of the items?

a. A

The Manufacturing leadtime consists of which of the following?

a. Order preparing time b. Shop flow time c. Pre-delivery time d. All of above (X)

What question must be considered in any inventory system?

a. What is to be ordered? b. How much should be ordered? c. When should the order be placed? d. All of the above. (X)

Inventory is used to:

a. maintain independence of operations. b. meet variation in product demand. c. allow flexibility in production scheduling. d. all of the above. (X)

The scope of materials management can best be described as encompassing:

a. purchase and internal control of materials b. purchase and inbound shipping of materials c. warehousing and distribution of finished goods d. all of the management functions related to the complete cycle of materials flow (X)

Logistics includes:

a. the shipment of products to customers b. the shipment of materials from suppliers to factory c. the shipment of materials within the factory d. All of the alternatives are correct. (X)

The greater specialization of employees is seen as an advantage of:

centralization of purchasing

Most current inventory decision models are made on the basis of:

cost minimization.

What current trend enhances the importance of purchasing?

declining labor costs relative to total production costs

Fixed-order quantity models are:

event triggered.

If the importance of random data diminishes as the past becomes more distant, the method to use for forecasting should be:

exponential smoothing.

All of the following are factors increasing the importance of purchasing EXCEPT:

increasing government regulation of transportation industry

The logistics function includes all of the following activities EXCEPT:

inspection of incoming materials

The time between the issuance of a replenishment order and the receipt of stock is:

lead time.

The major variables associated with aggregate production planning include changes in all of the following except:

price of the product

Which of the following is typically NOT an advantage of centralized purchasing:

responsiveness to the needs of operations

Which of the following is NOT an activity of purchasing:

select suppliers to supply each material

An operation routing sheet does which of the following?

specifies the sequence of machines used to assemble the product

The three pieces of data needed to forecast when using the exponential smoothing method are:

the most recent forecast, the actual demand which occurred for that period, and a smoothing constant.

Which of the following is NOT a warehousing function:

transportation to the warehouse

Demand can be made to more closely equal production capacity by all of the following except:

varying the level of inventory

Among the components of operations leadtime, which of the following shop managers have the major responsibility to reduce:

waiting times in queue