11-16
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
Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.
True
The time-phased product structure, unlike the bill of material, adds the concept of lead times.
True
ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used. True or False?
false
ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings. True or False?
false
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. True or False?
false
Cycle counting is an inventory control technique exclusively used for cyclical items. True or False?
false
Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management. True or False?
false
1) TPS stands for Toyota Production System.
true
MRP is generally practiced on items with dependent demand.
true
One function of inventory is to take advantage of quantity discounts. True or False?
true
Reduced inventory levels and faster response to market changes are both benefits of MRP.
true
7) A push system means providing the next station with exactly what is needed when it is needed.
false
2) TPS stands for Total Production Streamlining.
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 the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.
FALSE
"Phantom bills" are bills of material for subassemblies that do not exist in reality.
False
A dependent demand item is so called because its demand is dependent on customer preferences.
False
By convention, the top level in a product structure is designated level 1.
False
1) Aggregate planning occurs over the medium or intermediate future of 3 to 18 months.
TRUE
1) Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.
TRUE
10) The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.
TRUE
11) When implemented as a comprehensive operations strategy, JIT, TPS, and lean systems sustain competitive advantage and result in increased overall returns.
TRUE
2) Aggregate planning in manufacturing ties organizational strategic goals to a production plan.
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) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.
TRUE
3) One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.
TRUE
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
12) Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? A) product development skills B) cost C) capacity D) speed E) flexibility
a
16) Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
a
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
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
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
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
10) In most manufacturing industries, which of the following would likely represent the largest cost to the firm? A) transportation B) purchasing C) insurance D) financing E) advertising
b
12) What does TPS stand for? A) Total Production Streamlining B) Toyota Production System C) Taguchi's Production S's D) Total Process Simplification E) Transparent Processing System
b
15) Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
b
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
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
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
11) Among which of the following industries are purchasing costs the LOWEST percentage of sales? A) automobiles B) petroleum C) restaurants D) lumber E) chemicals
c
14) Which of the following is NOT a source of variability? A) Employees, machines, and suppliers produce units late. B) Customer demand is unknown. C) Employees, machines, and suppliers produce units that conform to standards. D) Engineering drawings are inaccurate. E) Drawings or specifications are incomplete.
c
14) Which of the following statements is true regarding the leverage of supply chain savings? A) Supply chain leverage is about the same for all industries. B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain leverage depends only upon the percent of sales spent in the supply chain. E) None of the above is true.
c
19) Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
c
20) Which of the following is NOT one of the Seven Wastes? A) overproduction B) transportation C) assignment D) defective product E) motion
c
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
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
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
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 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
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
17) Which of the following statements regarding a pull system is TRUE? A) Large lots are pulled from upstream stations. B) Work is pulled to the downstream stations before it is actually needed. C) Manufacturing cycle time is increased. D) Problems become more obvious. E) None of the above is true of a pull system.
d
4) Outsourcing: A) transfers traditional internal activities to outside vendors. B) utilizes the efficiency that comes with specialization. C) allows the outsourcing firm to focus on its key success factors. D) All of the above are true of outsourcing. E) None of the above is true of outsourcing.
d
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
5) The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is: A) a standard use of the make-or-buy decision. B) not allowed by the ethics code of the Supply Management Institute. C) offshoring. D) outsourcing. E) keiretsu.
d
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
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
8) Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? A) supplier qualification B) product tracking C) independent audits D) refrigeration E) just-in-time delivery
d
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.
d
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
Demand for a given item is said to be dependent if: A) it originates from the external customer. B) there is a deep bill of material. C) the finished products are mostly services (rather than goods). D) there is a clearly identifiable parent. E) the item has several children.
d
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
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
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
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
13) For which corporate strategy(ies) should supply chain inventory be minimized? A) low cost B) response C) differentiation D) low cost and response E) low cost and differentiation
e
13) Which of the following is generally found in most lean environments? A) a push or pull system, depending upon the rate of demand B) a push system for high margin items and a pull system for low margin items C) a push system for purchased parts and a pull system for manufactured parts D) push systems E) pull systems
e
18) Manufacturing cycle time is best defined as the: A) length of the work shift, expressed in minutes per day. B) time it takes a unit to move from one workstation to the next. C) time between the start of one unit and the start of the next unit. D) sum of all the task times to make one unit of a product. E) time from raw materials receipt to finished product exit.
e
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
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
9) Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? A) suppliers B) distributors C) wholesalers D) retailers E) landscaping contractors
e
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
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
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
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
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
1) Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.
false
1) Plans for new product development generally fall within the scope of aggregate planning.
false
2) The aggregate planning process usually includes dispatching of individual jobs.
false
2) The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.
false
3) When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.
false
4) In a JIT system, product inspection adds value by identifying defective items.
false
5) A firm that employs a response strategy should minimize inventory throughout the supply chain.
false
5) Customer demand will always remain an unknown, so it is not considered a source of variability.
false
6) Supply chain decisions are not generally strategic in nature, because purchasing is not a large expense for most firms.
false
7) Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.
false
9) Increasing inventory exposes variability in production processes.
false
Work-in-process inventory is devoted to maintenance, repair, and operating materials. True or False?
false
3) The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.
tRUE
3) Product storage is an example of waste in the sense that no value is added.
true
4) Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
true
6) Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.
true
8) Waste is anything that does not add value from the consumer's perspective.
true
A major challenge in inventory management is to maintain a balance between inventory investment and customer service True or False?
true
In ABC analysis, "A" items are the most tightly controlled True or False?
true
In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification. True or False?
true
One advantage of cycle counting is that it maintains accurate inventory records True or False?
true
Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage. True or False?
true
The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.
true
Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.
true