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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?
"pseudo" & planning
What information is necessary for an operations manager to make effective use of a dependent inventory demand model?
(1) Master production schedule (what is to be made, and when); (2) Specifications or bill of material (materials and parts required to make the product); (3) Inventory availability (what is in stock); (4) Purchase orders outstanding (what is on order, also called expected receipts); and (5) Lead times (how long does it takes to get various components)
An order for 110 units of Product A has been made. There are currently 60 units of Product A on hand. Each A requires 2 units of Part B. There are 30 units of B available. (a) Calculate the net requirements for A. (b) Calculate the gross requirements for B. (c) Calculate the net requirements for B.
(a) 110 - 60 = 50; (b) 50 × 2 = 100; (c) 100 - 30 = 70
An order for 120 units of Product M has been made. 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. (a) Calculate the net requirements for M. (b) Calculate the gross requirements for N. (c) Calculate the net requirements for N.
(a) 120 - 30 = 90; (b) 90 × 4 = 360; (c) 360 - 20 = 340
An order has been placed for 50 units of Product A and 60 units of Product B. There are currently 35 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. (a) Calculate the net requirements for B. (b) Calculate the gross requirements for C. (c) Calculate the net requirements for C.
(a) 60 - 35 = 25; (b) 50 × 2 + 25 × 5 = 225; (c) 225 - 160 = 65
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?
115
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?
180
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?
300
The minimum record accuracy required for successful MRP is approximately which of the following?
99%
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.
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.
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.
________ are the time units in a material requirements planning (MRP) system.
Buckets
What does the POQ interval equal?
EOQ / average demand per period
Which of the following is TRUE regarding the POQ lot-sizing method?
Each order quantity is recalculated at the time of the order release
"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
MRP can be effective only if very accurate lot sizes are calculated in advance.
FALSE
MRP is an excellent tool for scheduling components with variable lead times.
FALSE
Operations splitting sends pieces to the next operation before the entire lot is completed on the previous operation.
FALSE
Which of the following is FALSE concerning enterprise resource planning (ERP)?
It is inexpensive to implement.
________ is a lot-sizing technique that generates exactly what is required to meet the plan.
Lot-for-lot
What is MRP? Identify four benefits from its use.
MRP or material requirements planning is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements. The benefits of MRP include (1) better response to customer orders, (2) faster response to market changes, (3) improved utilization of facilities and labor, and (4) reduced inventory levels.
________ is a system that allows, with MRP in place, inventory data to be augmented by other resource variables.
Material requirements planning II or material resource planning or MRP II
________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.
Material requirements planning or MRP
Which of the following statements best compares modular bills and phantom bills?
Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.
________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.
Net material requirements (or Net requirements plans)
A(n) ________ is a bill of material for components, usually subassemblies, that exist only temporarily; they are never inventoried.
Phantom bill of material
Which of the following statements regarding MRP in services is TRUE?
Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling.
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
DRP is a time-phased stock-replenishment plan for all levels of a distribution network.
TRUE
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
Gross material requirements do not take into account the amount of inventory on hand.
TRUE
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
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
In general, the lot-for-lot approach should be used whenever economical.
TRUE
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
MRP is generally practiced on items with dependent demand.
TRUE
Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.
TRUE
Reduced inventory levels and faster response to market changes are both benefits of MRP.
TRUE
Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.
TRUE
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
The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.
TRUE
The supply-chain systems that result from using ERP in the grocery industry are called efficient consumer response (ECR) systems.
TRUE
The time-phased product structure, unlike the bill of material, adds the concept of lead times.
TRUE
Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."
TRUE
Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.
TRUE
When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.
TRUE
Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation?
The process must adhere to stringent quality control standards.
Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering?
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.
________ are a way of allowing a segment of the master schedule to be designated as "not to be rescheduled."
Time fences
If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP learn when each of these parts is needed?
Timing is established with the time-phased product structure, which turns a bill of material on its side and adds lead times for each component. Each component is then offset to accommodate lead times.
Which of the following statements regarding lot-sizing is TRUE?
Too much concern with lot-sizing results in false accuracy.
Four A washers, five B washers, two C bolts, and a D bolt are required to make one grill parts kit. If 100 grill parts kits are needed, how many more washers will be consumed than bolts?
Using MRP explosion gives A = 400, B = 500, C = 200, and D = 100. Since A and B are washers and C and D are bolts, the difference is 400 + 500 - 200 - 100 = 600 more washers used than bolts .
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?
Week 4, 40 As
Which of the following statements regarding Wheeled Coach is FALSE?
Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise.
Describe the role of record accuracy in Wheeled Coach's successful use of MRP.
Wheeled Coach's record integrity is excellent. Record accuracy is recognized as a fundamental ingredient of its successful MRP implementation. Its cycle counters are charged with material audits that not only correct errors but also investigate and correct problems.
Low-level coding means that:
a component item is coded at the lowest level at which it appears in the BOM structure.
Which of the following best describes a gross material requirements plan?
a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started
Distribution resource planning (DRP) is:
a time-phased stock replenishment plan for all levels of a distribution network.
Enterprise resource planning (ERP):
automates and integrates the majority of business processes.
A(n) ________ provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.
closed-loop MRP system
Effective use of MRP and other dependent demand models does not require which of the following?
cost of individual components
A(n) ________ system is packaged business software that automates and integrates the majority of business processes, shares common data and practices across the entire enterprise, and produces information in a real-time environment.
enterprise resource planning or ERP
Which of the following is NOT a key benefit of MRP?
increased quality
By convention, what is the top level in a product structure?
level 0
A(n) ________ can illustrate whether a work center has been scheduled beyond its capacity.
load report or resource requirements profile
What lot-sizing technique is generally preferred when inventory holding costs are extremely high?
lot-for-lot
Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)?
lot-for-lot
Which of the following lot-sizing techniques results in the lowest holding costs?
lot-for-lot
In MRP, system nervousness is caused by:
management's attempt to continually respond to minor changes in production requirements.
Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.
material requirements planning or MRP
MRP II is accurately described as:
material resource planning.
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?
modular
Bills of material organized by major subassemblies or by product options are called ________.
modular bills
Firms making many different final products use ________ to facilitate production scheduling.
modular bills
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?
pegging
Which lot-sizing technique orders the quantity needed during a predetermined time between orders?
periodic order quantity
In MRP, the number of units projected to be available at the beginning of each time period refers to:
projected on hand.
Distortion in MRP systems can be minimized when safety stock is held at the:
purchased component or raw material level & finished goods level.
If safety stock is desired, it should be built into which portion of MRP?
raw materials OR finished goods
For the lot-sizing technique known as lot-for-lot to be appropriate:
setup cost should be relatively small.
A material requirements plan contains information with regard to all of the following EXCEPT:
the capacity needed to provide the projected output rate.
If a load report (resource requirements profile) shows a work center scheduled beyond capacity:
the work center's load may be smoothed by such tactics as operations splitting or lot splitting.
Demand for a given item is said to be dependent if:
there is a clearly identifiable parent.
What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?
time fences
