CPIM exam part 1 review

How many times can a stockout occur if an order is placed at the start of each month? A. 52 times B. 365 times C. 12 times D. 1 time

C. 12 times Because a stockout can occur only when inventory is getting low, it can occur only before a restocking point. If there are 12 restocking points (one per month), then there are 12 chances for a stockout.

How does enterprise resources planning (ERP) differ from manufacturing resource planning? A. ERP runs on different types of servers. B. Only the names have changed in order to market the software. C. ERP does not dwell on manufacturing alone. D. ERP uses relational databases.

C. ERP does not dwell on manufacturing alone.

Which of the following is a key customer service performance indicator for most companies? A. Purchase price variance B. Manufacturing variance C. On-time schedule performance D. Overtime

C. On-time schedule performance On-time schedule performance is a measure of meeting the customer's originally negotiated delivery request date.

Which of the following provides information on component availability? A. Capacity requirements planning B. Distribution requirements planning C. Master production scheduling D. Material requirements planning

D. Material requirements planning Material requirements planning provides the information on components needed, available quantities, and required dates.

The paths over which a carrier operates, including right-of-way, roadbed, tracks and other physical facilities, are: A. toll paths. B. channels. C. routes. D. ways.

D. ways. Ways are the paths over which a carrier operates, including right-of-way, roadbed, tracks, and other physical facilities. These may be owned by the government, privately held by the carrier, or provided by nature.

What is Project Production manufacturing

Project production is a manufacturing process in which each unit or small group of units is managed by a project team created especially for that purpose.

What is Repetitive manufacturing

Repetitive manufacturing consists of the repeated production of the same discrete products of families of products.

What is a Requirements explosion

Requirements explosion is the process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the bill of material.

What are sales and operations

Sales and operations planning is related to an organization's ability to match its supply with demand.

What are some of the characteristics and selections customers expect in the products and services they buy

a fair price, higher-quality products and services, better delivery lead time, better pre- and after-sales service, and product and volume flexibility. As both consumers and industrial customers have become much more demanding, and suppliers have responded by improving the range of characteristics they offer.

What is the transaction channel

the transaction channel handles the related transactions, which include both payment of funds up the channel and transfer of ownership down the channel. Transfer of ownership is accomplished by transferring the title to the goods to the next party.

Name all the steps in the purchasing cycle

The purchasing cycle consists of the following steps: 1. Receiving purchase requisition 2. Selecting suppliers 3. Determining the right price 4. Issuing purchase orders 5. Ensuring that delivery dates are met 6. Receiving goods and closing the order 7. Approving suppliers' invoice for payment

Which S&OP meeting addresses disagreements from different functional areas regarding the sales and operations plans? A. Supply planning meeting B. Demand planning meeting C. Executive meeting D. Pre-sales and operations planning meeting

C. Executive meeting The executive meeting is used to address any disagreements that arise during the S&OP process that were not reconciled during previous steps.

Sales for a concrete block manufacturer correlate directly with new home starts. The company would likely use which forecasting method? A. Trend B. Moving average C. Extrinsic D. Seasonality

C. Extrinsic Extrinsic forecasting correlates with indicators external to an organization that may influence demand.

What process of sorting and packing products eliminates the need for storage? A. Split delivery B. Honeycombing C. Cross-docking D. Floating inventory

C. Cross-docking Cross-docking is packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.

Which scheduling technique builds a schedule by proceeding sequentially from the initial period to the final period while observing capacity limits? A. Process sequencing B. Capacity requirements scheduling C. Finite forward scheduling D. Finite backward scheduling

C. Finite forward scheduling

A shoe manufacturer receives two orders minutes apart. The first order, A, is for 100 trainers in ten colors to be delivered in three weeks. The second order, B, is for 200 white trainers to be delivered in two weeks. The manufacturer assigns order A to be completed first. What is this dispatching rule called? A. Earliest operation due date B. Shortest process time C. First come, first served D. Earliest job due date

C. First come, first served With first come, first served (FCFS), jobs are done in the order in which they are received, regardless of due dates and processing times. This dispatching rule works well if schedules are well-designed and stable.

Which example of differentiating a product from the offerings of competitors is most likely to result in the product becoming an order winner? A. Creating a combination of desired capabilities that is unique even though none of the capabilities by themselves is unique B. Adding one more feature so there are fewer minimum requirements that cannot be provided C. Building a product that meets actual customer needs even though it does not meet all expectations D. Changing priorities to focus on price, quality, delivery speed, and flexibility

A. Creating a combination of desired capabilities that is unique even though none of the capabilities by themselves is unique

Which of the following typically contributes costs to a physical distribution system that are exceeded only by costs for transportation? A. Distribution inventory B. Protective packaging C. Materials handling D. Design

A. Distribution inventory Distribution inventory is second only to transportation in terms of cost in a physical distribution system.

What flows downstream toward the customer in the transaction channel? A. Title to goods B. Goods C. Cash for sales D. Nothing other than cash for returns

A. Title to goods

As global supply chains open sourcing up around the globe, it becomes critical that buyers consider which of the following before making a final sourcing decision? A. Total cost of ownership B. Logistics costs C. Inventory carrying cost D. Import duties and taxes

A. Total cost of ownership The total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream.

Copper is purified and then extruded into various sizes of copper tubing. Using a VATI analysis, what product flow best matches this type of production? A. V B. T C. A D. I

A. V One product (copper) is split off into various types of end products, forming a V shape with the start of the process at the bottom of the V and the end products at the top of the V.

Rework, scrap, spoilage, and downgrades are examples of: A. internal failure costs. B. external failure costs. C. the product development cycle. D. a design process.

A. internal failure costs. Internal failure costs are accrued when things go wrong before the product reaches the customer. They usually include the costs of rework, scrap, downgrades, reinspection, retesting, and process losses. They can have the added impediment of extending lead times or resulting in incomplete shipments.

The price for a product must fall within a certain range for a supplier to be considered by potential customers. This condition is known as an order: A. qualifier. B. confirmation. C. premise. D. winner.

A. qualifier.

Value is defined by: A. the customer (external or internal). B. top management. C. engineering. D. sales and marketing.

A. the customer (external or internal). Value is defined by customers, both internal and external. Determining what is valued requires two things: understanding who the customers are and understanding what they value. Engineering, sales and marketing, and top management determine value only in so far as they are internal customers for the product or service. Ultimately, it is the external customer who pays for the product or service, and their definition of value is paramount.

What is after sales support?

After-sales support often separates competitors, when customers know that one company stands behind its products while the other is only interested in the initial sale.

What is an indented bill

An indented bill that is fully expanded will, by convention, not be complete until all lowest-level items are purchased components. Therefore, the items that have no further indented items below them will all be purchased components.

Which of the following is a pull system in which work centers signal that they wish to withdraw parts from feeding operations or suppliers? A. Shop packet B. Kanban C. Andon D. Dispatch

B. Kanban Kanban is a method that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or suppliers.

How can the objectives of marketing be met while also considering other stakeholder objectives? A. Marketing and production objectives can be met with lower inventories. B. Marketing and production objectives can be met with higher inventories. C. Marketing and finance objectives can be met with lower inventories. D. Marketing and finance objectives can be met with higher inventories.

B. Marketing and production objectives can be met with higher inventories.

The process of selecting and sequencing available jobs to be run at individual workstations and the assignment of those jobs to workers is called: A. order release. B. dispatching. C. input/output control. D. priority sequencing.

B. dispatching. Dispatching refers to the selecting and sequencing of available jobs to be run at individual workstations and the assignment of those jobs to workers.

In capacity requirements planning, scheduled receipts include: A. purchase orders. B. open production orders. C. planned orders. D. firm planned orders.

B. open production orders. Open orders appear as scheduled receipts, coming from material requirements planning.

A fundamental principle of lean production is to focus on: A. product-specific work cells. B. operator and process flexibility. C. buffering the constraint. D. strict adherence to the master schedule.

B. operator and process flexibility. Lean production focuses on increasing flexibility within manufacturing.

In ABC classification, an item with the least complex controls and record keeping and high levels of safety stock would receive which classification? A. A B. B C. C D. D

C. Category C items have the least complex controls and record keeping, for example, nuts and bolts. They will have a low inventory carrying cost, so plentiful days of supply make sense. They are ordered far less frequently but in much larger quantities.

On the basis of the information below, increasing revenue by $1,000,000 would result in what amount for gross profit? Revenue Sales- $2,000,000 Cost of Goods Sold - Direct Material= $600,000 (30%) - Direct Labor= $200,000 (10%) - Overhead (constant)= $500,000 (25%) Gross Profit= 700,000 (35%) A. $1,000,000 B. $ 1.050,000 C. $ 1,300,000 D. $ 1,700,000

C. $ 1,300,000 Increasing revenue by $1,000,000 would increase the cost of goods sold to $1,700,000 (overhead does not increase), resulting in gross profit of $1,300,000.

In period 1, planned input was 36 hours but actual input was 32 hours. In period 2, planned and actual input were 36 hours. In period 3, planned input was 34 hours but actual input was 30 hours. All hours are standard hours. What was the cumulative variance? A. 8 standard hours B. 4 standard hours C. -8 standard hours D. -4 standard hours

C. -8 standard hours Cumulative Variance (Inputs) = Previous Cumulative Variance + Actual Input - Planned Input. First day: 32 hours - 36 hours = -4 hours. Second day, no change. Third day: -4 hours + 30 hours - 34 hours = -8 hours.

Given the following, what is the work center backlog? Average input: 100 units/week Average output: 100 units/week Current work in process: 160 units A. 63 weeks B. 1 week C. 1.6 weeks D. 2.6 weeks

C. 1.6 weeks To calculate the load that is backlog at a work center, divide the current number of units (or hours) currently at the work center by the average output, or 160 units/100 units of output per week = 1.6 weeks of load.

A work center consists of 2 machines working 8 hours a day and 5 days a week. Historically, utilization has been 80 percent and efficiency has been 90 percent. To the nearest hour, what is the rated capacity? A. 40 hours B. 80 hours C. 58 hours D. 37 hours

C. 58 hours Rated Capacity = Available Time × Utilization × Efficiency = (2 machines × 8 hours/day × 5 days) × 0.8 × 0.9 = 57.6 hours, rounded to 58 hours.

Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the economic order quantity (EOQ)? A. 216 units B. 305 units C. 683 units D. 483 units

C. 683 units Economic Order Quantity = Square Root of [(2 × Annual Demand × Order Cost)/(Carrying Cost Rate × Item Cost)] = Square Root of (2AS/ic) = Square Root of [(2 × 14,000 units × $30 per unit)/(0.2 × $9) = Square Root of ($840,000/$1.80) = Square Root of 466,666.7 = 683.13 units rounded to 683 units.

If a manufacturer typically produces 80 orders of a given product per year and calculates that three stockouts are acceptable, what is its customer service level? A. 77% B. 83% C. 96% D. 97%

C. 96% Customer Service Level = (Orders per Period - Stockout Chances per Period)/Orders per Period; 77/80 = 0.96 = 96%

Which of the following is a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age? A. Delphi method B. Qualitative C. Exponential smoothing D. Seasonality

C. Exponential smoothing Exponential smoothing is a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. It gives more weight to the most recent demand information.

Which of the following primarily focuses on ensuring that inventory records accurately represent the value of inventory? A. Audit B. Cycle counting C. Periodic inventory D. Perpetual inventory

C. Periodic inventory The main purpose of periodic inventory is to satisfy financial auditors that the inventory records represent the value of the inventory.

Which of the following is an input to capacity requirements planning (CRP)? A. Resource requirements plan B. Sales and operations plan C. Material requirements plan D. Master production schedule

C. Material requirements plan CRP uses planned and firm planned orders from the material requirements plan to calculate requirements.

Which product design strategy shifts product differentiation closer to the consumer by delaying identity changes, such as assembly or packaging, to the last possible supply chain location? A. Deferral B. Bright packaging C. Postponement D. Assemble-to-order

C. Postponement Postponement enables specific identification of a product as close to the market as possible.

Rough-cut capacity planning (RCCP) checks which of the following data? A. Inventory B. Resources for a family of products C. Materials and labor D. Critical resources

D. Critical resources In order to validate the feasibility of the master production schedule, RCCP uses a bill of resources to check critical resources.

Which of the following entities or conditions impacts customer demand due to decisions that consumers and companies must make regarding financial resources? A. Customers B. Competition C. Quality D. Economy

D. Economy

In an organization that uses an intermittent manufacturing process type, lead times are long, routings are different for different items, operation times for orders differ, and queues tend to be long. What is likely true of this scenario? A. Drum-buffer-rope scheduling will not be useful in this environment. B. Elevating the constraint will mitigate most of the issues described in the question. C. Adding a time buffer before the constraint would simply increase WIP inventory. D. The constraint may shift spontaneously and often.

D. The constraint may shift spontaneously and often. The question describes a typical intermittent manufacturing environment (work center or batch) and the shifting load on various resources as different routings are used will tend to create bottlenecks in different locations spontaneously. However, while this type of environment presents challenges for drum-buffer-rope scheduling, it can still produce real benefits in terms of increasing throughput and reducing WIP inventories.

What form of transportation is most useful for moving low-value, bulky cargo over long distances? A. Pipelines B. Truck C. Air D. Water

D. Water The main advantage of water transport is cost. It is most useful for moving low-value bulky cargo over relatively long distances.

The economic order quantity (EOQ) for a manufactured part is the quantity at which: A. the ordering costs are lowest. B. the replenishment lead time is shortest. C. the costs of changing capacity are lowest. D. the ordering and carrying costs are equal.

D. the ordering and carrying costs are equal. The EOQ is a type of fixed order quantity model intended to minimize the combined costs of acquiring and carrying inventory. It is based on certain assumptions, including that demand is constant and known, the item is produced or purchased in batches continuously, order preparation and inventory carrying costs are constant and known, and replacement occurs all at once. Given these assumptions, the EOQ occurs when the ordering cost equals the carrying cost.

What is Finite loading

Finite loading is used to generate a realistic and achievable schedule because it takes available capacity into account and forces scheduling of the promise date to reflect capacity constraints.

What is Foward scheduling

Forward scheduling allows taking advantage of excess capacity and helps with load leveling.

Why is competition important?

In today's global environment, manufacturers find foreign competitors selling in their markets, transportation of goods around the globe easy and affordable, and communications availing customers of goods and services from around the globe.

Intermediate customers

Intermediate customers refers to the customers that are not at the end of the supply chain, which in this case would refer to retailers who carry the parts for sale to the general public. Ultimate customers would refer to the customers of those retailers that purchase the parts from those retail locations. Supplier segmentation refers to companies that supply the manufacturer with parts and raw materials. Lead time segmentation is a form of supplier segmentation.

Manufacturing orders

Manufacturing orders have already gone through the validation process in capacity requirements planning.

What is an order qualifier

Order qualifiers are those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace.

What is an order winner

Order winners are characteristics that would cause a firm's customers to choose them over the competition and can be considered competitive advantages.

Difference between Order Winners and Order Qualifiers

Order winners are special product and service attributes desired by the customer that enable companies to beat the competition. A lower price is always welcome; however, it is not the only aspect of company choice. Order qualifiers are characteristics a product or service must have to be considered. Specifications are, of course, necessary; however, any supplier or source would have to meet specifications. Order winners are what set one company above its competitors.

Which type of lead time is the time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials? A. Purchasing lead time B. Procurement lead time C. Supplier lead time D. Manufacturing lead time

Procurement lead time procurement lead time as follows: "The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials. Lead time begins when a decision has been made to accept an order to produce a new product and ends when production commences."

What is the formula for rated weekly capacity

Rated Weekly Capacity = Available Weekly Hours × Utilization × Efficiency

What is the formula for efficiency

Standard hours Produced/ Actual Hours

Explain the sequence in processing products in a supply chain

1. Goods in a supply chain originate with the supplier, 2. who provides the raw materials and components to the manufacturer. 3. In turn, the manufacturer produces the end product, 4. which is then sold to the customer.

What is a business plan?

A business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow.

What is a dispatch list

A dispatch list is used to identify the priority and sequence of manufacturing orders at a workstation.

If the inventory turnover ratio is 6 times and the average inventory is $2.5 million, what is the annual cost of goods sold? A. $15 million B. $12.5 million C. $8.5 million D. $2.4 million

A. $15 million Annual Cost of Goods Sold = Inventory Turnover Ratio × Average Inventory in Dollars = 6 × $2.5 million = $15 million.

A process has four steps in which each has a yield of 99.7 percent (within 3 sigmas or standard deviations) or a 0.3 percent chance of defective material. What is the probability of a defect for the final finished good? A. 1.195 percent B. 0.3 percent C. 3.988 percent D. 98.81 percent

A. 1.195 percent Multiplying the yields of each successive operation together shows the net yield: 0.997 × 0.997 × 0.997 × 0.997 = 0.988054 or 98.81 percent (rounded). The probability of a defect is the complement, or 1 - 0.988054 = 0.011946 or 1.195 percent (rounded). This illustrates why six sigma promotes the need for high quality of steps above standard quality levels.

A work center produces 200 units, 220 units, 210 units, 200 units, and 205 units each day of a 5-day week respectively. If the standard hours per item are 0.5, what is the work center's demonstrated capacity for the week (expressed as a daily rate)? A. 104 standard hours. B. 207 standard hours. C. 414 standard hours. D. Available time, utilization, and efficiency are not provided, so the answer can't be calculated.

A. 104 standard hours. Demonstrated capacity can be calculated by multiplying the average number of items produced by the standard hours per item. First, find the average number of items produced by summing the units and dividing by the number of units: (200 units + 220 units + 210 units + 200 units + 205 units)/5 days = 1,035 units/5 days = 207 units per day. Next, multiply this average by the standard hours per item: 207 units per day × 0.5 hours per unit = 103.5 standard hours per day, rounded to 104 standard hours.

Gross requirements for a period on the material requirements planning grid are 100 units for unit A. Two units of A are needed to make one unit of Z. If net requirements are 80 units, what was the available inventory of A? A. 20 units B. Not enough information was provided to answer the question C. 40 units D. 60 units

A. 20 units Net Requirements = Gross Requirements - Available Inventory. This equation can be rearranged as Available Inventory = Gross Requirements - Net Requirements, resulting in 100 units - 80 units = 20 units. The information on how many As are used for the Zs is not needed to answer this question.

What is the rated capacity of a work center that has available time of 320 hours, utilization of 80 percent, and efficiency of 90 percent? A. 230 standard hours B. 230 actual hours C. 444 standard hours D. 444 actual hours

A. 230 standard hours Rated Capacity = Available Time × Utilization × Efficiency = 320 hours × 0.8 × 0.9 = 230.4 standard hours, rounded to 230 standard hours. Since this is an expectation based on a time study and set as a standard for this work center, it is a standard hours calculation.

A typical order of cellphones contains 200 handsets. In a given year, demand for these handsets is 5,000. How many orders would need to be fulfilled each year to meet demand? A. 25 B. 50 C. 100 D. 200

A. 25 Orders per Period = Period Demand/Order Quantity; 5,000/200 = 25

A work order requires 220 units to be run. The setup time is 2 standard hours. The run time is 0.2 standard hours per unit. Queue and wait time are 0.5 standard hours per unit. What is the operation time for this work order? A. 46.0 standard hours B. 46.6 standard hours C. 44.0 standard hours D. 44.4 standard hours

A. 46.0 standard hours Operation Time per Work Order = Setup Time + Run Time = Setup Time + (Quantity × Standard Time per Unit) = 2 hours + (220 units × 0.2 hours per unit) = 46 standard hours

The lead time for a particular stock-keeping unit is four weeks, the average demand is 100 units per week, and safety stock is set at one week's demand. The order quantity is 1,000 units. The order point is A. 500 units. B. 4,100 units. C. 200 units. D. 1,500 units.

A. 500 units. Order point (OP) = demand during lead time (DDLT ) + safety stock (SS) = (100 units x 4 weeks ) + 100 units = 500 units

If the opening inventory is 100 units, sales are 500 units, and the ending inventory should be 200 units, what will manufacturing produce? A. 600 units B. 500 units C. 300 units D. 400 units

A. 600 units The equation for determining the production quantity is as follows: Total Production = Total Forecast + Backorders + Ending Inventory - Opening Inventory = 500 units + 0 units + 200 units - 100 units = 600 units.

How is a business plan different from a strategic plan? A. A business plan focuses on the long-range financial objectives of a company. B. A business plan is tactical in nature. C. A business plan receives input from the sales and operations plan. D. A business plan is a near-term projection of a company's financials.

A. A business plan focuses on the long-range financial objectives of a company.

How is six sigma best defined? A. A methodology that furnishes tools to decrease process variation and improve product quality B. The ability of the process to produce parts that conform to specifications C. A never-ending effort to expose and eliminate root causes of problems D. Mistake-proofing techniques, such as manufacturing or setup activity designed in a way to prevent an error from resulting in a product defect

A. A methodology that furnishes tools to decrease process variation and improve product quality The definition for six sigma found in the APICS Dictionary describes it as follows: "A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality."

Which is an accurate statement about ABC classification? A. About 20 percent of the items will account for about 80 percent of the total value. B. C items account for about 80 percent of the total value. C. A general rule for using ABC classification is to have plenty of everything in inventory. D. A items should have the most safety stock.

A. About 20 percent of the items will account for about 80 percent of the total value. The general rule of thumb is that about 20 percent of the items will account for about 80 percent of the total value. A items should have the tightest control over safety stock levels, not the largest amount of safety stock. Good inventory management would not have plenty of everything in stock. Also, C items account for about 5 percent, not 80 percent, of the total value.

When updating the sales forecasting reports, what information must be used? A. Actual sales data from the period that most recently ended B. Updated gross domestic product (GDP) data for the country and region C. Updated data on manufacturing defects per million opportunities D. Changes to the manufacturing environment type

A. Actual sales data from the period that most recently ended The sales forecasting reports must be updated with data from the period that most recently ended. This data may include actual sales, production, inventory levels, and other information. The manufacturing environment type and manufacturing defects would not impact the sales plan unless they altered projected inventory levels substantially, and GDP data would be too broad to be applicable to sales forecasts.

In a make-to-stock strategy, when are orders for products typically received? A. After the product is in inventory and available for sale B. Before the product is produced, placed in inventory, and made available for sale C. Before the product can be engineered, produced, and made available for sale D. After the product can be assembled and made available for sale

A. After the product is in inventory and available for sale In a make-to-stock environment, orders are expected to be filled from existing inventory and immediately available for shipment.

Which of the following is the most likely manufacturing environment for a bicycle? A. Assemble-to-order B. Remanufacture C. Engineer-to-order D. Make-to-order

A. Assemble-to-order According to the APICS Dictionary, an assemble-to-order manufacturing environment is one in which "a good or service can be assembled after receipt of a customer's order. The key components... used in the assembly or finishing process are usually stocked in anticipation of a customer order. Receipt of the order initiates assembly of the customized product." In the question's example, a bicycle manufacturer will likely have all of the components for their various bicycle models already produced. When a customer orders a new bike, their chosen model (and any features) will be assembled from components in stock.

Assume that design, purchase, inventory, manufacturing, assembly, and ship steps each individually have a lead time of one week. In which environment would delivery lead time be two weeks? A. Assemble-to-order B. Make-to-order C. Make-to-stock D. Engineer-to-order

A. Assemble-to-order In an assemble-to-order environment, the delivery lead time would include assembly and ship steps, for a total of two weeks.

What will happen with a moving average forecast of a product with distinct seasonality if the seasonality is included when forecasting is performed? A. At the end of the seasonal upswing, the forecast will show demand continuing to increase. B. The forecast will always have a bias toward overproduction. C. At the end of the seasonal low, the forecast will show demand starting to increase again. D. The forecast will lag the trend unless the results are subsequently deseasonalized.

A. At the end of the seasonal upswing, the forecast will show demand continuing to increase. Using any time series forecast method without first removing seasonality will result in seasonal upswings being projected to continue upward and seasonal downswings projected to continue downward. Therefore, the forecast will tend toward underproduction at the end of a seasonal downswing.

Which is an example of employee empowerment? A. Authority to reject product that is within specifications B. Spending up to a certain limit given approval C. Ability to supervise employees at the same organizational level D. Ability to join a workers' union

A. Authority to reject product that is within specifications A good example of employee empowerment is the ability to reject units of a product, which might be done even if a product was within specifications, such as if it was almost outside of specifications for multiple different specifications.

Which of the following is the term for the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer order promising? A. Available-to-promise B. On-hand inventory C. Work in process D. Capable-to-promise

A. Available-to-promise Available-to-promise (ATP) is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer order promising.

Which accounting method for valuing inventory estimates total cost, including allocated overhead, to produce a batch of goods divided by the total number of units produced? A. Average cost B. Standard cost C. First in, first out D. Last in, first out

A. Average cost Average cost per unit is based on estimating total cost, including allocated overhead, to produce a batch of goods divided by the total number of units produced.

A large organization that maintains manufacturing, distribution, marketing, and retail operations wants to track key performance indicators (KPIs) to measure overall organizational performance. Which tool would be best suited for the desired tracking? A. Balanced scorecard B. SCOR model C. United Nations Global Compact D. Blockchain

A. Balanced scorecard The balanced scorecard can be used to evaluate organizational or supply chain performance. The SCOR model is tailored specifically to supply chain management, which is part of the organizational processes, but would not give a clear picture of overall performance. The United Nations Global Compact and blockchain are not tools tailored to tracking KPIs.

In a make-to-order strategy, when are orders for products typically received? A. Before the product is produced, placed in inventory, and made available for sale B. After the product is in inventory and available for sale C. Before the product can be engineered, produced, and made available for sale D. Before the product can be assembled and made available for sale

A. Before the product is produced, placed in inventory, and made available for sale. In a make-to-order environment, orders are the signal to manufacturing to produce a product, and therefore they must be received before the product can be produced, placed in inventory, and made available for sale.

What document shows the component parts and number of components needed to make one unit of the part? A. Bill of material B. Material requisition C. Routing sheet D. Material requirements plan

A. Bill of material According to the APICS Dictionary, a bill of material is "a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the quantity of each required to make an assembly."

What is the term for an element of time or material that can be maintained at the constraint, convergent points, divergent points, and shipping points? A. Buffer B. Rope C. Drum D. Safety stock

A. Buffer In the theory of constraints, buffers can be time or material, and they support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

How can a digital supply network help boost profitability? A. By increasing top and bottom lines B. By lowering security costs C. By providing too much performance information D. By enhancing risk

A. By increasing top and bottom lines Digital supply networks can boost profitability by increasing top and bottom lines. They tend to reduce, not enhance, risk, and too much performance information can lead to slowed decision making and missed opportunities. Security costs may increase due to the need to invest in technological security measures in addition to traditional physical security.

Which of the following processes employs a finite scheduling model of a company's manufacturing system to determine when an item can be delivered? A. Capable-to-promise B. Make-to-order C. Available-to-promise D. Engineer-to-order

A. Capable-to-promise Capable-to-promise employs a finite scheduling model of the manufacturing system to determine when a new or unscheduled customer order can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies.

A company operating in a volatile industry, in which demand and events can frequently throw off predictions, has become frustrated with the unreliability of and its dependence on forecasts. What step could it take to generate better and quicker information about customer demand? A. Collaborate more closely with downstream customers. B. Focus more closely on key competencies. C. Increase inventory. D. Improve order winners.

A. Collaborate more closely with downstream customers. Closer collaboration will mean that upstream partners get downstream customer information directly and immediately. A key benefit of communicating demand rather than only orders is that you can see the reason for certain orders (e.g., to stockpile in advance of a plant shutdown versus a trend of higher sales), and this helps eliminate the bullwhip effect where variability in orders (both high and low) is magnified at each upstream supply chain node.

Which of the following entities or conditions impacts demand by providing expectations that products will be sold at a fair price, that higher quality is required, that delivery lead time is negligible, that before- and after-sales service is available, and that products and their volumes are flexible? A. Customers B. Sales and marketing C. Customs D. Competition

A. Customers

What sources of demand are considered when performing demand planning? A. Demand from all sources B. Demand from internal customer orders only C. Demand from the sales forecast only D. Demand from external customer orders only

A. Demand from all sources Demand planning is the recognition of demand from all sources, including forecasted demand and actual orders from internal and external customers.

Managing consignment inventory is an essential function in which of the following processes? A. Demand management B. Sales and operations planning (S&OP) C. Capacity management D. Forecasting

A. Demand management Demand management is the function of recognizing and managing all demands for products, including managing consigned inventory in customers' locations.

A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be? A. Demand will be understated. B. Demand will be overstated. C. Demand will be unaffected. D. Not enough information exists to comment.

A. Demand will be understated. When both domestic and international demand are present, ignoring international demand will result in understated requirements.

What is a challenge associated with the process of implementing collaborative planning, forecasting, and replenishment (CPFR)? A. Discontinuation of business practices that may be seen as successful B. Decreased levels of customer service C. Supply chain fragmentation across organizational boundaries D. Decreased sales revenue

A. Discontinuation of business practices that may be seen as successful. One of the challenges is the discontinuation of businesses practices that may be seen as successful. CPFR typically results in increased sales revenue, supply chain integration across organizational boundaries, and improved customer service levels.

Which factor favors use of the road mode of transport over other modes? A. Dispersed market B. Low variable costs C. High capital cost D. Lowest carrying cost

A. Dispersed market Road is best suited for moving goods to a dispersed market because they can provide door-to-door service so long as there is a suitable road.

Which is the factor that primarily determines by how much total line haul costs will vary? A. Distance moved B. Customer discounts C. Packaging D. Perishability of goods

A. Distance moved Total line haul costs vary with the distance moved, which is why this is the correct answer. Line haul costs are not dependent on packaging, customer discounts, nor the perishability of the goods in question.

What term is used for the distribution route, from raw materials through consumption, along which products travel? A. Distribution channel B. Logistics channel C. Transaction channel D. Marketing channel

A. Distribution channel

In the physical distribution system, which of the following creates time value by placing the product close to the customer? A. Distribution inventories B. Order processing and communication C. Materials handling D. Warehousing

A. Distribution inventories Distribution inventory includes all finished goods inventory at any point in the distribution system. Distribution inventories create time value by placing the product close to the customer.

Which technology would best assist an organization that needed to inspect pipelines to monitor for leakage? A. Drones B. Autonomous vehicles C. Robotic process automation D. Blockchain

A. Drones Drones can be used to inspect pipelines and other difficult-to-access areas.

Which of the following statements refers to project production? A. Each unit or small group of units is managed by a project team created especially for that purpose. B. The project schedule is translated into production requirements. C. Engineering schedules and manages production. D. Oversight of the manufacturing process is defined on a Gantt chart.

A. Each unit or small group of units is managed by a project team created especially for that purpose. In project production, each unit or small group of units is managed by a project team created especially for that purpose.

A corporation has decided to give its factory employees more control and flexibility over the execution of their day-to-day duties. This allows them to decide when to begin certain processes rather than following a detailed schedule dictated by management. What is this an example of? A. Employee empowerment B. Diversity management C. Employee incentives D. Employee involvement

A. Employee empowerment Employee empowerment is the practice of giving non-managerial employees the responsibility and the power to make decisions regarding their jobs or tasks. It transfers some managerial responsibility to the employee. Empowerment can range from corporation-level decisions to workstation decisions (e.g., scheduling, quality, purchasing decisions).

Which of the following is a framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization? A. Enterprise resources planning B. Advanced planning and scheduling C. Collaborative planning, forecasting, and replenishment D. Manufacturing resource planning

A. Enterprise resources planning Enterprise resources planning (ERP) delivers an integrated suite of business applications. Manufacturing resource planning is a method for the effective planning of all resources of a manufacturing company. Advanced planning and scheduling is a manufacturing management process that ensures raw materials and production capacity are optimally allocated to meet demand. Collaborative planning is related to the handling of complex, multi-stakeholder projects and planning scenarios

A distribution manager is asked to minimize freight expenses. Which of the following business activities would likely conflict with these efforts? A. Expediting B. Training new employees C. Order entry D. Packaging

A. Expediting Expediting increases freight costs due to premium freight charges.

What is the term for a distinctive characteristic of a good or service that may be provided by an option, an accessory, or an attachment? A. Feature B. Standard C. Variable D. Portfolio

A. Feature A feature is a distinctive characteristic of a good or service that may be provided by an option, an accessory, or an attachment.

Because bills of material (BOMs) identify the exact materials used in production and can include component and subcomponent cost information, they are also useful for which other department? A. Finance B. Marketing C. Returns D. Sales

A. Finance

What does scheduling a constraint involve? A. Finding methods to maximize utilization of the constraint B. Getting rid of the bottleneck C. Allowing the process to stabilize after optimization D. Subordinating the constraint to the other processes

A. Finding methods to maximize utilization of the constraint The second of the five focusing steps in the theory of constraints, deciding how to exploit the constraint to the system, is key. The other answers are not directly related to scheduling a constraint.

Which types of orders are considered to be under the control of the planner? A. Firm planned orders and released orders only. B. Firm planned orders, gross requirements, and released orders only. C. Scheduled receipts and released orders only. D. Released orders only.

A. Firm planned orders and released orders only. The planner controls firm planned orders and released (open) orders. While released (open) orders may incur a cost to change them, the planner could delay, expedite, or cancel these orders.

In which accounting method for valuing inventory is the oldest inventory the first to be used? A. First in, first out B. Last in, first out C. Average cost D. Standard cost

A. First in, first out The first in, first out (FIFO) method of inventory valuation for accounting purposes assumes that the oldest inventory (first in) is the first to be used (first out). However, this does not necessarily affect the actual physical movement of items.

When designing a forecasting system, which of the following principles of forecasting needs to be integrated into the design in order to improve the forecast system over time? A. Forecasts should include an estimate of error. B. Forecasts are usually wrong. C. Forecasts are more accurate for nearer time periods. D. Forecasts are more accurate for groups or families.

A. Forecasts should include an estimate of error. An effective forecasting system must have a method of estimating and managing forecast error built into its design. The other answers refer to the general condition of forecasting that is assumed in every system.

Which of the following entities or conditions impacts customer demand through regulations in areas such as safety, liability, taxes, or the environment? A. Government B. Economy C. Quality D. Competition

A. Government

Dependent demand relates to which of the following elements? A. Gross component requirements B. Throughput time C. Forecast error D. Order quantities

A. Gross component requirements The planned order for an independent demand item becomes the gross requirements for its dependent components.

Which of the following is a form of inventory buildup to buffer against some event that may not happen? A. Hedge inventory B. Buffer inventory C. Anticipation inventory D. Safety stock

A. Hedge inventory Hedge inventory is a form of inventory buildup to buffer against some event that may not happen. Hedge inventory planning involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company's strategic initiatives. Risk and consequences are unusually high, and top management approval is often required.

Some work center outputs might be measured in meters, others in kilograms, and still others in units. What would be the best thing to standardize to measure capacity required across all of these work centers? A. Hours B. Percentage of final unit C. Throughput D. Dollars

A. Hours Physical units of measure are often converted into standard hours of capacity required to produce an order to avoid issues with different units of measure. Meanwhile, dollars should never be used as a measurement of capacity. Dollars measure the value of throughput.

Visualizing the demand data shows a slight upward trend. If analysis shows that the trend will likely continue, how should the exponential smoothing constant alpha be adjusted if the gap between the actual and forecast results appears to be widening? A. Increase the alpha smoothing constant. B. Eliminate the alpha smoothing constant because it is a source of bias. C. Decrease the alpha smoothing constant. D. Make no change to the alpha smoothing constant.

A. Increase the alpha smoothing constant. Increasing the alpha smoothing constant will put more weight on the latest demand and thus lag the trend less. There are also other forecasting methods (not discussed in this course) that are better than exponential smoothing to use when there is a strong trend in the data.

Which technology would be best used to automatically update machinery use in order to better plan maintenance routines before breakdowns can occur? A. Internet of Things B. Blockchain C. Artificial intelligence D. Robotic process automation

A. Internet of Things The Internet of Things enables equipment and other devices to update their status and location, which can be helpful for automatically tracking machine use and status in order to plan and execute maintenance routines.

In addition to customer orders, the master production schedule (MPS) might handle which of the following types of demand? A. Interplant orders B. Dependent demand C. Parts list items D. Bill-of-material items

A. Interplant orders Interplant demand is usually handled by the master production scheduling system in a manner similar to customer orders.

Dividing the annual cost of sales by the average inventory level will produce which of the following values? A. Inventory turnover B. Cycle time C. Inventory velocity D. Days of supply

A. Inventory turnover Inventory turnover is the number of times an inventory cycles, or "turns over," during the year. A frequently used method to compute inventory turnover is to divide the annual cost of sales by the average inventory level.

When an organization fails to follow up on supplier performance issues, how does that do the supplier a disservice? A. It does not allow them to correct problems that may result in the failure to secure another contract. B. It can lead to loss of morale among the supplier's workforce. C. It increases the likelihood of future orders that outstrip the suppliers' ability to meet demand. D. It prevents the supplier from increasing brand value based on their performance on current contracts.

A. It does not allow them to correct problems that may result in the failure to secure another contract. If an organization identifies issues with a supplier's performance and fails to communicate those issues back to the supplier, it does not allow the supplier the opportunity to correct the identified issues, which may result in the supplier being unable to secure a contract in the future.

At which level of production planning can one perform planning without also considering how to manage inventory? A. It is not possible to manage the one without the other at any level B. Master planning and sales and operations planning C. Material requirements planning D. Master scheduling

A. It is not possible to manage the one without the other at any level Inventory either results from or supports production, sales, marketing, and customer service. Yet it also represents costs. It is not possible to manage one without the other at any level.

Why does the UN Global Compact single out supply chain partners as an important factor in a firm's ability to comply with its 10 principles? A. It motivates suppliers in countries with low labor costs toward compliance. B. It spreads the Compact's reach, even though partner actions can't impact the firm. C. Customers define which of the principles have the highest priority. D. If the organization uses unionized labor, all of its suppliers should, too.

A. It motivates suppliers in countries with low labor costs toward compliance. In an extended supply chain, the actions of an organization's suppliers may reflect positively or negatively on the organization, especially if they are the channel master or most visible partner in the network. Therefore, the Global Compact stresses the need to ensure that suppliers are compliant with the principles (or are making reasonable progress in that direction). When located in countries with lower labor costs, it is both more important to ensure compliance, while also harder to do so.

If a bill of material contains an independent demand item that is not sold as a spare part, where will the item be found? A. It will be at the top of the bill. B. There will be many independent demand items, and they will be at the lowest level. C. The bill should not have an independent demand item. D. It could appear at any point.

A. It will be at the top of the bill. An independent demand item will be the topmost item in the bill of material (or the subject of the bill such as in an indented bill of material). However, when multiple single-level bills are combined in various ways, none of the items on the bill might be independent demand items.

In the pursuit of continuous improvement, reducing the annual ordering cost will have which of the following effects on economic order quantity (EOQ)? A. It will lower the EOQ amount. B. It will raise the EOQ amount. C. The EOQ amount will be unaffected. D. Annual ordering costs have no relation to EOQ.

A. It will lower the EOQ amount. Reducing annual ordering costs will lower the EOQ amount, because orders can be made more frequently and average inventory levels are reduced.

A manufacturer looks to differentiate itself from competitors by filling custom orders quickly. As a result, it places orders on shorter notice than many competitors. Given that, what is the best way to segment its suppliers? A. Lead times B. Level of innovation C. Supplier capabilities D. Customization versus standardization

A. Lead times

Which of the following is a combined approach for process improvement and problem solving based on reducing non-value-added activities, decreasing process variation, and improving product quality? A. Lean six sigma B. Total quality management C. Theory of constraints D. DMAIC

A. Lean six sigma Lean six sigma is a management approach for problem solving and process improvement based on a combination of the different tools of six sigma and lean manufacturing.

Which is a production strategy that avoids idle capacity but could have issues if the forecast is inaccurate? A. Level B. Chase C. Cellular D. Lean

A. Level A level strategy, also called production levelling, avoids excess or idle capacity but requires an accurate forecast or there could be shortfalls or excess inventory.

Which of the following terms refers to a measure of satisfying demand through inventory or through a production schedule that satisfies the customers' requested delivery dates and quantities? A. Level of service B. Customer satisfaction C. Schedule attainment D. Order fill rate

A. Level of service Level of service is a measure (usually expressed as a percentage) of satisfying demand through inventory or through a production schedule that satisfies the customers' requested delivery dates and quantities.

Which basic production planning strategy will build inventory and avoid the costs of excess capacity? A. Level production strategy B. Chase strategy C. Demand matching strategy D. Product-based strategy

A. Level production strategy Chase and demand matching strategies are the same, and do not build inventory because they are designed with the capacity and flexibility to match variations in demand over time. Meanwhile, a product-based strategy is not a production strategy. Therefore, level production strategy is the correct answer.

Which of the following is an example of variable transportation costs? A. Line haul B. Terminal handling C. Pickup and delivery D. Billing

A. Line haul Line haul costs are variable, depending on the distance traveled,

Maintaining high stock levels of products for sale conflicts with which of the following objectives? A. Lowest days of supply B. Lowest distribution costs C. Best customer service D. Lowest production costs

A. Lowest days of supply Providing high levels of inventory to maximize customer order fill rates conflicts with achieving low levels of inventory.

What is the term for items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations? A. Maintenance, repair, and operating supplies B. Expense items C. Overhead D. Indirect spend

A. Maintenance, repair, and operating supplies Maintenance, repair, and operating supplies (MRO) include items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations.

Which manufacturing environment has the longest delivery lead time? A. Make-to-order B. Make-to-stock C. Package-to-order D. Assemble-to-order

A. Make-to-order Including all environments, the sequence from longest to shortest delivery time is ETO (not a choice in this problem), MTO, ATO, package-to-order (a subtype of ATO), and MTS. In MTO, the product is manufactured after the receipt of the order - the final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer. Where options or accessories are stocked before customer orders arrive, the term assemble-to-order is frequently used.

Before workers can begin operations, they are issued a shop order packet. What does this contain? A. Manufacturing orders B. Manufacturing calendar C. Planned orders D. Inventory location

A. Manufacturing orders Manufacturing orders have already gone through the validation process in capacity requirements planning. The shop order packet is made up of all the manufacturing orders that are waiting to start operations or are works in progress.

Which of the following uses a format that includes time periods, the forecast, customer orders, projected available balance, and available-to-promise? A. Master schedule B. Distribution requirements plan C. Resource requirements plan D. Material requirements plan

A. Master schedule The master schedule includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule.

In a conventional manufacturing planning and control environment, which of the following objectives often conflict? A. Meet customer service targets and decrease inventory investment. B. Minimize production costs and decrease product variety. C. Meet customer service targets and minimize delivery lead times. D. Minimize production costs and increase the length of production runs.

A. Meet customer service targets and decrease inventory investment. In order to meet fluctuations in customer needs, you need inventory. However, storing inventory can be costly and inefficient. Therefore, a manufacturing environment will need to balance these two potentially conflicting objectives.

At a technology manufacturer, a replenishment order is submitted at the end of the day when inventory of a particular type of tablet drops below 50 units. The replenishment order is always calculated to ensure that inventory is brought back up to 100 units. What is the name for this type of order replenishment system? A. Min-max system B. Period order quantity C. Fixed order quantity D. Lot-for-lot

A. Min-max system A min-max system is a type of order point replenishment system where the minimum is the order point and the maximum is the "order up to" inventory level. An order is recommended when the sum of the available and on-order inventory is at or below the minimum.

When an organization identifies a supply disruption, what is the first step it should take, according to Accenture? A. Mobilizing B. Sensing C. Operation D. Analyzing

A. Mobilizing According to Accenture, the first step when responding to a supply disruption is mobilizing, which involves enacting the initial response plan and establishing rules for how to respond to further disruptions.

Which forecasting technique sums demand for a number of past periods and divides by the number of periods? A. Moving average B. Qualitative analysis C. Deseasonalization D. Exponential smoothing

A. Moving average The moving average technique depends on the use of average demand data for some number of past periods. Qualitative analysis might consider past average demand as a factor but does not rely on it. Exponential smoothing and deseasonalization are both smoothing techniques; they might indirectly consider average demand data from the past but not to the extent that moving average forecasting does.

Which observation about forecasting is most accurate? A. One should forecast only independent demand items. B. Forecasted historical data equals the actual units shipped in the period. C. Bias is normal and expected in a forecast. D. Product family forecasts are built up from individual product forecasts.

A. One should forecast only independent demand items. Only independent demand items are forecasted, not dependent demand items. In addition, a normal property of a good forecast is that it is not biased; product family forecasts are made first and then individual product forecasts are produced later, rather than the other way around. Forecast historical data should use demand estimates rather than actual units shipped, which is an incomplete way to estimate demand.

Which is an important feature in total productive maintenance? A. Operators are responsible for most routine machine maintenance. B. Inspectors ensure that every machine is ready for work each day. C. Skilled mechanics are not used for any machine maintenance. D. Operators regularly report maintenance productivity to management.

A. Operators are responsible for most routine machine maintenance. In total productive maintenance, machine operators take responsibility for most of the routine maintenance on their equipment, thus receiving a motivating sense of ownership. Meanwhile, skilled mechanics will still perform more involved maintenance or repair as needed; machine operators are trained to ensure that their machines are ready; and reporting maintenance productivity to management is not related to total productive maintenance.

Which of the following types of costs is related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup? A. Ordering cost B. Purchase order cost C. Total cost D. Carrying cost

A. Ordering cost Ordering cost is used in calculating order quantities, the costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup, as applicable.

What type of inventory record system uses transactions as they occur to track inventory levels? A. Perpetual inventory system B. Periodic inventory system C. Two-bin inventory system D. Cycle counting inventory system

A. Perpetual inventory system A perpetual inventory system is an up-to-date, continuous record of transactions. A periodic inventory system is an order replenishment system, not an inventory record system. A two-bin inventory system is a visual replenishment system. A cycle counting inventory system buffers against variability of demand, not an inventory record system.

What information do shop order files provide as an input to production activity control? A. Planned and actual setup and run times B. Operation capacity required (pieces × operation standard) C. Quantity on hand, available, and on order D. Manufacturing lead time and alternative work centers

A. Planned and actual setup and run times Shop order files provide the shop order number; shop order quantities; order due dates; quantities issued, completed, scrapped, and balance due; planned and actual setup and run times; lead times remaining; and cost information.

What is the term for the row on a material requirements planning (MRP) grid that is derived by taking the planned receipt quantity and offsetting to the left by the appropriate lead time? A. Planned order release B. Net requirements C. Scheduled receipts D. Planned order receipt

A. Planned order release Planned order release is a row on an MRP table that is derived from planned order receipts by taking the planned receipt quantity and offsetting to the left by the appropriate lead time.

One hundred units of part A are needed at the start of week 6. They have a one-week lead time. Two part Bs are needed for one part A, and Bs have a two-week lead time. Which shows a proper exploding and offsetting entry in the material requirements planning grid? A. Planned order release of 200 Bs in week 3. B. Planned order release of 100 Bs in week 4. C. Planned order receipt of 100 Bs in week 3. D. Planned order receipt of 200 Bs in week 4.

A. Planned order release of 200 Bs in week 3. The planned order receipt of 100 As in week 6 with a one-week lead time means that the planned order release of the 100 As will be in week 5. Because 2 Bs are needed for one A, there will be a planned order receipt for 200 Bs in week 5. Due to the two-week lead time, offsetting will put the planned order release in week 3.

A scheduler at a factory is very cautious and is particularly concerned about the possibility of unanticipated extra orders. Which of the following needs to be long enough to factor in potential increases in capacity? A. Planning horizon B. Final assembly schedule C. Cumulative lead time D. Liquid zone

A. Planning horizon The planning horizon is the amount of time a plan extends into the future. It is normally set to cover a minimum of cumulative lead time, time for lot sizing low-level components, and time for capacity changes of primary work centers or key suppliers.

Incoterms define which of the following in regard to shipping? A. Point at which ownership and risk for shipped goods transfers between parties B. When the sender needs to post an advance ship notice (ASN) C. Identity of the freight forwarder and/or broker D. Price of the goods

A. Point at which ownership and risk for shipped goods transfers between parties When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need.

Production is about to start manufacturing a new product. In order to begin, they will need to have specific information and instructions. In which of the following will this information be contained? A. Product's routing B. Open order C. Shop file D. Manufacturing calendar

A. Product's routing A routing is information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standard for setup and run. In some companies, it will also include information on tooling, operator skill levels, inspection operations, and testing requirements.

Using the total quality management definition of a customer, who is the production control department's most immediate customer? A. Production shop floor B. Shipping C. Central supply D. End users of products

A. Production shop floor Total quality management identifies both internal and external customers, and internal customers are the people or departments who use one's outputs as their inputs. In this example, production control's most immediate customer is production itself.

Which is a function of physical distribution? A. Protective packaging B. Purchasing C. Physical supply D. Production control

A. Protective packaging The activities of physical distribution include transportation, distribution inventory, warehousing, material handling, and protective packaging.

In distribution, which of the following terms refers to a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant? A. Pull B. Kanban C. Push D. Distribution requirements planning

A. Pull In distribution, pull is a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant.

Which document serves as the purchaser's authorization to formalize a purchase transaction with a supplier? A. Purchase order B. Supply agreement C. Quote D. Invoice

A. Purchase order A purchase order is the purchaser's authorization to formalize a purchase transaction with a supplier.

Which of the following issues should be addressed first when helping a current supplier transition to a lean environment? A. Quality B. Small and frequent lot shipments C. Responsiveness D. Continuous improvement

A. Quality The first issue to be addressed is to ensure quality materials and components. Without total quality, lean cannot happen.

Which is an advantage of work cells? A. Reduced material movement B. Larger batches and lower unit costs C. Maximum machine use D. Reduced requirements for worker skills

A. Reduced material movement Work cells can result in reduced material movement, or reduced waste, because workstations are placed together in a flow production system. The other options are incorrect because the cellular layout does not necessarily influence the use of the machine; work cells result in smaller batches; and workers in a cell need to be cross-trained to perform more than one function.

What should happen in the material requirements planning system if delivery dates change due to purchasing or delivery delays? A. Replanning should be done to keep plans current. B. Get master scheduler approval to change the plan, because it is in the frozen zone. C. Nothing should be done, as there should be slack time built in and D. the plan shouldn't change. Shift the items to the slushy zone to give them more time.

A. Replanning should be done to keep plans current. Changes in required delivery dates and delays in purchasing and component deliveries are all examples where replanning would be needed in the material requirements planning system. A system objective is to keep priorities current with changing conditions.

Which quality tool is used to predict a variable based on a relationship with another variable? A. Scatter chart B. Cause-and-effect diagram C. Pareto chart D. Control chart

A. Scatter chart In a scatter chart, two sets of data are plotted on a graph, with the y axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships.

If the projected available balance would go negative in a period, what should be done? A. Schedule a master production schedule receipt for that period. B. Change the forecast. C. Do nothing, as this is normal and expected. D. Change the plan to have a higher beginning inventory balance.

A. Schedule a master production schedule receipt for that period. When the projected available balance in the master schedule would go negative, an MPS receipt needs to be scheduled for one or more lots of production.

Which correctly identifies the following examples of costs as internal failure (I), external failure (E), appraisal costs (A), and prevention costs (P)? A. Scrap = I; product recalls and loss of customers = E; in-line inspections = A; machine maintenance and operator training = P B. Product recalls = I; scrap and in-line inspections = E; loss of customers = A; machine maintenance and operator training = P C. Operator training= I; product recalls and loss of customers = E; scrap and machine maintenance= A; in-line inspection = P D. Machine maintenance and in-line inspections = I; scrap and loss of customers = E; product recalls = A; operator training = P

A. Scrap = I; product recalls and loss of customers = E; in-line inspections = A; machine maintenance and operator training = P Scrap is an internal failure cost because it occurs without the customer seeing it. Product recalls and loss of customers are external failure costs because the first is directly experienced by customers and the second is a direct customer reaction to poor quality. In-line inspections are an appraisal cost because this is an example of a quality control activity. Machine maintenance and operator training are examples of prevention costs because these are investments designed to reduce the chances of quality problems occurring in the first place.

A company producing lawn mowers, with peak selling periods during the year, would likely use which of the following forecast methods? A. Seasonality B. Trend C. Extrinsic D. Moving average

A. Seasonality Seasonality is a repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others. Items such as lawn mowers and snow blowers are subject to seasonal demand.

In an effort to be more responsive to the market, sales wants to break into production runs in order to produce other products. Which of the following manufacturing activities conflicts with the sales request? A. Setup B. Production C. Rework D. Inspection

A. Setup Breaking into production runs will require an additional setup, extending the time required to produce the original product.

Which of the following is an example of a pull system for replenishing inventory? A. Six sigma method for implementing process improvements. B. Lean method for implementing the plan-do-check-action (PDCA) steps. C. Six sigma methodology for determining how many defects per opportunity are acceptable. D. Lean method for justifying manufacturing expenses.

A. Six sigma method for implementing process improvements. DMAIC is a six sigma methodology for determining and solving root causes of issues and tracking their resolution over time.

What is the term for the target costs of an operation, process, or product including direct material, direct labor, and overhead charges? A. Standard costs B. Average costs C. First in, first out D. Last in, first out

A. Standard costs

A manufacturer is unable to meet a customer's demand with their current in-house capacity and strategy. Assuming that there are no secret and minimal proprietary design factors, to which strategy could they turn to meet demand while neither incurring greater inventory costs nor reducing their own capacity? A. Subcontracting B. Partnering with a competitor C. Adding overtime shifts D. Redesigning the product

A. Subcontracting Subcontracting provides the opportunity to meet demand in excess of capacity without undue changes in capacity or staffing levels. There is no excess inventory cost, because supply should always meet the minimum level of demand. However, purchasing and then reselling products or services to fulfill the remaining demand will tend to result in lower profit margins. There may also be quality issues.

Which organizational objectives are often tradeoffs with one another? A. Targeted level of customer service and low-cost plant operation B. Cash flow and profitability C. High inventory investment and targeted level of customer service D. Low-cost plant operation and strong cash flows

A. Targeted level of customer service and low-cost plant operation

Which is the best description of a stock keeping unit (SKU) if all examples are SKUs for a distribution system? A. Televisions on display and identical boxed models at the same location are the same SKU. B. White shirts of the same style and in the same box but in different locations are the same SKU. C. Wires of different gauge that are stocked on the same reels are the same SKU. D. Sodas in a 6-pack and a 12-pack are the same SKU if the cans are the same SKU.

A. Televisions on display and identical boxed models at the same location are the same SKU. A stock keeping unit identifies the same size and type of item at a particular stock keeping location. The televisions unboxed for display and the same models still in boxes are the same units at the same location.

Which of the following costs will be influenced by the number of times a shipment must be loaded, handled, and unloaded? A. Terminal handling B. Pickup and handling C. Line haul D. Billing and collecting

A. Terminal handling Terminal-handling costs are charges based on the number of times a package is loaded or unloaded.

If the order quantity is increased, which occurs? A. The cost of carrying inventory increases and the cost of ordering decreases. B. The cost of carrying inventory decreases and the cost of ordering increases. C. The cost of carrying inventory decreases and the cost of ordering increases. D. The cost of carrying inventory increases and the cost of ordering increases.

A. The cost of carrying inventory increases and the cost of ordering decreases. If the order quantity is increased, inventory levels will increase and thus the cost of carrying inventory will increase. The number of times the orders are placed will decrease, resulting in decreased ordering cost

Which of the following is true of preparing a forecast based on historical data? A. The data needs to be in the same terms as needed for the forecasts. B. Understanding the circumstances related to the data is not required. C. The data needs to be for one concentric customer group versus individual customers. D. The data should not be cleansed and should be accepted as is.

A. The data needs to be in the same terms as needed for the forecasts. It is important that historical data match what is being forecasted. If the purpose is to forecast demand on production, data based on demand—not, for example, shipments—is needed.

Which of the following is an advantage of simultaneous engineering? A. The product design is worked on at the same time that the process design takes place. B. The product design is a success even if a profit cannot be made. C. Multiple designers work on the design at the same time, producing multiple options to consider. D. The process requires fewer resources and lowers the cost of design.

A. The product design is worked on at the same time that the process design takes place. Product design and process design work hand-in-hand to achieve the design objectives and to produce the product for the lowest possible cost.

An organization has set a trip value of ±3.0 and has calculated the algebraic sum of forecast deviations as -70 and the mean absolute deviation as 25. What is the tracking signal, and what course of action does that indicate for the organization? A. The tracking signal is -2.8; no forecast reevaluation is necessary. B. The tracking signal is -2.8; the forecast is significantly biased and must be reevaluated. C. The tracking signal is -.36; no forecast reevaluation is necessary. D. The tracking signal is -.36; the forecast is significantly biased and must be reevaluated.

A. The tracking signal is -2.8; no forecast reevaluation is necessary. Tracking signal is calculated by dividing the algebraic sum of forecast deviations by the mean absolute deviation. Using the numbers given in the question, this results in a tracking signal of -2.8. The organization has set a trip value of ±3.0. Since the tracking signal falls within that range, the organization does not need to reevaluate the forecast, as the bias is considered within the appropriate range.

Which of the following is true of variable costs? A. They are operating costs that vary directly with a change of one unit in the production volume. B. They are increases in the price of a standardized good/service over a specific period of time. C. They are persistently rising general price levels brought about by rising input costs. D. They are expenses that do not vary with the production volume.

A. They are operating costs that vary directly with a change of one unit in the production volume. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases.

By validating the need and timing of capacity requirements and by recommending adjustments to capacity, resource planning can add what to the strategic plan? A. Value B. Lead time C. Efficiency D. Longer planning horizon

A. Value Resource planning can add value to the strategic plan by, for example, validating the need and timing of capacity requirements and by recommending whether to expand capacity in advance of need all at once, to expand capacity incrementally in steps, or to lag behind the need.

A company losing market share due to price competition should incorporate which of the following techniques? A. Value chain analysis B. Activity-based costing C. Subcontracting D. Hoshin planning

A. Value chain analysis

When might it be appropriate for lean production systems to use time fences? A. When planning the parts of production with longer lead time than the required customer lead time B. When the master schedule is broken into daily time buckets C. When a heijunka box is used to break the time slots equal to takt time D. It is not appropriate to use time fences in lean because all orders are based on customer demand.

A. When planning the parts of production with longer lead time than the required customer lead time The portion of production in which lean uses demand-pull signals will operate on orders rather than forecasts and so will not use time fences. It will be purely reactive to demand. For elements with longer lead times than the required customer lead time, lean will still use master schedules and capacity planning on this push side of operations. For these push elements, lean can benefit from using time fences, because schedule stability in turn promotes production stability.

A calculated value that can signal the quality or validity of a forecast when it is in doubt is known as: A. a tracking signal. B. bias. C. a smoothing factor. D. mean absolute deviation.

A. a tracking signal. A tracking signal is the ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation. It is used to signal when the validity of the forecasting model might be in doubt.

A scheduled receipt in material requirements planning is: A. an open order that has an assigned due date. B. a planned release for an order to arrive on an assigned due date. C. an order that was already received on a previous date. D. an open order that is planned to be received.

A. an open order that has an assigned due date.

The portion of inventory and planned production that can be committed to customer orders typically is referred to as the: A. available-to-promise quantity. B. on-hand balance. C. projected available balance. D. excess quantity.

A. available-to-promise quantity. Available-to-promise inventory is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer orders.

Starting with the due date for the order is an example of: A. backward scheduling. B. process scheduling. C. finite scheduling. D. forward scheduling.

A. backward scheduling. Backward scheduling starts with the due date for the order and works backward from the last operation to determine the required start date and/or due dates for each operation.

When a customer orders a laptop online and selects from a variety of different options, such as RAM, hard disk space, color, etc., an order entry system will produce a modular: A. bill of material. B. inventory list. C. design template. D. manufacturing calendar.

A. bill of material. Customer service and service parts departments will use bills of material, for example, to ensure that the right replacement part is issued.

A company that wants to maintain a 99.99% customer service rate will require a considerable amount of safety stock. This will incur a significant: A. carrying cost. B. shipping cost. C. overtime cost. D. overhead cost.

A. carrying cost. In order to achieve a 99.99% customer service rate, a considerable amount of safety stock will need to be held to fulfill a larger potential mean absolute deviation (MAD).

Total productive maintenance (TPM) focuses on preventive maintenance plus: A. continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. B. driving down costs on service parts while focusing on manufacturing setups to be product-specific. C. increasing direct labor efficiencies along with continuous education on rapid changeovers and total quality. D. releasing orders to the machine shop for tool manufacture or equipment maintenance.

A. continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. TPM is a system of maintaining and improving the integrity of production and quality systems through the machines, equipment, processes, and employees that add business value to the organization.

The primary objective of a floating-location storage system is to improve: A. cube utilization. B. cross-docking. C. distribution. D. kitting.

A. cube utilization. Since a floating-location storage system enables the storage of goods wherever there is appropriate space for them, it maximizes warehouse space cube utilization.

The level of detail for the master production schedule is: A. developed for individual items. B. identical to that used in the production plan. C. at the raw material level. D. at the product family level.

A. developed for individual items.

The primary objective of cycle counting is to: A. eliminate the causes of errors. B. update inventory locations. C. eliminate annual physical inventory. D. update inventory quantities.

A. eliminate the causes of errors.

The most common sequence for processing products in a supply chain is: A. supplier, manufacturer, customer. B. manufacturer, customer, supplier. C. distributor, retailer, supplier. D. retailer, supplier, manufacturer.

A. supplier, manufacturer, customer.

A shipment of raw materials has arrived at a work center. The machine operators are finishing the work on an order already in process at the work center and are about to start preparing their stations for processing. The amount of time the materials wait to be processed is known as: A. the queue time. a time bucket. the manufacturing calendar. a planning horizon.

A. the queue time. The queue time is one element of the total manufacturing lead time. Increases in queue time result in direct increases in manufacturing lead time and work-in-process inventories. Queue time is often the largest component of lead time in functional manufacturing process types.

For the past few years, a company has been shipping a product to a market 500 miles away at a cost of €4 per mile. The company normally ships a truckload of 1,000 units at a time. The company is considering a change: they want to ship the units unassembled, which means they could ship 1,800 units at a time. What is the line haul cost per unit of shipping the product unassembled? A. €1.11 per unit B. €0.50 per unit D. €0.28 per unit D. €2 per unit

A. €1.11 per unit Line Haul Cost: (Distance x Cost per Mile) / Units Assembled: (500 x 4) / 1000 = €2.00 per unit Unassembled: (500 x 4) / 1,800 = €1.11 per unit

Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual ordering cost A. $375 B. $105 C. $225 D. $525

Annual Ordering Cost = Number of Orders × Cost per Order. Number of Orders = Annual Demand/Lot Size = A/Q = 14,000 units/800 units = 17.5 orders per year. Annual Ordering Cost = 17.5 × $30 = $525.

Production control wages average at $400,000 per year, production control supplies and operating expenses average at $40,000 per year, and the average setup costs are $90 per order. If 5,000 orders are placed on average per year, what is the average ordering cost per order? A. $170 per order B. $178 per order C. $187 per order D. $168 per order

B. $178 per order Average Ordering Cost per Order = (Fixed Cost/Number of Orders) + Variable Cost = ([$400,000 + $40,000]/5,000) + $90 per order = $88 per order + $90 per order = $178 per order.

On the income statement, revenue is $6 million. The cost of goods sold is $4 million, and general and administrative expenses are $1 million. What is the gross margin (gross profit)? A. $11 million B. $2 million C. $3 million D. $1 million

B. $2 million Gross Margin = Revenue - Cost of Goods Sold = $6 million - $4 million = $2 million. General and administrative expenses are not deducted when calculating the gross margin.

Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual inventory carrying cost? A. $525 B. $720 C. $375 D. $1,440

B. $720 Annual Inventory Carrying Cost = Quantity/2 × Carrying Cost Rate × Unit Cost = Q/2 × i × c = 800/2 × 0.2 × $9 = $720.

An organization's average inventory in the aggregate is $3 million. Capital costs are 7 percent per year, storage costs are 8 percent per year, and risk costs are 11 percent per year. What is the annual carrying cost? A. $570,000 B. $780,000 C. $1,848 D. $450,000

B. $780,000 Carrying Cost = Average Annual Inventory × Carrying Cost Rate. To determine the carrying cost rate, sum the capital cost, storage cost, and risk cost percentages: 7% + 8% + 11% = 26%. Carrying Cost = $3,000,000 × 0.26 = $780,000.

Inventory on the balance sheet at the end of the last year was $5,000,000. Inventory at the end of this year was $4,000,000. Last year's annual cost of goods sold (COGS) was $3,000,000. This year's annual COGS was $2,300,000. What is this year's inventory turnover? A. 0.575 times B. 0.511 times C. 0.589 times 1D. .957 times

B. 0.511 times Inventory Turnover = Annual COGS/Average Inventory in Dollars. Average Inventory = (Inventory at Period Start + Inventory at Period End)/2. Since the inventory at the end of the last year will be the same as the inventory at the beginning of this year, it can be used when calculating average inventory. Average Inventory for this year: ($5,000,000 + $4,000,000)/2 = $4,500,000. Inventory Turnover = $2,300,000/$4,500,000 = 0.511 times.

The lead time for a particular stock-keeping unit is four weeks, the average demand is 200 units per week, and safety stock is set at one week's demand. The order quantity is 2,000 units. The order point is A. 4,000 B. 1,000 C. 400 D. 2,200

B. 1,000 Order point (OP) = demand during lead time (DDLT ) + safety stock (SS) = 200 (4) + 200 = 1,000 units

An organization had a forecast for June of 125 units, but 140 units actually sold. What is the exponential smoothing forecast for July if the alpha smoothing constant is 0.2? A. 137 units B. 128 units C. 130 units D. 53 units

B. 128 units New Forecast = α × Latest Demand + (1 - α) × Previous Forecast = (0.2 × 140) + ((1 - 0.2) × 125) = 128

A manufacturer forecasts annual sales of 70 units but actually sells only 5 units per month. What is the forecast error? A. 7.1% B. 14.3% C. 85.7% D. 116.7%

B. 14.3% Forecast error is the difference between actual demand and forecast demand, stated as an absolute value or as a percentage. In the above instance, the actual demand is 60 units, and the forecast error is 10/70 = 0.143 = 14.3%.

If the lead time is one week, the review period is one week, the average demand is 100 units per week, and the safety stock is 50 units, what is the target or maximum inventory level? A. 300 units B. 250 units C. 200 units D. 150 units

B. 250 units Target Level = Demand During the Lead Time (DDLT) + Demand During the Review Time + Safety Stock (SS). The target level = (1 week review time × 100 units/week) + (1 week lead time × 100 units/week) + 50 units of safety stock = 250 units.

A work center is used 16 hours per day in a 5-day week, and there are 4 pieces of equipment and 8 operators. Each operator requires one piece of equipment to work. Utilization is 80 percent. What is the available time for a five-day week? A. 512 hours B. 320 hours C. 256 hours D. 640 hours

B. 320 hours Available Time = Equipment or Workers × Hours in Time Bucket. Here equipment is used because this is the constraint. (The fact that the workers operate in two shifts has already been accounted for by listing 16 hours per day as part of the available hours.) Therefore the calculation is 4 pieces of equipment × (5 days × 16 hours per day) = 320 hours. Utilization is not needed to answer this question.

Demand for the prior six months is 56, 58, 55, 50, 48, and 45 units, respectively. What is the three-month moving average forecast for the upcoming month? A. 104 units B. 48 units C. 54 units D. 52 units

B. 48 units To calculate the three-month moving average, sum the most recent three month's results and divide by the number of months, or 3: 50 units + 48 units + 45 units = 143 units/3 months = 47.67 units rounded up to 48 units.

The day 56 log for a work center shows planned input of 14 hours, actual input of 16 hours, and a cumulative input variance of -2 hours. For the same day the planned output was 15 hours, the actual output was 14 hours and the cumulative output variance was -5 hours. The day 55 log showed the planned backlog was 7 hours and the actual backlog was 6 hours. What is the planned backlog for day 56? A. 8 hours B. 6 hours C. 0 hours D. -7 hours

B. 6 hours Planned Backlog = Previous Planned Backlog + Planned Input - Planned Output = 7 hours + 14 hours - 15 hours = 6 hours.

A production process is an I-type process from a VATI analysis where operations 1, 2, 3, and 4 operate sequentially and operations 1 through 3 require one unit as input for each one unit of output, but operation 4 requires two units as input to produce one unit of output. Unit processing times are 200 per hour for operation 1, 220 per hour for operation 2, 180 per hour for operation 3, and 100 per hour for operation 4. At which level of demand would the market become the constraint? A. 95 per hour B. 70 per hour C. 160 per hour D. 230 per hour

B. 70 per hour Given that Operation 3 was the constraint at 100 units per hour in the initial scenario, a rate of demand significantly less than this makes the market the constraint. Therefore, Operation 3 the capacity constrained resource at that point.

A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85 units of safety stock to meet its customer service level. If the original lead time was six weeks, what is the new level of safety stock required? A. 85 B. 92 C. 98 D. 99

B. 92 The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the new lead time divided by the old lead time—in this case, 85 times the square root of 7/6), or 85 times 1.08 = 92 (rounded).

Which of the following statements regarding scheduling bottlenecks is true? A. Not everything that increases the capacity of the bottleneck increases the capacity of the system. B. A bottleneck must be fed at a rate equal to its capacity. C. A gateway operation does not control the work feeding the bottleneck. D. The time buffer in front of the bottleneck should be longer than the time of any expected delay.

B. A bottleneck must be fed at a rate equal to its capacity. A bottleneck must be fed at a rate equal to its capacity so that the time buffer remains constant.

There is a scheduled receipt in week 4 for an item with a two-week lead time. What can be inferred from this information? A. The grid should show a corresponding planned order receipt for week 4. B. A firm planned order must have been used to provide more lead time. C. This item has yet to be released. D. The MRP grid should show a corresponding planned order release in week 2.

B. A firm planned order must have been used to provide more lead time. The item has a two-week lead time, so it should still exist as a planned order receipt for week 4, with a corresponding planned order release in week 2. However, it has already been released, and there will be no planned order release or receipt shown any more. A firm planned order must have been used to provide more lead time than the standard, for example, due to production quality issues that need to be resolved.

If one B is made using 2 Ds and 2 Es, and one A is made using 3 Bs and 1 C, which is true? A. D and E are children of A. B. A is the parent of B. C. C is the parent of A. D. A is one parent of D.

B. A is the parent of B. Item A is the end item and parent of both assembly A and part B. Part C is a child (or component) and not a parent of item A. Item A is a parent to items B and C, not D. Items D and E are children of B.

What is a Strategic Plan? A strategic plan contains a capacity resource plan. B. A strategic plan contains the company's vision, mission statement, goals, and objectives. C. A strategic plan is tactical in nature. D. A strategic plan seeks to define priorities.

B. A strategic plan contains the company's vision, mission statement, goals, and objectives.

Which of the following describes the process of order entry? A. Completing the entire cycle of the sales order, from creation to closure and payment B. Accepting and translating what a customer wants into terms used by the manufacturer or distributor C. Qualifying the customer's creditworthiness and ship-to information and assigning a salesperson D. Releasing the shop order into manufacturing to produce the product

B. Accepting and translating what a customer wants into terms used by the manufacturer or distributor Order entry is the process of accepting and translating what a customer wants into terms used by the manufacturer or distributor.

What action by a company would indicate that it is conducting a green reverse logistics operation? A. Using vehicles and machinery with electric motors instead of combustion engines B. Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities C. Purchasing all electricity from green sources, such as solar or wind energy D. Purchasing carbon offsets to compensate for emissions produced by its manufacturing process

B. Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities is the best example of a green reverse logistics operation. The other options include green initiatives but don't feature reverse logistics.

What does it mean when a material requirements planning (MRP) planned order is released? A. Work has begun on the item referenced. B. Authorization has been given to manufacture or purchase the item. C. The item on the order must be scheduled. D. The item on the order has been completed and placed in stock.

B. Authorization has been given to manufacture or purchase the item When the manufacturing or purchasing planner has been authorized by the MRP output, the planner can release planned purchasing and manufacturing orders.

Which often has the advantages of providing better response to customer wishes, lowering cost, speeding decision making, and helping to get people who are directly aware of problems more involved in solving them? A. Allowing customers to provide feedback in their own words B. Allowing people further down the management structure to make decisions independently C. Getting middle managers more involved in everyday decision making D. Getting upper managers out on the shop floor on a daily basis

B. Allowing people further down the management structure to make decisions independently Allowing people further down the management structure to make independent decisions, or employee empowerment, can have all of the advantages listed in the question. The other answers may provide some but not all of these advantages.

In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint and it sends its output to shipping. Demand is for 8 units a day. Where is the drum? A. At operation A B. At operation B C. Before operation A D. Before operation B

B. At operation B The drum is at operation B because the pace of the operation is set to match this constraint rate.

In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint, and it sends its output to shipping. Demand is for 8 units a day. Where else might inventory be stored in this production system? A. At the raw materials before operation A and before operation E only. B. At the raw materials before operation A and before and after operation E. C. Before and after operation E only. D. At the raw materials before operation A and after operation E only.

B. At the raw materials before operation A and before and after operation E In addition to the constraint buffer before operation B, there will also be an assembly buffer before the final assembly point E because there are materials made in processes that do not pass through the constraint but are assembled here. There will also be a shipping buffer after operation E and prior to shipping. Finally, there will be stores of raw materials before operation A to ensure that this gateway operation is not starved for materials.

As part of a contract-buying improvement initiative, approved suppliers are integrated so they can use supplier scheduling. Which of the following should be implemented with these suppliers? A. Frequent price reviews of supplier materials B. Audits of individual transactions with these suppliers C. Issuing of purchase orders D. Significant reduction of purchasing fraud-related checks and balances

B. Audits of individual transactions with these suppliers An organization that is using contract buying with a supplier can use supplier scheduling. For MRP (material requirements planning) planned orders, often the supplier is given a copy or view of the material requirements plan so they can produce the units that will be needed. This is called supplier scheduling when the supplier uses the planned orders directly in its own MRP process. In this arrangement, no purchase orders are issued. However, both the purchasing process itself and the performance of individual suppliers still needs to be monitored and controlled in this situation. Since purchasing involves large amounts of money, the organization needs checks and balances and audits to safeguard against fraud. Prices will be regulated by the blanket purchase order or other long-term contract, so price reviews should not need to be more frequent in this scenario.

If a large seasonal order from a major retailer is grouped with regular monthly orders from smaller customers, what will be the effect of producing to the total average demand in comparison with preparing these as separate forecasts? A. Production costs will be higher. B. Average annual inventory will be higher. C. Demand will be less lumpy. D. The major customer's service level will suffer.

B. Average annual inventory will be higher. When a large order is grouped with a number of smaller orders it will mask the lumpiness in demand that actually exists. If the organization produces to a level schedule, it will need to produce far in advance of demand and this will raise average annual inventory levels. However, the total amount of production is not necessarily higher than demand. In addition, the major customer's service level may not suffer (it will only suffer if the large order cannot be filled on schedule).

Which of the following technologies would be the best fit for a pharmaceutical company that needs precise information related to temperature control throughout the supply chain? A. Cloud computing B. Blockchain C. Drones D. Wearable technology

B. Blockchain Blockchain, which provides a secure method for tracking data from multiple data sources across a supply chain, would be the best fit for the company.

Trying to achieve the lowest production cost possible would likely conflict with which of the following scenarios? A. Reducing setup time by holding a kaizen event B. Breaking into a production run to make product needed for a customer C. Stopping production for a week to install new equipment that will increase production output D. Initiating a new project that will enable setup to be offline, increasing production line uptime

B. Breaking into a production run to make product needed for a customer Breaking into a production run typically requires an additional setup, which translates to lost production time, thereby increasing expenses.

Sales and operations planning is focused on which of the following objectives? A. Making recommendations to release replenishment orders for material and rescheduling existing orders to align with the master schedule B. Bringing together all the plans for the business into one integrated set of plans C. Stating what the company plans to produce in terms of specific configurations, quantities, and dates D. Converting the master production schedule into requirements for key resources

B. Bringing together all the plans for the business into one integrated set of plans The sales and operations planning process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, financial) into one integrated set of plans.

In the theory of constraints (TOC), which of the following terms refers to materials awaiting further processing? A. Queuing B. Buffer C. Move D. Waiting

B. Buffer A process buffer consists of raw materials, components, or subassemblies that are waiting to be used in production when the demand pull occurs. There are no queues in a TOC system; production is initiated by the drum and not by pre-released orders waiting to be started.

Which of the following capacity management techniques is most appropriately used to test the feasibility of the plans generated by material requirements planning? A. Resource planning B. Capacity requirements planning C. Rough-cut capacity planning D. Input/output control

B. Capacity requirements planning Capacity requirements planning (CRP) refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

Which of the following methods often is employed to make high-variety, low-volume manufacturing operate in a repetitive mode? A. Project production B. Cellular manufacturing C. Process layout D. Flow manufacturing

B. Cellular manufacturing Cellular manufacturing is a process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell. The ease of changeover makes it ideal for high-variety, low-volume products. The other answers are incorrect, as they refer to processes that are more specialized or less flexible and thus unsuited for this purpose.

Under the theory of constraints, what signals the start of the purchasing process? A. Planned order release B. Change in buffer inventory C. Purchase requisition D. Kanban

B. Change in buffer inventory Production inventory shortages cause a "hole" in the constraints buffer and alert the buffer manager to release a purchase order for the short materials.

Which of the following entities or conditions impacts customer demand by improved communication, global transportation, and worldwide sourcing? A. Government B. Competition C. Quality D. Logistics

B. Competition

A new work center crew is consistently getting work done faster than standards predict. In due time, what should be done for this work center? A. Use the crew's output rate increase to tighten the standards for all other work centers. B. Conduct a new engineering study using time-study techniques. C. Adjust the standard hours to reflect the crew's latest output results. D. Nothing needs to be done other than to praise the crew.

B. Conduct a new engineering study using time-study techniques. Standard hours per unit are determined using engineering studies based on time-study techniques, so this would be the best way to adjust the standard among the options shown.

As manufacturing planning and control has become more complex, the need for integration of knowledge and decision making has resulted in which of the following computer systems? A. Manufacturing execution systems B. Enterprise resources planning C. Collaborative planning, forecasting, and replenishment D. Manufacturing resource planning

B. Enterprise resources planning

Business-to-business customers have said that new products being rolled out need to have reasonable delivery reliability and price but insist on a product design that meets exacting precision requirements so it integrates with their product without costly rework. They do not care about delivery speed because they are able to place their orders far in advance. Which of the following strategies would be most likely to delight these customers? A. Create a good design with best-in-class delivery reliability and a reasonable price by focusing on high production rates and inspections to ensure that only products that match the exacting specifications go out the door to the customer. B. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time. C. Consider product design, delivery reliability, and price to be order winners to focus on so as to exceed expectations. D. Consider product design to be the only order winner to focus on and accept that this will require a higher-than-average price, use slow and inexpensive shipping to compensate, and work on great delivery reliability using a make-to-stock strategy.

B. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time.

Which quality tool is used to detect assignable causes of variation in a process as opposed to random variations? A. Cause-and-effect diagram B. Control chart C. Pareto chart D. Scatter chart

B. Control chart The primary use of control charts is to detect assignable causes of variation in a process as opposed to random variations. The control chart is one of the seven tools of quality.

When following the UN Global Compact Management Model, what must an organization do once it has assessed its current state of risks and opportunities related to human rights, labor, the environment, and anti-corruption? A. Transform organizational strategy into tactics, such as capital improvement projects. B. Create or refine the organization's strategy and related policies, goals, and metrics. C. Adjust metrics to ensure that there is a way to determine if new policies and procedures are being followed. D. Commit in a transparent way to incorporate the principles into formal governance structures.

B. Create or refine the organization's strategy and related policies, goals, and metrics. The "Assess" step, described in the question, is the second step in the model. The next step is the "Define" step, which consists of creating or refining the organizational strategy and related polices, goals, and metrics based on the results of the assessment step.

Which metric measures the amount of inventory on hand? A. Obsolescence list B. Days of supply C. ABC classification D. Inventory velocity

B. Days of supply Days of supply is an inventory-on-hand metric converted from units to how long the units will last.

Delivery lead time in an engineer-to-order environment includes which of the following elements? A. Purchase, manufacture, assemble, ship B. Design, purchase, manufacture, assemble, ship C. Assemble, ship D. Manufacture, assemble, ship

B. Design, purchase, manufacture, assemble, ship Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Since this is engineer-to-order, the receipt of the order would initiate the design phase.

Which of the following planning techniques should a company use to improve customer service from its regional warehouses? A. Capacity requirements planning B. Distribution requirements planning C. Material requirements planning D. Sales and operations planning

B. Distribution requirements planning Distribution requirements planning provides the supply warehouse with the information necessary to plan for the goods to be at the regional warehouse when needed.

Which of the following manufacturing strategies is most appropriate when the customer is heavily involved in the product design? A. Assemble-to-order B. Engineer-to-order C. Make-to-order D. Make-to-stock

B. Engineer-to-order In an engineer-to-order environment, customer specifications for products require unique engineering design and significant customization. The customer is usually very involved in the product design. With assemble-to-order, the product can be assembled after receipt of a customer's order; with make-to-order, the product is manufactured using a combination of standard items and custom-modified items after receipt of a customer's order; and, with make-to-stock, products are usually finished based on forecasts before receipt of a customer order.

What is the term for a schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble-to-order environment? A. Dispatch list B. Final assembly schedule C. Build sequence D. Shop floor schedule

B. Final assembly schedule The final assembly schedule identifies the end items necessary to complete a specific customer's order. A dispatch list is used to identify the priority and sequence of manufacturing orders at a workstation. The build sequence lists the order of jobs to be worked on at a workstation. The shop floor schedule is the actual assignment of starting or completion dates to operations or groups of operations to show when these must be done if the manufacturing order is to be completed on time.

Which of the following are manufacturing order pick lists most likely to exclude? A. Low-cost C-item vendor-managed inventory B. Floor stock materials issued to the department C. Consignment items that are stocked out D. Materials purchased specifically for an order

B. Floor stock materials issued to the department Floor stock items are already issued. The other responses would all need to be picked and issued to production.

In which scenario is finished goods safety stock or its equivalent needed least? A. For dry pasta held at a regional distribution center. B. For a popular line of make-to-order garage doors. C. For server cards sold just to corporate customers who order under strict quantity contracts. D. For a line of less popular board games at a central distribution center.

B. For a popular line of make-to-order garage doors.

Which of the following is assumed in the process of forecasting and should be factored into future forecasts? A. Lead time variation B. Forecast error C. Increased production throughput D. Reduced setup time

B. Forecast error Forecast error is the difference between actual demand and forecast demand, stated as an absolute value or a percentage.

The information needed to develop a master schedule will come from which source? A. Material requirements plan B. Forecast of individual end items C. Production activity control D. Capacity requirements plan

B. Forecast of individual end items The capacity requirements plan, production activity control, and material requirements plan relate to capacity planning, execution, and priority planning activities that follow the master scheduling process. Therefore, to develop a master schedule, you will need the forecast of individual end items.

Demand management includes which of the following activities? A. Taking orders, making delivery promises, shipping orders, and following up to ensure that delivery takes place B. Forecasting, order processing, making delivery promises, and interfacing with the marketplace C. Forecasting, determining safety stock, quoting new orders, and shipping product D. Order processing, making delivery promises, shipping product, and following up to ensure that delivery takes place

B. Forecasting, order processing, making delivery promises, and interfacing with the marketplace. Demand management includes forecasting, order processing, making delivery promises, and interfacing with the marketplace.

Which category of expenses on an income statement includes the costs of general managers, computer systems, research and development, and others? A. Operating expenses B. General and administrative expenses C. Accrued expenses D. Prepaid expenses

B. General and administrative expenses General and administrative expenses are the expenses required to administer a business. They are not related to the construction or sale of goods or services.

Which of the following terms refers to a form of manufacturing in which the jobs pass through the functional departments in lots and each lot may have a different routing? A. Flow B. Intermittent C. Project D. Repetitive

B. Intermittent Intermittent production is a form of manufacturing in which the jobs pass through the functional departments in lots and each lot may have a different routing. Meanwhile, flow is a form of manufacturing in which work flows from one workstation to another in a nearly constant rate and with no delays. Project production is a manufacturing process in which each unit or small group of units is managed by a project team created especially for that purpose. Repetitive manufacturing consists of the repeated production of the same discrete products of families of products.

Which of the following forecasting techniques uses internal historical data? A. Qualitative B. Intrinsic C. Extrinsic D. Economic indicators

B. Intrinsic Intrinsic data is accumulated from historical events occurring within a company. The other forecasting methods use non-historical or external data outside of the company's control.

Projections based on historical sales information are which of the following types of forecasting methods? A. Quantitative B. Intrinsic C. Extrinsic D. Qualitative

B. Intrinsic Intrinsic forecasts are based on internal factors, such as an average of past sales, knowledge of seasonal spending habits, etc.

What does the APICS Dictionary define as the activities and techniques of maintaining the desired level of items? A. Lot control B. Inventory control C. Incoterms Traceability

B. Inventory control The APICS Dictionary, 16th edition, defines inventory control as "the activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products."

Which is true in relation to cash flows and work-in-process (WIP) inventory? A. WIP inventory is not recognized as an expense until it is finished and sold, so it has no impact on cash flow immediately. B. Labor, materials, and overhead immediately become accounts payable or wages payable. C. WIP inventory becomes an asset that increases cash flow. D. Labor, materials, and overhead must be paid for immediately.

B. Labor, materials, and overhead immediately become accounts payable or wages payable. WIP inventory represents a cash outflow for materials, labor, and overhead that is said to be absorbed by the materials produced. However, these first become accounts payable or wages payable, since organizations have a certain amount of time to pay all of these things. They become cash outflows fairly quickly, so increasing WIP inventory will negatively impact cash flows.

In what way can a poorly designed product add to total product costs? A. Cheaply made parts can break after the warranty period ends. B. Lack of standardized parts can reduce efficiency in the manufacturing process. C. Parts requirements can result in streamlined material flows. D. Product design can result in inefficient use of storage in warehouse settings.

B. Lack of standardized parts can reduce efficiency in the manufacturing process. The lack of standardized parts can reduce efficiency in the manufacturing process, causing increased product costs. Note that inefficient warehouse storage would affect holding or carrying costs, not product costs, which relate to the actual production of a product.

What is a potential risk associated with using GPS systems to track a shipment as it moves through the supply chain? A. Increased risk of theft B. Loss of power due to reliance on a battery C. Incorrect data stored in the blocks D. Reader malfunction during the scanning process

B. Loss of power due to reliance on a battery GPS systems typically use battery power, so power loss is a potential risk. Data being stored incorrectly on blocks would apply to blockchain technology, and reader malfunction would apply to radio frequency identification (RFID) technology instead of GPS systems. GPS systems add an extra layer of security by allowing location records to be created and associated with incidents like container doors opening, thereby lowering theft risks instead of increasing them.

A company is seeking to design a new product as a low-cost manufacturer. Which of the following design methods brings product and process design groups together to achieve this objective? A. Collaborative planning, forecasting, and replenishment B. Simultaneous engineering C. Quality function deployment D. Lean six sigma

B. Simultaneous engineering Simultaneous engineering is a concept that refers to the participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included.

The master production schedule shows that the priority plan exceeds the capacity available. Which can resolve this situation? A. Take back some work currently assigned to subcontractors. B. Make a sales promotion for this period happen in a later period. C. Authorize short time. D. Increase amount advertising for this period.

B. Make a sales promotion for this period happen in a later period. Altering the timing of a sales promotion to occur later may shift demand to a later period, thus reducing the demand level for the period in question. Increasing marketing spend will likely increase demand and thus make the capacity shortfall worse and is therefore an incorrect answer. The other two answers are incorrect because these actions would further reduce capacity.

Which of the following is the most likely manufacturing environment for an industrial hydraulic press? A. Assemble-to-order B. Make-to-order C. Make-to-stock D. Engineer-to-order

B. Make-to-order According to the APICS Dictionary, a make-to-order manufacturing environment is one in which "a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items customed-designed to meet the special needs of the customer." In the question's example, the hydraulic press would include standard components as well as special components specific to the needs of the customer.

A chemical company waits to manufacture batches of products until customers place orders, due to the products' shelf life. This is an example of which of the following production environment strategies? A. Make-to-stock B. Make-to-order C. Engineer-to-order D. Assemble-to-order

B. Make-to-order In a make-to-order production environment, a good or service can be made after receipt of a customer's order.

A fashion house has forecasted the next season's colors and styles. Distribution plans have been drawn up that will send the majority of heavier items (e.g., sweaters) to distributors in colder regions, while a larger quantity of t-shirts and lighter fabric garments will be distributed in warmer regions. This is an example of what kind of manufacturing environment? A. Engineer-to-order B. Make-to-stock C. Make-to-order D. Assemble-to-order

B. Make-to-stock A make-to-stock environment relies on forecasting not only for supply and production but also for distribution, ensuring that appropriate products are distributed to the right locations. An assemble-to-order environment relies on forecasting for supply and component production, but from that point it uses actual orders for assembly and distribution. The point where push becomes pull is then wherever actual orders dictate activity rather than relying on forecasts.

What does process flexibility refer to? A. Ease with which current designs can be modified in response to changing market demands B. Manufacturing system that allows quick changeovers to respond to near-term changes in product volume and mix C. Training machine workers to perform tasks outside their immediate jobs and in problem-solving techniques D. Certification procedures verifying that a supplier operates, maintains, improves, and documents effective procedures that relate to the customer's requirements

B. Manufacturing system that allows quick changeovers to respond to near-term changes in product volume and mix Process flexibility is the design of a manufacturing system, including operators and machinery, that allows quick changeovers to respond to near-term changes in product volume and mix.

Determining what is required, how much is required, and when it is required is a key function of what manufacturing planning and control process? A. Demand management B. Material requirements planning C. Master planning D. Capacity requirements planning

B. Material requirements planning Determining the answers to these questions is a core objective of material requirements planning: to determine the materials needed.

A product is made from two widgets, but the bill of material shows only one. Which of the following results can be expected? A. Material requirements will be overstated in the master production schedule. B. Material requirements will be understated in the material requirements plan. C. Production will not be impacted. D. The error is insignificant and can be covered by safety stock.

B. Material requirements will be understated in the material requirements plan. Bills of material must reflect exactly what will take place in manufacturing. Any error will lead to errors in planning material supply and result in excess inventory or shortages, as in this example.

Which is a good description of the purpose of a fishbone diagram? A. Synonym for a Pareto analysis B. Method to determine the root cause of a symptom C. Cost buildup method D. Capability analysis

B. Method to determine the root cause of a symptom A fishbone diagram is another name for a cause-and-effect diagram, which is used as an aid in brainstorming ideas to identify root causes of a problem and to solve the problem.

A computer manufacturer is developing a new laptop model to replace two current product lines. What source of inventory loss is most likely to impact the organization as a result? A. Shrinkage B. Obsolescence C. Scrap D. Shelf life

B. Obsolescence The new laptop model is likely to cause the other two model lines to be obsolete, resulting in the devaluation of the inventory of those two lines.

Product A is made from components B and C. Component B is made from parts D and E. Which items should be forecasted? A. Only A, B, and C B. Only A C. Only B, C, D, and E D. Only D and E

B. Only A Product A should be forecasted because it is an independent demand item. As components of A or its subassemblies, the other components are dependent demand items and are planned by material requirements planning.

Which type of metrics should be tracked in real time whenever possible? A. Tactical B. Operational C. Financial D. Strategic

B. Operational Operational metrics measure the immediate short term on an hourly or daily basis and should be monitored in real time whenever possible to determine operational issues that are having the most impact on the business.

Which is a correct financial accounting equation? A. Revenue = Cost of Goods Sold - General and Administrative Expenses B. Owners' Equity = Assets - Liabilities C. Income = Revenue - Liabilities D. Assets = Liabilities - Owners' Equity

B. Owners' Equity = Assets - Liabilities "Owners' Equity = Assets - Liabilities" is a variant of the correct balance sheet equation: Assets = Liabilities + Owners' Equity. "Assets = Liabilities - Owners' Equity" incorrectly subtracts owners' equity from this equation. "Income = Revenue - Liabilities" is incorrect because the income statement equation is as follows: Income = Revenue - Expenses, not Revenue - Liabilities. "Revenue = Cost of Goods Sold - General and Administrative Expenses" is incorrect because the cost of goods sold and general and administrative expenses are subtracted from revenue to determine net income (or profit) before taxes.

Which type of legal risk refers to the misuse of intellectual property? A. Compliance B. Patent infringement C. Contract D. Bribery and corruption

B. Patent infringement Trademark or patent infringement refers to the misuse of intellectual property or using a trademark without authorization. It may result in financial and legal damages.

An order has been placed and approved for delivery in two months' time. The factory produces the product at a steady rate, meaning that days of supply are stable. What lot-sizing technique could be used to achieve appropriate levels of supply in this situation? A. Time-phased order point B. Period order quantity C. Demand planning D. Min-max system

B. Period order quantity Period order quantity is a lot-sizing technique under which the lot size is equal to the net requirements for a given number of periods. This method orders enough items to satisfy demand for a particular number of time periods, such as months, weeks, or days.

In order to maintain real-time inventory records, every transaction can be recorded in what type of document or electronic record? A. SKU B. Perpetual inventory record C. Inventory bin D. Lot-for-lot

B. Perpetual inventory record A perpetual inventory record tracks inventory levels at each stock keeping location. When a transaction occurs that either adds or subtracts inventory, the inventory levels in the record are updated immediately.

A shop order packet contains the authorization for a particular item or number of items to be made. Which of the following authorizations may also need to be issued as part of the order packet? A. Inventory list B. Pick lists C. Maintenance schedule D. Shop calendar

B. Pick lists The shop order packet will include what the shop floor needs to successfully produce the items.

Capacity requirements planning (CRP) receives the preliminary requirements plan in the form of which of the following? A. Routing B. Planned and open orders C. Bills of material D. Design specifications

B. Planned and open orders At the material requirements planning level, the preliminary material requirements plan is sent to capacity requirements planning in the form of planned and open orders. These are translated into load on specific work centers, which is compared to their available capacity.

A manufacturer of laptops knows roughly which components will be included in each laptop configuration they offer. To facilitate master scheduling and material planning, the necessary components and subassemblies can be grouped together in a particular type of document, even though specifics of an order have not yet been received. What is this document called? A. Business proposal B. Planning bill of material C. Planning schedule D. Forecast

B. Planning bill of material A planning bill of material is intended to simplify planning. It is an artificial grouping of items and components used to plan lead times for products that will need to be assembled- or made-to-order, the specifics of which will not be known until an order is received.

Which of the following factors is likely to become LEAST important for a product that has moved from regular production to spare parts supply? A. Quality B. Price C. Customer service D. Delivery reliability

B. Price Once a product has moved from regular production to intermittent spare parts supply, customer service, delivery reliability, and quality must remain high. Service parts are usually critical to the customer and must be available at all times with perfect quality. Since the item is no longer considered a "product," its price can become elastic and can be based on what the market will bear. Price, therefore, declines as an important factor, as customers will pay a premium when equipment has downtime.

A piece of electronics equipment is several years old, and new models with new functionality are common on store shelves. Which of the following factors are likely to be more important to consumers when choosing this product? A. Design and availability B. Price and delivery C. Price and quality D. Quality and delivery

B. Price and delivery Electronic equipment usually has relatively short life cycles. With newer models available, customers interested in the more mature products typically want price reductions and/or faster or more reliable delivery. Quality is important, but a mature product typically will have demonstrated adequate quality by this point.

What are the critical ratio and the queue ratio used for? A. Cycle time calculation B. Priority planning C. Master scheduling D. Capacity planning

B. Priority planning The critical ratio is a dispatching rule that calculates a priority index number by dividing the time remaining to the due date by the expected time to finish the job. The queue ratio is the ratio of the hours of slack within the job to the queue originally scheduled.

Which are considered ordering costs? A. Capital costs B. Production control costs C. Obsolescence costs D. Risk costs

B. Production control costs Production control costs are among the main components of ordering costs, along with production control, setup, lost capacity, and purchase costs.

What is the term for a production environment in which each unit or small group of units is managed by a team created especially for that purpose? A. Flow B. Project C. Intermittent D. Continuous

B. Project Project production is a manufacturing process in which each unit or small group of units is managed by a project team created especially for that purpose. Meanwhile, intermittent production is a form of manufacturing in which the jobs pass through the functional departments in lots and each lot may have a different routing. Flow is a form of manufacturing in which work flows from one workstation to another in a nearly constant rate and with no delays. Repetitive manufacturing consists of the repeated production of the same discrete products of families of products.

Which is a major objective of materials management? A. Provide sufficient equitable employment. B. Provide the required level of customer service. C. Support cost accounting by decreasing inventory turns. D. Provide cost information for management decisions.

B. Provide the required level of customer service.

A discrepancy has been identified between a supplier's shipping documents and the supplier's invoice with regard to quantity. Which of the following functions should contact the supplier about the discrepancy? A. Cost accounting department B. Purchasing department C. Accounts payable department D. Warehouse

B. Purchasing department The purchasing department is responsible for verifying the information on all documents and resolving any discrepancies found.

An organization is arranged using a work center process type with a functional process layout. Which tends to be the largest component of lead time for this type of manufacturing? A. Move time B. Queue time C. Setup time D. Run time

B. Queue time Queue time tends to consume a large percentage of the total lead time in work center (job shop) process types with functional layouts.

Which is the root cause of forecast error? A. Errors in monitoring the forecast. B. Random variation around the average demand. C. Differences in lead times. D. Differences between sales and demand.

B. Random variation around the average demand. All the other answers are not root causes of forecast error.

What is the first step in the purchasing cycle? A. Selecting suppliers B. Receiving and analyzing purchase requisitions C. Issuing purchase orders D. Determining the right price

B. Receiving and analyzing purchase requisitions The purchasing cycle consists of the following steps: 1. Receiving purchase requisition 2. Selecting suppliers 3. Determining the right price 4. Issuing purchase orders 5. Ensuring that delivery dates are met 6. Receiving goods and closing the order 7. Approving suppliers' invoice for payment

A planned order has been released earlier than expected. Materials have arrived at a workstation a week before they were expected and are taking up space on the factory floor. What impact will this have on the manufacturing system? A. Greater efficiency B. Reduced system efficiency C. Higher turnover D. Better products

B. Reduced system efficiency Planned orders should not be released early unless necessary. Releasing orders early will reduce system efficiency, because materials will arrive early, have higher inventory holding costs, and may get in the way of operations. In addition, material requirements sometimes change daily, and orders that are released before necessary are commitments to buy something that may no longer be needed.

A vehicle assembly plant would be classified as which type of manufacturing process? A. Job B. Repetitive C. Continuous D. Batch

B. Repetitive Repetitive manufacturing is dedicated to a single product or a small range of products, where products are passed through the same sequence of operations.

A customer has doubled its order for ski boots, which means that the manufacturer will not be able to meet the tight deadline. In addition, some of the pre-made clasps have been rejected after suffering transit damage, which means expediting the ski boot order is not an option. What action remains to the planner to address these issues? A. Canceling the order B. Replanning C. Maintaining priorities D. Redesigning the product

B. Replanning Replanning becomes necessary when expediting is not possible for one or more materials due to shortages. It involves calculating a new net requirement and planned order release and receipt date. This may or may not result in a new due date for the end unit(s). Maintaining priorities is not possible at this time, a product redesign is an extreme and unworkable solution, and canceling the order would result in waste.

What is the term for the process of interpreting the production plan's impact on critical key materials and capacity? A. Infinite scheduling B. Resource requirements planning C. Master production scheduling D. Strategic business planning

B. Resource requirements planning Production planning is a long-term planning technique, and it is checked by means of resource requirements planning for key work centers.

What is the term for a complete supply chain dedicated to the opposite flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling? A. Sustainable supply chain B. Reverse logistics C. Recycling D. Green supply chain

B. Reverse logistics Reverse logistics is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

Which of the following terms refers to a systematic approach to identifying, analyzing, and addressing an organization's exposure to uncertainty within the supply chain? A. Producer's risk B. Risk management C. Safety factor calculation D. Buffer management

B. Risk management

Which technology would be best suited to reducing labor costs associated with responding to emails and providing chat function support to customers? A. Wearable technology/augmented reality B. Robotic process automation C. Artificial intelligence D. Cloud computing

B. Robotic process automation Robotic process automation (RPA) refers to the use of software "bots" to automate repetitive interactions with customers or other automated systems, such as responding to emails and chat functions automatically.

Which observation is true as priority planning moves through the various levels of capacity validation and becomes more and more detailed? A. Master scheduling plans all resource capacities at the end-item level. B. Sales and operations planning plans just critical resources at the product family level. C. The duration of the planning horizon gets longer to accommodate the increase in detail. D. Material requirements planning plans detailed resource requirements just for component-level bottlenecks.

B. Sales and operations planning plans just critical resources at the product family level. S&OP plans critical resources at the product family level; master scheduling plans key resources and bottlenecks at the end-item level; and MRP plans detailed resource requirements at the component level.

A work center is slightly under capacity for four weeks running, producing between 5% and 10% under its rated capacity. Which of the following would be a feasible way of resolving this difference? A. Redesigning the product B. Scheduling overtime C. Restructuring the work center D. Postponing delivery

B. Scheduling overtime Resolving differences starts by working to increase capacity where possible. Scheduling overtime may assist in resolving the difference, but a review aimed at finding the root cause of the underperformance should be made, as four weeks running is a long time. Is this a temporary situation due to regular employees being on vacation? Due to illness? A change in a process? Learning curves? Misstated standard times?

In exponential smoothing, what is the term for the weighting factor that is applied to the most recent demand, observation, or error? A. Bias B. Smoothing constant C. Smoothing variable D. Tracking signal

B. Smoothing constant The smoothing constant in exponential smoothing is the weighting factor that is applied to the most recent demand, observation, or error. In this case, the error is defined as the difference between actual demand and the forecast for the most recent period.

Why must top management coordinate with each other? A. So that key performance indicators at the associate level are common B. So that diverse groups such as creative teams and rules-based teams operate with a common purpose C. So that rules-based groups are prevented from spending much time with creative groups D. So that creative groups are physically separated from the rules-based groups and will not disrupt them

B. So that diverse groups such as creative teams and rules-based teams operate with a common purpose Formal continuous improvement methods may be too rigid when applied to creative organizations like research and development. So two styles of management may coexist: one for creative groups and another for everyone else, as is described in Kotter's Accelerate. Therefore, senior managers must coordinate their efforts so that separate and diversely managed units operate with a common purpose.

Which of the following actions best reduces work-in-process (WIP) inventory on the shop floor? A. Identify the constraint to the system. B. Subordinate all else to the constraint to the system. C. Elevate the constraint to the system. D. Decide how to exploit the constraint to the system.

B. Subordinate all else to the constraint to the system. Once a process constraint has been identified, WIP is reduced by making all loads equal to the allowable capacity found at the constrained process. Any load released to the manufacturing floor that is greater than the constrained process capacity will simply end up as excess load.

An organization implements a dock-to-stock program with a key supplier. How will this impact the total cost of ownership (TCO) if the program is implemented correctly? A. TCO will initially be higher but will eventually be lower as the cost of poor quality goes down. B. TCO will be lower due to no receiving and inspection without a higher average cost of poor quality. C. TCO will be higher because the costs of supplier relationship management will more than offset shorter lead times from such a program. D. TCO will not be affected because passing costs on to the supplier cannot improve costs from a total supply chain perspective.

B. TCO will be lower due to no receiving and inspection without a higher average cost of poor quality. The total cost of ownership in supply chain management speaks to the sum of all the costs associated with every activity of the supply stream. In this case, dock-to-stock is a program through which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection, and enables product to move directly into production. If the program is implemented correctly, the costs of poor quality should not increase. Even from a total supply chain perspective, TCO will decrease because only one party is performing these quality steps rather than both parties doing the same task.

Which level of technology systems requirements stem from choices made for the production process? A. Analytical B. Tactical C. Operational D. Strategic

B. Tactical Tactical requirements in manufacturing stem from choices made for the production process.

A lawn tractor manufacturer is determining how to market a new line of commercial mowers. What should the company consider when looking at the product marketing tool in the four Ps? A. The break-even point, above which the company will turn a profit B. The mower attributes that will result in order qualifiers and winners C. Sales incentives for salespersons and retailers D. Where the mower should be sold and at what lead time

B. The mower attributes that will result in order qualifiers and winners

New equipment and workers are added to a constraint work center. If the process is linear and one unit is input and one is output per operation, what might occur next if demand does not change? A. The market cannot become the constraint. B. The next slowest work center in terms of production rate may become the constraint. C. The next fastest work center in terms of production rate may become the constraint. D. The system will not have a constraint any more.

B. The next slowest work center in terms of production rate may become the constraint. Since there is always a constraint in a system, when one constraint is removed, either the next slowest operation will become the constraint or the market will become the constraint, given the assumptions in the scenario. Even though demand did not change, the market could become the constraint if demand is less than the next slowest operation

Which is true about the components of demand? A. Random variation is constant from period to period by definition. B. The seasonal index estimates how much demand during the season will be above or below the average. C. A trend is demand that fluctuates based on the time of the year, week, or day. D. Seasonality always occurs in summer, fall, winter, and spring.

B. The seasonal index estimates how much demand during the season will be above or below the average. Seasonality fluctuates based on the time of the year, week, or day (i.e., not a trend), and not just during the seasons of the year. While random variation averages out over time, period-to-period variation is not uniform. However, it is true that a seasonal index estimates how much demand during the season might fluctuate.

How are suppliers utilized in a lean production environment? A. The supplier's cost reductions are directly awarded to the buyer. B. The supplier is viewed as an upstream work center. C. The buyer will use short-term contracts to cover multiple small deliveries. D. The buyer will take over production planning for the supplier due to the increased complexity.

B. The supplier is viewed as an upstream work center. In a lean environment, cost savings are shared by the customer and the supplier, which is why the supplier is viewed as an upstream work center. Because customers and suppliers enter into long-term contracts with multiple short deliveries, the supplier is viewed as an upstream work center. Because of better communication such as information sharing, pull signal, and long-term contracts with smaller deliveries, planning becomes much more simple

Which of the following is true of product costs? A. They are period costs. B. They are allocated to the product. C. They are non-manufacturing costs. D. They vary with production.

B. They are allocated to the product. Product costs are allocated by some method to the products being produced.

What term is used for a distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting? A. Marketing channel B. Transaction channel C. Distribution channel D. Sales channel

B. Transaction channel

Which of the following is a possible root cause of time series forecast bias? A. Errors in monitoring the forecast B. Trend changes C. Insufficient data D. Differences between sales and demand

B. Trend changes Bias can be caused by issues with the forecasting technique, such as the lag that occurs when a trend changes. Trend changes may appear as spikes or dips in the data. Another potential root cause is when human bias was involved in making data estimates. Identifying the correct root cause is important; otherwise, inappropriate remedies might be applied.

At a toy manufacturer, one work center is assigned the task of attaching an action figure's head. Two lots of the figure's head are provided. As soon as one lot is exhausted, a replenishment order is issued. The worker continues to work on assembly using the second lot while the replenishment lot is processed. What is the name for this inventory system? A. Min-max system B. Two-bin inventory system C. Lot-for-lot system D. Hybrid system

B. Two-bin inventory system Two-bin inventory is a fixed-order system in which inventory is carried in two bins. A replenishment quantity is ordered after the first is exhausted. During the replenishment time, material in the remaining bin is used.

An end customer's expectations of how a product should perform, its features, reliability, and the ease of maintenance (where applicable) are elements of which measure of quality? A. Value-based B. User-based C. Transcendent D. Product-based

B. User-based User-based quality is based on the expectations of the ultimate user: Does the product function as expected, and is it reliable and durable? This consideration could also be based on other elements, such as warranty, price, and perceived quality.

Which measurement, presented as a percentage, describes how intensively a resource is being used to produce a good or service? A. Order winner B. Utilization C. Output D. Efficiency

B. Utilization Utilization compares actual time used to available time. The information can be acquired through reviewing historical records on the actual use of the equipment and/or work center. This allows planners to include downtimes, breaks, delays, and maintenance in their calculations.

Which of the following statements is true when production lead time is increased? A. Work-in-process inventory will decrease. B. Work-in-process inventory will increase. C. Component inventory will increase. D. Work-in-process inventory may be insufficient.

B. Work-in-process inventory will increase. When production takes longer, the raw materials, components, and subassemblies will spend more time in work-in-process. The size of the component inventory and the necessary inventories needed in production are unaffected by an increase in product lead times.

Which of the following outcomes will occur if work is scheduled at a higher rate of production than is actually produced? A. Lead times will decrease. B. Work-in-process will increase. C. Standard costs will decrease. D. The output rate will increase.

B. Work-in-process will increase. If more work is scheduled at a workstation than can be completed, the amount of work-in-process will increase.

Lean production uses kanban cards to generate a reorder point signal. This is an example of: A. a replenishment system. B. a pull system. C. a push system. D. a production support system.

B. a pull system. A pull system involves the production of items only as demanded for use or to replace those taken for use. A push system involves pushing materials out according to a production schedule based on a forecast or actual orders. In a replenishment system (or min-max system), the minimum is the order point, and the maximum is the "order up to" inventory level.

Plans for sales and operations planning are at the: A. customer level. B. aggregate product family level. C. manufacturing site level. D. detailed SKU level.

B. aggregate product family level. The sales and operations planning process must reconcile all supply, demand, and new product plans at aggregate levels and tie to the business plan.

Two companies offer comparable products with relatively similar quality and pricing, but one company dramatically leads the market due to its after-sales support. This is an example of: Answers A. an order survey. B. an order winner. C. an order qualifier. D. order follow-up.

B. an order winner.

The objective of distribution management is to provide the required level of customer service: A. for the lowest cost. B. at the least total cost. C. as conformance to requirements. D. to delight the customer.

B. at the least total cost. Least total cost means that the total of all distribution costs should be at a minimum while providing the required level of customer service.

Rough-cut capacity planning performs a: A. scheduling routine and then checks capacity availability. B. comparison to available or demonstrated capacity. C. detailed capacity analysis. D. material requirements explosion.

B. comparison to available or demonstrated capacity. Rough-cut capacity planning is compared to available or demonstrated capacity and is usually done for each key resource.

Placing inventory at a customer's location without receiving payment until after the goods are used or sold is called: A. work-in-process inventory. B. consignment. C. consignee. D. vendor-managed inventory.

B. consignment. Consignment is the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.

The point in time inside which changes to the master schedule typically must be approved by an authority higher than the master scheduler is referred to as the: A. cutoff date. B. demand time fence. C. capable-to-promise. D. planning time fence.

B. demand time fence. The demand time fence is a point in time inside which demand is based on customer orders rather than forecasts and changes to the master schedule must be approved by an authority higher than the master scheduler. Contrast this with the planning time fence, where changes in the schedule may be made within the constraints of the production plan and are made manually by the master scheduler.

The long-term payoff from total quality management (TQM) depends heavily on management's success in: A. demonstrating that a commitment to TQM philosophies can improve the company's bottom line. B. instilling a culture in which the TQM philosophy and practices can survive. C. actually leading training classes in the tools of quality. D. advertising their own personal successes in using the tools of quality.

B. instilling a culture in which the TQM philosophy and practices can survive. TQM is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of operations. It aims at instilling enthusiasm and commitment to doing things right from the top to the bottom of the organization. Management's job is to kindle an organization-wide search for ways to improve, a search that involves all company personnel exercising initiative and using their ingenuity to participate in continuous improvement.

The practice of stopping a production line when a defect is found is known as: A. six sigma. B. jidoka. C. total quality management. D. kaizen.

B. jidoka. Jidoka means that when a problem occurs on a production line, a worker is able to stop the process and prevent defective goods from being produced.

Aesthetics, features, and warranty are all dimensions of: A. utility. B. quality. C. conformance. D. service.

B. quality. Quality has the dimensions of performance, features, conformance, warranty, service, aesthetics, perceived quality, and price.

For the purposes of production planning, product families should be established on the basis of A. the availability of materials. B. similarities in manufacturing process. C. the availability of equipment. D. market segments.

B. similarities in manufacturing process. Manufacturing needs to know what products share the same manufacturing processes Market segments are how marketing might group its markets or customers. The availability of materials and machinery, affect production capacity but are not the basis for establishing product families.

When a manager is assessing how many people she will need to do a new job and determining how long the new job will take, she will calculate how long an average employee would take to set up and produce the first batch of product. This is called: A. capacity available. B. standard time. C. capacity required. D. throughput.

B. standard time Standard time is the length of time that should be required to set up a given machine or operation and run one batch (or part, assembly, etc.) through that operation. It assumes an average worker who follows prescribed methods and allows time for personal rest to overcome fatigue and delays.

A key design factor for today's manufacturers might include taking product back at the end of its life cycle to dispose of properly. This would be an example of: A. global warming. B. sustainability. C. anti-corruption. D. energy efficiency

B. sustainability. Sustainability includes activities that provide present benefit without compromising the needs of future generations.

What is a Bucketless MRP record?

Bucketless MRP record show the exact date on which a specific action is required.

On a balance sheet, assets are $1 million. If liabilities are $600,000, what is owners' equity? A. Not enough information was provided to answer the question. B. $600,000 C. $400,000 D. $1,600,000

C. $400,000 Assets = Liabilities + Owners' Equity. Rearranging this question, you get: Owners' Equity = Assets -Liabilities = $1,000,000 - $600,000 = $400,000.

In period 1, planned input was 36 hours but actual input was 32 hours. In period 2, planned and actual input were 36 hours. In period 3, planned input was 34 hours but actual input was 30 hours. All hours are standard hours. What was the cumulative variance? A. 4 standard hours B. -4 standard hours C. -8 standard hours D. 8 standard hours

C. -8 standard hours Cumulative Variance (Inputs) = Previous Cumulative Variance + Actual Input - Planned Input. First day: 32 hours - 36 hours = -4 hours. Second day, no change. Third day: -4 hours + 30 hours - 34 hours = -8 hours.

Three years of first-quarter results are 150, 175, and 200 units, respectively. If the average demand for all quarters is 220 units, what is the first quarter seasonal index? A. 0.682 B. 0.909 C. 0.795 D. 1.257

C. 0.795 First, determine the period average by summing the first-quarter results and dividing by the number of periods: 150 units + 175 units + 200 units = 525 units/3 years = 175 units. Next, divide this period average demand by the average demand for all periods: 175 units/220 units = 0.795 (rounded).

A particular inventory item sells 50 units per day at a retail store. The review period is on a 20-day cycle, and the lead time is 3 days. Safety stock is set as 2 days of supply. If there are 210 units on hand at the order period, what is the order quantity using a periodic review system? A. 1,090 units B. 1,300 units C. 1,040 units D. 1,250 units

C. 1,040 units Order Quantity = Target Level - Inventory on Hand = T - I. Target Level = Demand per Working Day × (Review Period + Lead Time) + Safety Stock. Safety Stock = Days of Supply × Lead Time = 2 × 50 units = 100 units. Target Level = 50 units per day × (20 days + 3 days) + 100 units = 1,250 units. Order Quantity = 1,250 units - 210 units = 1,040 units.

For the past six months, a manufacturer has experienced monthly forecast deviations of 15, -6, 12, 8, -18, and -4 units. What is the mean absolute deviation for these months? A. 1.16 B. 9.33 C. 10.5 D. 11.67

C. 10.5 To calculate the mean absolute deviation, first make each deviation positive and sum these absolute values: 15 + 6 + 12 + 8 + 18 + 4 = 63 units. Next, divide by the number of periods (6): 63/6 = 10.5.

A standard for a work center is 2 units of output per standard hour. In 100 hours, the work center actually produces 210 units of output. What is the work center's efficiency? A. 125 percent B. 95 percent C. 105 percent D. 48 percent

C. 105 percent Efficiency = Standard Hours Produced/Hours Actually Worked. To find the answer to this question, first we need to calculate the standard hours produced. To do this, divide the units actually produced by the standard rate of production: 210 units/2 units per standard hour = 105 hours. Efficiency = 105 hours/100 hours = 1.05 = 105 percent. Alternatively, the same answer can be found by dividing the actual rate of production by the standard rate of production: 210 units/200 units = 105 percent

The deseasonalized demand forecast is 500 units for the next year. If the seasonal index for the first quarter is 1.25, what is the forecast for next year's first quarter? A. 178 units B. 625 units C. 156 units D. 100 units

C. 156 units First, find the period deseasonalized demand by dividing the annual deseasonalized demand by the number of periods: 500 units / 4 quarters = 125 units. Next, multiply the deseasonalized first quarter demand by the seasonal index: 125 x 1.25 = 156.25, rounded to 156 units.

A bill of resources shows that standard hours of labor for product family A is 0.2 hours per unit and for product family B is 0.4 hours per unit. Planned production is 700 units of A and 400 units of B for the month. If there are 2 workers with 160 hours per month available, what is the surplus or shortfall of labor? (Shortfall will be shown as a negative value.) A. 40 hours B. -20 hours C. 20 hours D. -40 hours

C. 20 hours To determine if there is a shortfall or surplus of labor for the month, first calculate the available hours by multiplying the available hours per worker by the number of workers: 2 workers × 160 hours per worker = 320 hours. Next, determine the load or total hours required by multiplying the number of units for the family by the standard hours for labor for the product family and summing the results: (700 units × 0.2) + (400 units × 0.4) = 140 hours + 160 hours = 300 hours. Finally, the available hours minus the load equals the surplus or shortfall: 320 hours - 300 hours = 20 hours, a surplus.

Given the following information, what is the master production schedule (MPS) for week 5? Opening inventory = 100 units Lot size = 200 units Forecasted sales: Week 1 = 150 units Week 2 = 100 units Week 3 = 60 units Week 4 = 80 units Week 5 = 140 units Note: Assume that the master scheduler wants to keep inventory levels to a minimum while still meeting all projected demand. A. 0 B. 100 C. 200 D. 400

C. 200

There are currently 5,000 hydraulic door closers in stock, and analysts project that there will be sales of 58,500 this year. If this turns out to be true, how many days of supply are currently on hand? A. 21.3 days B. 36.7 days C. 31.2 days D. 11.7 days

C. 31.2 days Days of Supply = Inventory on Hand/Average Daily Usage. To determine average daily usage, divide the annual usage by 365: 58,500/365 = 160.274. Days of Supply = 5,000/160.274 = 31.197, rounded to 31.2 days.

Assuming demand is stable and continuous, approximately what percentage of storage space will be occupied by goods in a distribution center at any given time if it uses a fixed-location system? A. 100 percent B. 80 percent C. 50 percent D. 90 percent

C. 50 percent If demand for items is stable and continuous, then stock level will draw down steadily and the average level will only be 50 percent. Because its space is reserved, other items cannot be stored there.

The day 56 log for a work center shows planned input of 14 hours, actual input of 16 hours, and a cumulative input variance of -2 hours. For the same day the planned output was 15 hours, the actual output was 14 hours and the cumulative output variance was -5 hours. The day 55 log showed the planned backlog was 7 hours and the actual backlog was 6 hours. The planned backlog for day 56 was 6 hours. What was the actual backlog for day 56? A. 6 hours B. -7 hours C. 8 hours D. 0 hours

C. 8 hours Actual Backlog = Previous Actual Backlog + Actual Input - Actual Output = 6 hours + 16 hours - 14 hours = 8 hours.

Which letter from a VATI analysis would most likely represent the flow of material through the production process of manufacturing an orbital satellite? A. V B. I C. A D. T

C. A An orbital satellite is a complex device assembled from many parts and subassemblies, so it conforms to an A type plant where all the parts converge. It is not a V-type plant because this type of plant consists primarily of diverging processes where a few raw materials are processed into a variety of products. T-type plants diverge into many possible product combinations. I-type plants utilise a simple linear flow.

Which is true of part numbers and their relationship on bills of material? A. The same part used on different bills of material will need different part numbers. B. The same part number can be used to identify the same product at different stages of production before and after value has been added to it. C. A part at a particular processing stage has one and only one part number. D. A part can be either a parent or a child but never both.

C. A part at a particular processing stage has one and only one part number. Part numbers must be unique for control purposes, and a part that receives further processing during production will have a new part number when it exits the work center doing the processing.

How does advanced planning and scheduling (APS) software differ from other planning systems? A. APS combines enterprise resources planning with complex spreadsheet workbooks. B. APS runs in real time in parallel to other system processes. C. APS simultaneously plans and schedules production based on available materials, labor, and plant capacity. D. APS includes the planning processes of production planning, master production scheduling, and capacity requirements planning.

C. APS simultaneously plans and schedules production based on available materials, labor, and plant capacity.

Given the existence of forecasting error, what are manufacturers using in order to create more accurate production schedules and targets? A. Improved manufacturing methods B. Previous years' targets and goals C. Actual demand data from supply chain partners D. Greater market analysis

C. Actual demand data from supply chain partners Because of issues with forecasting, organizations are working to become less reliant on forecasts and more reliant on actual demand information provided by their downstream supply chain partners. This effectively means that organizations are moving toward a pull structure and away from a push structure.

If there is insufficient capacity for the priority plan for a period of the master schedule and this overload is based on actual customer orders, what solution might be most likely to succeed and should be attempted first? A. Make a sales promotion for this period happen in a later period. B. Change the schedule to reduce demand. C. Add an evening shift for equipment that is fully staffed on the current shift. D. Add more workers to equipment that is fully staffed on the current shift.

C. Add an evening shift for equipment that is fully staffed on the current shift. Adding a shift is one way to increase capacity. Overtime could also be used. However, the other answers are incorrect because adding workers to equipment that is fully staffed will not be as likely to increase capacity, since the equipment becomes the constraint; it is also preferable to increase capacity before considering changing the plan or reducing demand.

When multiple products are produced using the same resources over the same time horizon, what must an organization do prior to checking capacity? A. Remove the competing products from production. B. Set up new resources so the production processes do not conflict. C. Aggregate master schedules for all related items. D. Prioritize production of one product over the others.

C. Aggregate master schedules for all related items. When multiple products use the same resources over the same time horizon, the organization must aggregate the schedules before performing capacity checks.

Which items in an indented bill of material will be purchased components? A. All items on the bill. B. All items on the bill that are at the leftmost level of indenting. C. All items on the bill that do not have further indented items below them. D. All items on the bill that are at the rightmost level of indenting.

C. All items on the bill that do not have further indented items below them.

What is the cost of goods sold? A. Computation used to calculate retail costs for the sale of a product B. Accounting classification used on an asset sheet to reflect inventory value C. Amount of direct materials, direct labor, and allocated overhead associated with products sold during a given period of time D. Actual cost of the operation of a unit assigned the responsibility of developing and producing a specific product

C. Amount of direct materials, direct labor, and allocated overhead associated with products sold during a given period of time The cost of goods sold determines the amount of direct materials, direct labor, and allocated overhead associated with the products sold.

Which is an advantage of back scheduling? A. Levels the workload. B. Takes advantage of excess capacity. C. Avoids inventory buildup and cost. D. Commits resources as early as possible.

C. Avoids inventory buildup and cost. Back scheduling enables manufacturing to avoid committing resources until needed, thus avoiding a buildup of inventory and cost.

What term is used for an error in which actual demand is consistently above or below the forecast demand? A. Cumulative demand variance B. Forecast error C. Bias D. Random variation

C. Bias Bias is a consistent deviation from the mean in one direction, either high or low.

Which of the following statements is true of inventory when the final product design is continuously influenced by the customer? A. Large safety stocks must be maintained. B. Lot-size inventory increases to the finished goods level. C. Buffer inventory should be held closer to the raw material stage. D. Customer influence on the product design should not affect inventory levels.

C. Buffer inventory should be held closer to the raw material stage. Because the final configured item is often not determined until the actual customer order, leaving materials and components in an unfinished state significantly reduces stocked finished goods. The materials and components are then made- or assembled-to-order based on customer specifications. Increasing the lot-size inventory to the finished goods level will only build inventory as the company waits for a customer order with pre-designed configurations. Large safety stocks further increase the amount of finished goods maintained in inventory. Unless the customer requires only off-the-shelf products, the production and inventory functions must be flexible to build any customer configuration.

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

C. Buffer management The buffer ensures that the process will never be "starved" for needed inventory. This buffer of inventory represents the amount of time that the inventory in the buffer protects the constraint from disruptions.

A customer contacts a manufacturer's salesperson and wants to purchase all production supply and capacity for a given item. Which of the following values will the salesperson need to obtain from his company to respond to his customer? A. Rough-cut capacity plan B. Available-to-promise C. Capable-to-promise D. Master schedule

C. Capable-to-promise Capable-to-promise is the process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites.

Under the theory of constraints, what signals the start of the purchasing process. A. Kanban B. Planned order release C. Change in buffer inventory D. Purchase requisition

C. Change in buffer inventory Production inventory shortages cause a "hole" in the constraints buffer and alert the buffer manager to release a purchase order for the short materials.

Which is true about time fences in a master schedule system? A. In the slushy zone, capacity and materials can easily be committed to new orders. B. Changes in the frozen zone entail scheduling difficulty but no added production cost. C. Changes in the liquid zone can be made with little or no cost to production. D. The master planner can authorize changes in the frozen zone.

C. Changes in the liquid zone can be made with little or no cost to production. Changes in the liquid zone can be routine and entail no cost to production. The other answers are incorrect because it is still relatively difficult to change production priorities in the slushy zone; and because the cost of changes in the frozen zone is such that authorization should come from the management level above the master planner.

Kaizen in a lean environment refers to: A. voluntary study groups. B. a statement of objectives. C. continuing improvement involving everyone. D. visiting the shop floor to observe what is occurring.

C. Continuing improvement involving everyone Kaizen is the Japanese term for improvement. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor, or production methods.

Which inventory audit technique relies on a dedicated, trained staff who counts small amounts of inventory every workday? A. Physical inventory B. ABC segmentation C. Cycle counting D. Periodic inventory

C. Cycle counting Cycle counting is a continuous inventory audit practice that relies on dedicated, trained staff whose job is to count small amounts of inventory each workday. Cycle counting is a form of physical inventory along with periodic inventory, which does not take place on a daily basis. ABC item segmentation is often used when cycle counting but is not the actual name of the inventory audit technique.

How does an engineer-to-order product differ from products in other production strategies? A. Once the product is designed, it is typically sold as a standard product offering. B. The demand lead time is comparable to that for assemble-to-order products. C. Each customer order results in a unique set of part numbers, bills of material, and routings. D. It is produced upon receipt of the customer order.

C. Each customer order results in a unique set of part numbers, bills of material, and routings. With engineer-to-order products, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.

Which of the following scenarios warrants the use of economic order quantity (EOQ)? A. Finished goods with a short shelf life B. Finished goods that are made to order C. Finished goods with demand that is independent and fairly uniform D. Finished goods with a component that limits run length

C. Finished goods with demand that is independent and fairly uniform One of the assumptions for using EOQ is that demand is independent and fairly uniform. Other EOQ assumptions are that items are purchased or made in batches or lots, ordering costs and carrying costs are known and the curves are stable, and replacement occurs all at once.

What term is used for the responsibility of the supplier to dispose of packaging materials or environmentally sensitive materials? A. Recycling B. Sustainability C. Green reverse logistics D. Environmental stewardship

C. Green reverse logistics Green reverse logistics places the responsibility on the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals and other restricted materials.

Which element of flexibility is most related to the number of kanbans in the system? A. Ease with which movable equipment allows a layout to be reconfigured B. Having a certification program that ensures operator cross-training C. Having short internal setup times that permit frequent changeovers D. Ability of a work center to match the required output rate

C. Having short internal setup times that permit frequent changeovers The shorter the setup, the fewer the required kanbans.

A specific work center is outperforming expectations, completing a job that planners expected to take 15 hours in only 12 hours. What does this indicate? A. Good work ethic B. Superior machine maintenance C. High efficiency D. Low efficiency

C. High efficiency Efficiency is a measurement of the actual output relative to the standard output expected. It measures how well something is performing relative to existing standards. If the difference in this situation continues to be the case, the standard times should be reviewed and adjusted.

Which factor favors air transport? A. Inexpensive goods B. Dense goods C. Highly perishable goods D. Normal operating conditions

C. Highly perishable goods Highly perishable goods with a short shelf life are often shipped by air, for example, fresh seafood. Air is also best for light, non-bulky, valuable goods and for emergency shipments.

Which six-step process that forces designers to consider customer needs can a manufacturer use to support and generate a customer's desired product attributes? A. Total quality management (TQM) B. Voice of the customer (VOC) C. House of quality (HOQ) D. Continuous improvement

C. House of quality (HOQ) Identification of customer attributes Identification of supporting technical features Correlation of customer attributes with supporting technical features Assigning priorities to customer requirements and technical features Evaluation of competitive stances and products Identification of technical features to be used in the final design

To minimize costs and meet predictable seasonal demand, a manufacturer may need to develop a customized strategy drawing from multiple approaches. This is what type of strategy? A. Synthesized B. Chase C. Hybrid D. Level

C. Hybrid Hybrid strategies can combine chase, level, and subcontracting strategies in different ways to arrive at custom solutions. Often a custom solution will be optimal in terms of minimizing costs and meeting other objectives such as labor relations.

What type of demand inventory ordering model includes fixed reorder cycles, fixed reorder quantities, optional replenishment, and hybrid models? A. Material requirements planning B. Drum-buffer-rope C. Independent D. Kanban

C. Independent According to the APICS Dictionary, 15th edition, independent demand inventory ordering models include fixed reorder cycles, fixed reorder quantities, optional replenishment, and hybrid models, among others. Dependent demand inventory ordering models include material requirements planning, kanban, and drum-buffer-rope.

Which is the most accurate statement about the master production schedule? A. It is a plan that the finance and production departments agree to. B. It is a plan for families of products that manufacturing expects to make in some future period. C. If the MPS is poorly done, past-due schedules and unreliable delivery promises are expected. D. It provides input to the production plan.

C. If the MPS is poorly done, past-due schedules and unreliable delivery promises are expected. The MPS is an agreement between the production and sales and marketing departments, although finance does have a say. The MPS is a plan for end items. The production plan provides input to the MPS, not the other way around.

A distribution network that currently operates with a centralized replenishment planning team needs to reduce inventory. What would be the most appropriate action to reduce inventories without jeopardizing service? A. Perform an ABC classification. B. Reduce the number of stock keeping units stocked at the distribution centers. C. Implement decentralized inventory control. D. They should not make any changes.

C. Implement decentralized inventory control. Decentralized inventory control places the inventory decision making at each stocking location for stock keeping units at that location.

How should a forecast for snowmobile sales for the coming year be constructed? A. In the same schedule as production B. In the same schedule as shipping C. In the same schedule as customer orders D. In weeks

C. In the same schedule as customer orders The forecast should be constructed in the same schedule as that in which sales from customer orders are expected for the coming year. Note that the forecast will probably need a seasonality component due to the nature of the product. The production schedule will be influenced by the expected lead time required to produce the snowmobiles, and it will precede the shipping schedule for the snowmobiles. The shipping schedule will be influenced by the arrivals from production and the lead times required to deliver the snowmobiles through the delivery supply chain to finally reach the customer who placed the order. The schedules throughout the supply chain will be in the time increments needed for each to coordinate with all the other components of the snowmobile supply chain.

Finished goods being shipped from one facility to another is considered which type of inventory? A. Pipeline B. Anticipation C. In-transit D. Hedge

C. In-transit In-transit inventory is material moving between two or more locations, usually separated geographically.

Which financial document shows sources of revenue (sales in cash or as accounts receivable) followed by various types of expenses incurred throughout the period? A. General ledger B. Cash flow statement C. Income statement D. Balance statement

C. Income statement An income statement is a summary of management's performance as reflected in the profitability of an organization over a certain period. It itemizes the revenues and expenses that led to the current profit or loss and indicates what may be done to improve the results.

Which is the biggest tradeoff that needs to be accepted when an industry with strong seasonality chooses a level production strategy? A. Lower production efficiency. B. Skilled workers unavailable for rehire. C. Increased inventory carrying cost. D. Increased overtime costs.

C. Increased inventory carrying cost. A level strategy for a seasonal product requires building extra inventory in times of low demand to enable satisfying demand at the seasonal peak. This is called anticipation inventory. It results in higher average inventory levels and therefore higher inventory carrying costs. The other answers are tradeoffs of other methods such as the chase strategy.

An organization is examining its corporate social responsibility policies and wants to start by looking to internal influences to guide any changes it makes. Which of the following is an example of an internal influence? A. National laws and regulations B. Trade blocs C. Intended customers D. Local competition

C. Intended customers Internal influences are generally within the organization's control and include the customers that the company chooses to market to. National laws, trading blocs, and local competition are all examples of external influences.

A small engine parts manufacturer is working to segment suppliers and customers to enhance profitability. When it discusses the companies that carry those parts in retail locations, which segment is it considering? A. Lead time B. Suppliers C. Intermediate customers D. Ultimate customers

C. Intermediate customers

What is an example of an external influence that may guide strategy regarding corporate social responsibility? A. Employee organizations B. The organization's chief environmental officer C. International competition D. Customer segments

C. International competition External influences are influences that the organization cannot exert control over, such as international competition. A company may choose to market to particular customer segments or avoid others, may endorse or ban employee organizations, and may choose to dismiss or eliminate the role of a chief environmental officer, so those are all examples of internal influences.

Which is a characteristic of the production plan? A. It facilitates forecasting. B. It cannot be used for order promising or capable-to-promise. C. It is a plan that both the production and sales and marketing departments agree to. D. It works with families of products.

C. It is a plan that both the production and sales and marketing departments agree to. The master production schedule uses the sales and operation planning process as a primary input in the form of the agreed-upon production plan. The APICS Dictionary, 15th edition, states within its definition of master scheduling that "the sum of the master production schedules for the items within the product family must equal the production plan for that family." The MPS is where this agreed-upon plan between the production and sales and marketing departments is put into effect. The other answers are incorrect because forecasts are an input to the MPS; the MPS plans at the end-item level, not the product family level; and the MPS is used for order promising. Note: While the S&OP process does work with families of products, the agreed-to production plan that results from this process is at the specific item level, not product families. The Production Plan quantities for the specific items scheduled should equal the quantities planned at the product family level. That is the only role the families of products plays in developing the production plan, but it is not a characteristic of an actual production plan.

In a single-level bill of material, a component amount has been left blank. What does this indicate? A. The component has not been selected yet. B. The amount used is not important to the overall costing of production. C. It is not possible to measure the component in standard quantities accurately. D. The component is not used in this process.

C. It is not possible to measure the component in standard quantities accurately. When the amount of a component used or needed cannot be measured accurately using standard measurements, the quantity is left blank on the bill of material. The cost of the part or component would have to be included in overhead.

Which of the following is true of a business plan? A. It is stated in terms of monetary units and detailed by product. B. It is stated in terms of units and grouped by manufacturing site. C. It is stated in terms of monetary units and grouped by product family. D. It is stated in terms of units and grouped by distribution channel.

C. It is stated in terms of monetary units and grouped by product family.

The drum in the drum-buffer-rope scheduling process serves which of the following functions? A. It provides protection for the shipping schedule. B. It is the communication device for releasing work to the manufacturing process. C. It is used to create the master production schedule. D. It provides protection to the constraint.

C. It is used to create the master production schedule. The drum of the system refers to the 'drumbeat' or pace of production. It represents the master schedule for the operation, which is focused around the pace of throughout as defined by the constraint.

Which is true regarding a Pareto analysis? A. It assigns weighted costs associated with internal versus external failure costs. B. It arrives at the 80-20 proportions using statistics rather than being a rule of thumb. C. It separates the significant few from the trivial many. D. It uses the five focusing steps.

C. It separates the significant few from the trivial many. A Pareto chart separates the significant few from the trivial many by easily visualizing the most common occurrences.

Which of the following types of costs includes transportation, customs duties, and insurance in addition to the purchase price? A. Setup B. Acquisition C. Item D. Delivery

C. Item Item cost is the price paid for a purchased item, which consists of the cost of the item and any other direct costs associated with getting the item into the plant. The other options are elements of item cost.

Which of the following is an example of a pull system for replenishing inventory? A. Issuing material to a given schedule B. Producing inventory in advance of need C. Kanban D. Centralized distribution planning

C. Kanban In general, a pull system replenishes inventory only when it is needed. A kanban is a pull system in which work centers signal with a card that they wish to withdraw necessary parts from feeding operations or suppliers.

Which is an objective of material requirements planning? A. Keep the factory busy. B. Minimize inventory investment. C. Keep priorities current. D. Determine the forecast.

C. Keep priorities current. The objective of MRP is to keep priorities, or due dates for end items and components, current. Keeping the factory busy is an objective of capacity planning; determining the forecast is an input to the master production schedule; and minimizing inventory investment is an overall objective of aggregate inventory management.

Which of the following includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees? A. Standard cost B. Acquisition cost C. Landed cost D. Cost roll-up

C. Landed cost Landed cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.

Which of the following statements is true of enterprise resources planning (ERP)? A. Only a few databases are required, and they seldom relate to one another. B. ERP systems are similar to MRP II systems, as they both deal with manufacturing. C. Large data requirements tend to make these systems expensive and difficult to operate. D. Advances in technology have made ERP systems affordable for companies of any size.

C. Large data requirements tend to make these systems expensive and difficult to operate.

An organization that sells industrial and consumer packaging to manufacturers wants to generate a strategic-level long-term extrinsic forecast to help determine whether to expand, contract, or leave capacity as it is. Given information on the level of correlation and leading versus lagging, which indicator would be the best choice for this organization to use in the extrinsic forecast if they want to restrict themselves to simple regression analysis? A. Leading and 55% correlated: manufacturers' orders for non-defense capital goods B. Lagging and 60% correlated: change in labor cost per unit of output C. Leading and 72% correlated: manufacturers' new orders for consumer goods/materials. D. Lagging and 79% correlated: ratio of manufacturing and trade inventories to sales

C. Leading and 72% correlated: manufacturers' new orders for consumer goods/materials. Extrinsic forecasting is a type of quantitative forecasting that works to find a link between information that is externally available and demand. If there is a link, it is called correlation, and a greater level of correlation is preferable to a lower level. The best information that can be used is leading indicators because these economic or demographic indicators tend to be among the first types of data that can show a change in a trend. Therefore, the correct answer is the leading indicator that has the highest level of correlation. Note that extrinsic forecasts tend to be more useful for large aggregations, such as total company sales, than for individual product sales.

In relation to time fences, in which of the following zones can scheduling software make automatic adjustments without the input of the master scheduler? A. Slushy zone B. Frozen zone C. Liquid zone D. Forecast zone

C. Liquid zone In the liquid zone, scheduling software may automatically make adjustments without input from the master scheduler. Manual changes can also be made in this zone. The only constraint will be the limits set in the production plan. This zone is usually the extra time added beyond the cumulative lead time of the product.

Which shows the capacity required at each center based on planned and released orders for each time period of the plan? A. Work center profile B. Manufacturing calendar C. Load profile D. Routing

C. Load profile A load profile is a graphic comparison of each work center's available capacity and the load established by the planned and released orders for each time period of the plan. Answer a, work center profile, shows the available work center capacity but not the capacity required and is therefore incorrect.

What is the name for inventories that are purchased or manufactured in greater quantities than are immediately in demand? A. Transportation inventory B. Scheduled receipts C. Lot-size inventory D. Fluctuation inventory

C. Lot-size inventory Lot-size inventory is defined as materials, either purchased or manufactured, ordered in quantities greater than needed for immediate purposes for economic or other reasons. Fluctuation inventories (safety stock) are carried to protect against forecast. Transportation inventory is in transit. Scheduled receipts are quantities of items expected to be received, or arrive, on scheduled due dates.

Open shop orders and purchase orders are primary inputs to which of the following activities? A. Resource requirements planning B. Production activity control C. Material requirements planning D. Master production scheduling

C. Material requirements planning Open shop orders and purchase orders are prime inputs into material requirements planning (MRP). They tell MRP what items are coming in, the quantities, and when they are expected to arrive. They form part of the supply along with beginning inventory and planned orders used by MRP.

What is the key to reducing the organization's overall terminal handling costs for a time period? A. Use the air transportation mode more often. B. Use a customs broker. C. Maximize the weight of individual shipments. D. Maximize the number of shipments handled by the same carrier.

C. Maximize the weight of individual shipments. By increasing the weight of individual shipments, creating more TL shipments, there will be fewer shipments during a particular time period and therefore lower terminal handling, pickup and delivery, and billing and collecting costs.

Total quality management (TQM) has as its basis which of the following characteristics? A. Numerous inspections by supervisors B. Employee tasks divided into separate, understandable segments C. Methods and tools to analyze and solve process problems D. Supervisors who control all aspects of production

C. Methods and tools to analyze and solve process problems An essential component of TQM is the availability of statistical tools that enable operators to identify, correct, and record quality issues as they occur in the plant. Effective quality management is performed by individual production operators during the production process, not by supervisors. Quality efforts must include an entire process, not separate operations. Inspection is a regressive technique focused on identifying quality problems only after production has occurred.

Which would be likely to result in an inaccurate count of inventory? A. Counting category C inventory more often than required B. Authorized overtime work at a workstation that is a bottleneck in the manufacturing process C. Moving inventory to a different work center without recording the movement D. Undertaking rework to correct manufacturing defects in a product

C. Moving inventory to a different work center without recording the movement Inventory count inaccuracy can stem from several causes, including moving inventory and failing to record the movement. Over-counting inventory in an ABC classification may lead to wasted time but should not result in inaccurate inventory counts. As long as overtime work and rework are authorized and accounted for, they shouldn't result in inventory inaccuracy.

Upon receiving an order for two products, a lean manufacturer processes one item from one step to the next before beginning the second item. What is this an example of? A. Perpetual inventory system B. Periodic replenishment C. One-piece flow D. Two-bin inventory system

C. One-piece flow Assuming that a lean manufacturer has managed to optimize its setup times and reduce its lot sizes to one (or as close to one as possible), a reorder point system can be implemented. As the lean ideal is an order size of one, this lowers the reorder point.

Which formula is correct? A. Economic Order Quantity = (2AS/ic) B. Safety Stock = Order Point + Order Quantity C. Order Point = Demand During the Lead Time + Safety Stock D. Average Inventory = (Quantity + Safety Stock)/2

C. Order Point = Demand During the Lead Time + Safety Stock Order Point (OP) = Demand During the Lead Time (DDLT) + Safety Stock (SS). "Average Inventory = (Quantity + Safety Stock)/2" is incorrect because average inventory is order quantity Q/2 + SS, not (Q + SS)/2. "Economic Order Quantity = (2AS/ic)" is incorrect because it omits the square root of the equation shown. Meanwhile, the formula "Safety Stock = Order Point + Order Quantity" is simply incorrect.

Which characteristic is part of the TQM approach to manufacturing? A. Measuring performance scientifically B. Analyzing and improving process efficiency C. Prevention of quality defects D. Synchronized production

C. Prevention of quality defects TQM focuses on preventing quality problems by building quality in from the beginning. Six sigma focuses on precise measurements of performance. Lean focuses on synchronized production, and business process reengineering focuses on redesigning processes for higher efficiency and effectiveness.

Sales and operations planning (S&OP) is typically performed at which of the following levels? A. Raw material B. Semi-finished goods C. Product family D. End item (finished goods)

C. Product family S&OP is typically performed at the product family level. End items are typically planned at the master schedule level, while raw material and semi-finished goods are typically planned at the MRP level.

What is the key output of the sales and operations planning process? A. Material requirements plan B. Rough-cut capacity plan C. Production plan D. Master schedule

C. Production plan The production plan is the agreed-upon plan that comes from the sales and operations planning process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on).

In order to be sustainable in terms of financial returns, what should an organization focus on? A. Lowering all variable costs as much as possible in the short term B. Pursuing profits from new sources, even if the company is not well equipped to serve a new customer C. Providing competitive and stable return on investments while protecting company assets D. Increasing costs charged to downstream members of the supply chain

C. Providing competitive and stable return on investments while protecting company assets Sustainability in financial returns entails providing competitive and stable return on investments while protecting company assets. Lowering all variable costs in the short term may incur larger long-term costs that are financially damaging. Charging more to downstream members of the supply chain may cause the customer base to shrink and the company to lose money long-term. Chasing profits from customers that the company is not well equipped to service may lead to increased setup costs or costly contract breaches if the company cannot perform in ways that they have contractually agreed to.

Which of the following approaches to forecasting is based on intuitive or judgmental evaluation? A. Trend B. Moving average C. Qualitative D. Seasonality

C. Qualitative Qualitative forecasting is based on intuitive or judgmental evaluation. It is generally used when data are scarce, not available, or no longer relevant.

An electronic manufacturer is launching a new product line that is unlike anything else in the marketplace. Which of the following forecasting methods would the company most likely use? A. Seasonality B. Focus C. Qualitative D. Trend

C. Qualitative Qualitative forecasting is based on intuitive or judgmental evaluation. It is used generally when data are scarce, not available, or no longer relevant.

Involving the customer in the design of a product is part of which methodology? A. Outsourcing B. Group technology C. Quality function deployment D. Concurrent engineering

C. Quality function deployment

What term is used to show the result of calculating available time × utilization × efficiency? A. Efficiency B. Demonstrated capacity C. Rated capacity D. Standard hours

C. Rated capacity Rated Capacity = Available Time × Utilization × Efficiency.

Which is the best way listed to improve quality at the source for manufactured parts? A. Improving customer warranty coverage B. Inspecting all parts for known defectives C. Reducing the variation in manufacturing process D. Applying as much automation as possible.

C. Reducing the variation in manufacturing process Reducing variation in the manufacturing processes improves quality. The other answers are incorrect because automation does not necessarily improve quality; inspecting all parts is costly and does not improve quality at the source—it only catches defects that have occurred; and improving customer warranty coverage does nothing to ensure quality.

There are no planned order releases in week 1, but there is a planned order release for 50 As in week 2. The As have a one-week lead time. After advancing forward one week in time, what action will be recommended in the action time bucket? A. Not enough information was provided to answer the question. B. No action. C. Release planned order release of 50 As. D. Receive planned order receipt of 50 As.

C. Release planned order release of 50 As. The action time bucket is the current period 1. Right now there is nothing in the action time bucket. However, next week, the current week 2 will become week 1 and will become the action time bucket. Therefore, the planned order release for 50 As will be recommended for release.

What is the term for the process of validating the master production schedule against available demonstrated capacity? A. Capacity requirements planning B. Sales and operations planning C. Rough-cut capacity planning D. Resource requirements planning

C. Rough-cut capacity planning Rough-cut capacity planning is the process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers' capabilities, and in some cases money.

A company manufactures component parts for machine tools in the UK and ships them to Southeast Asia for assembly and sale in the local market. The components have been shipped by sea, transit time averages six weeks, and the shipping cost is £1,000 per shipment. The company is considering moving the parts by air at an estimated cost of £7,500; shipment will take two days. If inventory in transit for the shipment costs £190 per day, should the company ship by air? A. Ship by water B. Neither is a good option C. Ship by air D. Both are the same

C. Ship by air Based on cost alone, the best choice would be to ship by air. Total Cost = Transport Cost + Inventory Carrying Cost Air: £7,500 + £380 = £7,880 Water: £1,000 + £7,980 = £8,980 Shipping 40 days later by air rather than by sea—which has a two-day delivery lead time—enables a higher percentage of the order quantity and product mix to be based on orders rather than forecasts at the regional level. Lower levels of safety stock also will be required at the central and regional facilities.

Which would reduce materials handling costs? A. Manually moving materials near at hand rather than going to get a forklift B. Using traditional warehousing rather than cross-docking C. Shipping by full truckload rather than less-than-truckload D. Shipping directly to customers rather than using a break-bulk center

C. Shipping by full truckload rather than less-than-truckload Full truckload shipments require less handling than less-than-truckload; cross-docking reduces handling at the distribution centers of smaller orders assembled for delivery to the next level in the distribution system.

Which is true of a cold chain? A. Time spent above the ideal transportation temperature is unlikely to result in loss of value. B. All products in the cold chain are shipped at the same temperature and humidity. C. Some products can be damaged when temperatures dip below the ideal transportation temperature. D. They always use the fastest mode of transportation to minimize time in the cold chain.

C. Some products can be damaged when temperatures dip below the ideal transportation temperature. Some products, such as tropical fruits, may be damaged by overly low temperatures. The cold chain often uses slower transportation modes for certain products like produce and may handle products at different shipping temperatures and humidity. Time spent above the ideal transportation temperature may cause rapid deterioration and loss of value.

Which of the following is the process of identifying a company that provides a needed good or service? A. Purchasing B. Surveying C. Sourcing D. Buying

C. Sourcing Sourcing is the process of identifying a company that provides a needed good or service.

Using the VATI analysis terminology, what type of plant would typically be used in an assemble-to-order manufacturing environment? A. V-plants B. A-plants C. T-plants D. I-plants

C. T-plants A T logical structure consists of numerous similar finished products assembled from common assemblies, subassemblies, and parts. An assemble-to-order strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.

Which of the following is a location where carriers load and unload goods to and from vehicles? A. Port B. Dock C. Terminal D. Depot

C. Terminal A terminal is a location where carriers load and unload goods to and from vehicles. It is also used to make connections.

An organization does not engage in sales and operations planning (S&OP) at present. The organization has clear policies regarding aggregate inventory levels, but inventory tends to be too high toward the end of each budget year. What can an inventory management professional say if management is discussing whether or not to start using an S&OP process at the organization? A. The S&OP process would move inventory targets to an 18-month basis for better stability. B. The S&OP process reduces excess inventory levels relentlessly by identifying and removing waste in all of its forms. C. The S&OP process would promote monthly aggregate inventory corrections. D. The S&OP process would eliminate the need to have aggregate inventory policies because it matches supply with demand.

C. The S&OP process would promote monthly aggregate inventory corrections. The sales and operations planning process must reconcile all supply, demand, and new product plans at both the detail and aggregate levels and tie to the business plan. S&OP improves inventory planning by reviewing and adjusting aggregate inventory levels toward their targeted level at least monthly.

Which of the following situations is an example of common cause or chance variation? A. An operator improperly adjusts a machine. B. A cutting tool breaks and chips a part. C. The humidity in a room varies from one day to the next. D. A bill of material does not reflect the latest engineering change.

C. The humidity in a room varies from one day to the next.

A shipment of remote control components is delivered to a factory and immediately taken to a workstation ready to begin assembly. What is the name of this inventory management technique? A. Efficient B. Lot-for-lot C. Wall-to-wall inventory D. Lot control

C. Wall-to-wall inventory In wall-to-wall inventory management, materials enter a plant and are processed right away, as opposed to being logged in an inventory store until a later date.

What important assumption is made about quantitative forecasting methods? A. Random variations should not exist in a good forecast. B. Demand trends are rarely linear. C. The past is a valid indicator of the future. D. Seasonal variations are usually not significant.

C. The past is a valid indicator of the future. There is no basis for the assumptions that seasonal and random variations are small. Demand trends rarely being linear might have some validity, but the past as a valid indicator of the future is an assumption upon which a number of commonly used forecast techniques—such moving averages, seasonal indexes, and smoothing forecasts—are based.

In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint and it sends its output to shipping. Demand is for 8 units a day. Where would the rope be located? A. The rope goes from operation B to the raw materials used for the drum operation. B. The rope goes from operation A to operation E. C. The rope goes from operation B to the raw materials used by the gateway operation. D. The rope goes from operation E to operation A.

C. The rope goes from operation B to the raw materials used by the gateway operation. The rope pulls from the constraint operation to the entry of materials used at the gateway operation. Operation B is the constraint operation and operation A is the gateway operation.

Implementation of electronic data interchange (EDI) will have the most impact on which of the following costs? A. Supplier development B. Packaging C. Transactions D. Quality

C. Transactions EDI is the electronic exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices.

What term indicates the percentage of time the work center is active compared to the available time? A. Efficiency B. Productivity C. Utilization D. Yield

C. Utilization Utilization = Hours Actually Worked/Available Time.

Which of the following terms is associated with the systematic use of techniques that identify a required function, establish a value for that function, and finally provide that function at the lowest overall cost? A. Value-added B. Value stream C. Value analysis D. Value chain analysis

C. Value analysis A value analysis focuses on the functions of an item rather than the methods of producing the present product design.

Safety stock depends on which of the following? A. Risk of obsolescence B. Ordering cost C. Variability of demand D. Inventory carrying cost

C. Variability of demand Safety stock, also known as fluctuation inventory, exists primarily to accommodate variations in demand. The other answer choices might have an indirect influence on safety stock decisions, but none of them provides the best answer.

Which is the primary consideration listed for total line-haul costs when viable options for shipping include rail and road modalities and the shipping and receiving locations will always be the same? A. Pickup and delivery costs B. Distance shipped C. Variable cost per mile or kilometer D. Total weight

C. Variable cost per mile or kilometer Line-haul costs are variable, depending on the distance traveled and the cost per mile or kilometer. For this scenario, since the distance is predetermined, the primary consideration is the cost per mile or kilometer. Total line-haul costs do not depend primarily on weight. Vehicle weight is usually the majority of the total weight, so an empty vehicle will bear most of the same costs as a full one.

The shared perception of the organization's future, or what the organization will achieve, is known as its: A. strategic plan. B. mission. C. vision. D. sales and operations plan.

C. vision.

Under which circumstances will firms generally make-to-stock? A. When demand is unpredictable B. When customers require special engineering C. When required delivery times are shorter than the time needed to make the product D. When many product options exist

C. When required delivery times are shorter than the time needed to make the product. Make-to-order is more appropriate than make-to-stock when demand is unpredictable, when many product options exist, and when the customer requires special engineering.

Which of the following information is contained in a routing file? A. Customer part number B. Supplier of raw material C. Work center to be used D. Quantity to be ordered

C. Work center to be used The work center reference in the routing informs the production planners where the production order is to be built in the factory.

If the rate of sales of baby food follows the birth rate by six months, the birth rate statistic could serve as: A. a life-cycle factor. B. a dependent variable. C. a leading indicator. D. an intrinsic factor.

C. a leading indicator. A leading indicator is a specific business activity index that indicates future trends. For example, housing starts is a leading indicator for the industry that supplies builders' hardware. The birth rate statistic is not a dependent variable, because the sale of baby food and the birth rate have a correlative relationship. Birth rate statistics are an extrinsic factor, not an intrinsic factor. The relation of baby food sales and the birth rate is not part of the product's life cycle.

The process of committing orders against available capacity as well as inventory is called: A. available-to-promise. B. on-hand inventory. C. capable-to-promise. D. work in process.

C. capable-to-promise. Capable-to-promise is the process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites.

Elements of carrying cost include: A. ordering, stockout, and capacity costs. B. stockout, capacity, and capital costs. C. capital, storage, and risk costs. D. item, ordering, and stockout costs.

C. capital, storage, and risk costs. Carrying cost is the cost of holding inventory. It depends mainly on the cost of capital invested as well as such costs of maintaining the inventory as taxes and insurance, obsolescence, spoilage, and space occupied.

In a bill of material, the path that adds up to the greatest number of lead time periods defines the: A. lead time offset. B. delivery lead time. C. cumulative lead time. D. demand lead time.

C. cumulative lead time. Cumulative lead time for an item consists of the longest lead time path for a given bill of material. Delivery and demand lead times are subsets of the cumulative lead time. The lead time offset is a technique used in MRP where a planned order receipt in one time period requires the release of that order in an earlier time period based on the lead time for the item.

The function of recognizing all demands for goods and services to support the marketplace is called: A. demand forecasting. B. demand planning. C. demand management. D. demand chain management.

C. demand management. Demand management is the function of recognizing all demands for goods and services to support the marketplace.

In a functional layout, A. there is little buildup of WIP inventory. B. capital costs are higher than in a product-based layout. C. each work center must be flexible. D. specialized equipment is used.

C. each work center must be flexible. The advantage to a functional layout is that equipment can handle a wide variety of products. Capital costs generally are higher for a product layout, not a process layout. Dedicated equipment is used in a process layout, hence its relative inflexibility. There tends to be more WIP inventory in a process layout because, unlike in a product layout, workflow is lumpy because of varying batch sizes and non-standard routings.

Forecasts are usually: A. within a reasonable percentage. B. based on historical data. C. incorrect. D. overstated.

C. incorrect. Forecasts attempt to look into the unknown future and, except by sheer luck, will be wrong to some degree. Errors are inevitable and must be expected and planned for.

The movement of shipments using different types of equipment and combining the best features of each mode is called: A. freight brokerage. B. combined transport. C. intermodal transport. D. multimodal transport.

C. intermodal transport. Intermodal transport refers to shipments moved by different types of equipment in order to benefit from the best features of each mode.

Customers' minimum requirements based on price, quality, delivery, and so forth are called: A. specifications. B. order winners. C. order qualifiers. D. customer-defined attributes.

C. order qualifiers.

The term that refers to the relief of inventory and computation of sales data at the time and place of retail purchase, generally through the use of bar coding or magnetic media and equipment, is: A. batch processing. B. electronic data interchange. C. point of sale. D. transaction processing.

C. point of sale. Point-of-sale data is an integral part of meeting and replenishing demand in a retail supply chain.

In a product-based layout, A. work centers are located according to equipment type. B. workflow is lumpy. C. there is little build-up of work-in-process (WIP) inventory. D. a wide variety of different products can be produced.

C. there is little build-up of work-in-process (WIP) inventory. There is little build-up of WIP inventory in a product layout. The other answers are incorrect because workstations are located in a line formation for a product layout; work tends to flow at a regular rate in a product layout; and product layouts are not flexible enough to handle more than a limited variety of products.

Manufacturing lead time represents the: A. total lead time required to obtain a purchased item. B. time from the receipt of a customer order to the delivery of the product. C. total time required to manufacture an item, exclusive of lower-level purchasing lead time. D. longest planned length of time to accomplish the activity in question.

C. total time required to manufacture an item, exclusive of lower-level purchasing lead time. Manufacturing lead time represents the total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time.

What is the throughput per year if sales revenue equals $250 million and totally variable costs equal $100 million for the year? A. $2.5 million per year B. $100 million per year C. $350 million per year D. $150 million per year

D. $150 million per year The APICS Dictionary, 16th edition, definition of throughput says in part, "If the goal units are money, throughput is an amount of money per time period. In that case, throughput is calculated as revenues received minus totally variable costs divided by units of the chosen time period." Revenues are $250 million minus $100 million of totally variable costs = $150 million. This amount divided by one year equals $150 million per year.

Forecast deviation per period is 12, -8, 15, 17, -22, and -3 units for each of the prior periods, respectively. What is the mean absolute deviation for these periods? A. 1.83 B. 2.57 C. 3.33 D. 12.83

D. 12.83 To calculate the mean absolute deviation, first remove the plus and minus signs from each deviation and sum these absolute values: 12 units + 8 units + 15 units + 17 units + 22 units + 3 units = 77 units. Next divide by the number of periods, or 6: 77/6 = 12.83 (rounded).

A company is presently ordering a stock-keeping unit four times per year. It decides to change this policy and establish an EOQ. Annual demand is 100,000 units. Each unit costs $8. Ordering costs are $32 per order. Inventory carrying costs are 20 percent. What is the EOQ? A. 1,789 B. 4,000 C. 1,000 D. 2,000

D. 2,000 To calculate EOQ: Step 1: 2 x Annual Demand (100,000) x Order cost (32) = 6,400,000 Step 2: Cost per unit (8) x Carrying cost rate (0.2) = 1.6 Step 3: 6,400,000 / 1.6 = 4,000,000 Step 4: √4,000,000 = 2000

A customer has ordered 80 units of a new product that is particularly difficult to manufacture: a device screen that has a 40% success rate of not breaking during construction. To meet the customer's acceptable level of quality, the work center needs to produce how many units? A. 80 B. 134 C. 160 D. 200

D. 200 The yield is the amount of good or acceptable material available after the completion of a process. The number of units to produce is calculated by dividing the number of units ordered by the work center's yield; in this example, 80/0.4 = 200.

Over a one-year period, work center 12 was available for 14,000 hours (269.2 hours per average week), actually worked 11,980 hours, and produced 12,800 standard hours of work. What was the average weekly rated capacity? A. 246 actual hours B. 230 actual hours C. 230 standard hours D. 246 standard hours

D. 246 standard hours To calculate rated weekly capacity, first calculate utilization and efficiency. Utilization = Actual Hours/Available Hours = 11,980 hours/14,000 hours = 0.8557. Efficiency = Standard Hours Produced/Actual Hours = 12,800 hours/11,980 hours = 1.0684. Rated Weekly Capacity = Available Weekly Hours × Utilization × Efficiency = 269.2 hours per week × 0.8557 × 1.0684 = 246 hours (rounded).

A work center actually produces 320, 325, 330, and 322 standard hours per week for 4 weeks. What is the demonstrated capacity? A. 320 standard hours B. 330 standard hours C. 332 standard hours D. 324 standard hours

D. 324 standard hours Demonstrated Capacity = Sum of Standard Hours per Time Bucket/Number of Time Buckets = (320 hours + 325 hours + 330 hours + 322 hours)/4 = 1,297 hours/4 = 324.25 standard hours, rounded to 324 standard hours.

A door handle assembly is sold as an independent demand item. It has an economic order quantity of 500 units, and the average demand is 100 units per week. The stock keeping location holds 80 units of safety stock. There is a lead time of 3 weeks to order and receive units at the location. What is the order point using an order point system? A. 500 units B. 300 units C. 240 units D. 380 units

D. 380 units Order Point = Demand During the Lead Time + Safety Stock. Demand During the Lead Time = Units per Period × Lead Time = 100 units per period × 3 week lead time = 300 units during lead time. Order Point = 300 units during lead time + 80 units safety stock = 380 units.

An organization is designing a new product for manufacture and is prototyping different options to determine which design will function the best. Which technology would be most useful to them in this process? A. Artificial intelligence B. Augmented reality C. Cloud computing D. 3D printing

D. 3D printing 3D printing can be used to rapidly prototype potential designs during the design process and would be the best option for the organization.

For a company that uses ABC inventory classification to structure cycle counting processes, which category would be counted most often? A. All classifications are counted equally. B. C C. B D. A

D. A When using ABC inventory classification, A items are counted most often, followed by B and C respectively.

Which is true of part numbers and their relationship on bills of material? A. A part can be either a parent or a child but never both. B. The same part used on different bills of material will need different part numbers. C. The same part number can be used to identify the same product at different stages of production before and after value has been added to it. D. A part at a particular processing stage has one and only one part number.

D. A part at a particular processing stage has one and only one part number. Part numbers must be unique for control purposes, and a part that receives further processing during production will have a new part number when it exits the work center doing the processing.

Item A is produced using the following components, and each has lead times as shown: A (1 week), B (2 weeks), C (2 weeks), D (5 weeks), E (3 weeks), F (1 week), and G (5 weeks). If the following choices represent all of the possible paths through the product tree, what is the longest cumulative lead time for use in calculating the planning horizon? A. A-D B. A-C-E-F C. A-B D. A-C-G

D. A-C-G To determine the longest cumulative lead time, calculate the cumulative lead time for each path shown. A-C-G = 1 week + 2 weeks + 5 weeks = 8 weeks. A-C-E-F = 1 week + 2 weeks + 3 weeks + 1 week = 7 weeks. A-B = 1 week + 2 weeks = 3 weeks. A-D = 1 week + 5 weeks = 6 weeks. The highest total is the longest cumulative lead time (since these are all of the possible paths), which is A-C-G.

What is the portion of inventory or production that has yet to be assigned to specific customer orders? A. Excess production B. Anticipation inventory C. Capable-to-promise D. Available-to-promise

D. Available-to-promise Available-to-promise (ATP) inventory has not yet been committed to customer orders. "Excess production" and "capable-to-promise" are not appropriate descriptions for inventory that might still have a chance of being sold. "Anticipation inventory" is not a term commonly used to describe ATP inventory.

Which financial statement shows a company's debt? A. Cash flow statement B. Income statement C. Profit and loss statement D. Balance sheet

D. Balance sheet The balance sheet shows the resources owned, the debts owed, and the owners' share of a company at a given point in time.

In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint and it sends its output to shipping. Demand is for 8 units a day. Where would the constraint buffer be located? A. Before operation D B. Before operation E C. Before operation A D. Before operation B

D. Before operation B The constraint buffer is from when raw materials are released to the gateway operation until they reach the constraint, and inventory will accumulate before the constraint. Operation B is the constraint because it has the lowest output of the operations and is less than the market demand.

Certain corporations, such as Amazon and Apple, have excellent customer service operations. Which of the following is the term for an organization looking to such exemplars for inspiration on how best to improve their own operations? A. Root cause analysis B. Corporate espionage C. Market research D. Benchmarking

D. Benchmarking Benchmarking is the process of comparing products and/or services to those of another organization thought to provide superior performance. The benchmark target does not have to be a competitor or operate in the same industry.

What is an example of corruption that should be worked against if a company is following the UN Global Compact's 10 principles? A. Union membership B. Child labor C. Racial discrimination D. Bribery

D. Bribery Bribery is a form of corruption, and it is specifically listed in the UN Global Compact. Child labor and racial discrimination are both considered to be in violation of the UN Global Compact but are not considered forms of corruption. The UN Global Compact embraces the right of freedom of association and collective bargaining.

What type of material requirements planning (MRP) system lists the actual date for actions/events and omits periods of inactivity? A. Bucketed B. Perpetual flow C. Two-bin D. Bucketless

D. Bucketless Bucketless MRP systems are far more common than bucketed systems. Rather than showing buckets, these systems list the actual date for actions or other events and omit periods in which there is no activity.

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

D. Buffer management The buffer ensures that the process will never be "starved" for needed inventory. This buffer of inventory represents the amount of time that the inventory in the buffer protects the constraint from disruptions.

Assuming that demand levels remain the same, what happens if the order quantity increases? A. Ordering costs increase. B. Average inventory levels decrease. C. Economic order quantity shifts. D. Carrying costs increase.

D. Carrying costs increase. When demand remains the same but order quantity increases, carrying costs will increase, average inventory levels will increase, and ordering costs will decrease.

Which tool is used to analyze process dispersion and illustrate the main causes and subcauses leading to an effect or symptom? A. Scatter chart B. Pareto chart C. Control chart D. Cause-and-effect diagram

D. Cause-and-effect diagram The cause-and-effect diagram is a tool for analyzing process dispersion. The diagram illustrates the main causes and subcauses leading to an effect (symptom).

Which of the following actions is most appropriate when bias is detected in a forecast? A. Delete the periods of demand that introduced the bias. B. Record the circumstances that created the bias. C. Introduce sales programs to reduce the bias. D. Change the forecasting method or the parameters.

D. Change the forecasting method or the parameters. When bias exists, the forecasting method or its parameters should be changed. Deleting the periods that introduced the bias would not be an acceptable practice, although there may be occasions where the demand history must be adjusted to account for exceptional circumstances. Introducing sales programs does not remove the cause of the bias in the forecast. Recording the circumstances that created the bias may be useful but is not the most appropriate course of action.

Which is the best way listed to reduce material-handling costs for B2B customers who normally sell one to three pallets of units in a given order cycle? A. Use cross-docking to immediately build unit loads for all B2B customers upon receipt of finished goods. B. Change the minimum order size to be the number of units to fill one pallet and allow any number of units to be ordered above this amount. C. Set the unit load size and order increment requirement to equal one full truckload of pallets. D. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet.

D. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet.

Which production planning method maintains a stable inventory level while varying production to meet demand? A. Level loading method B. Critical path method C. Critical chain method D. Chase production method

D. Chase production method The chase production method seeks to keep inventory levels stable while varying production levels based on demand. This method typically has higher costs associated with varying staffing and overtime.

Which observation about forecast preparation is most accurate? A. Seasonality should never be removed until after forecasting is complete. B. Forecasts used at the operational level should be in dollars. C. Demand forecasts need to use past sales as their basis. D. Circumstances relating to demand data should be recorded.

D. Circumstances relating to demand data should be recorded. Recording circumstances around data is a way of determining if wide variations from the forecast error are attributable to anomalies, which is important in analyzing forecast error. One would never remove seasonality in forecasts used in master production scheduling, but one would in sales and operations planning. Forecasts should be based on demand and not sales, and while forecasts based on monetary units are used in business planning, manufacturing needs forecasts in terms of physical units.

Which is a primary use of a control chart? A. Determining the specification limits B. Finding the highest frequency of an event C. Calculating the cost of implementing quality systems D. Detecting special causes of variation

D. Detecting special causes of variation Control charts show the upper and lower limits of normal variation for a process and are used to detect special causes as opposed to random, or common, causes. Control charts do not show specification limits: instead, they show statistical control limits.

Which of the following factors comprise the cost of goods sold? A. Direct labor and direct material B. Sales, general, and administrative costs C. Direct and indirect labor, direct material, and factory overhead D. Direct labor, direct material, and factory overhead

D. Direct labor, direct material, and factory overhead The cost of goods sold is a critical component of the income statement and consists of the elements needed to produce finished goods (labor, material, and factory overhead).

Which of the following types of production planning and control systems is most appropriate for a job shop environment that is competing on short lead times? A. Material requirements planning B. Make-to-order C. Project management D. Drum-buffer-rope and buffer management

D. Drum-buffer-rope and buffer management The theory of constraints (TOC) is best suited to the production of products going through a job shop with short lead times, because it uses the concept of demand pull to trigger production. Instead of lengthy planning and complex control procedures, TOC enables quick changeover to build different products with short lead times by using the drum and the buffer. Material requirements planning (MRP) focuses on executing a push system, where production is planned ahead and then pushed to the production floor in the form of discrete manufacturing orders. This process can become quite complex as the number of orders released to the floor increases. Make-to-order production normally requires expanding lead times to account for materials planning, possible engineering time, and complex scheduling. Project management would be incorrect for standardized products built with very short lead times.

Which is a valid general principle of forecasting? A. Forecasts are more accurate for distant periods of time. B. Forecasts should be expected to be accurate most of the time. C. Forecasts are more accurate for individual items than for groups of items. D. Every forecast should include an estimate of error.

D. Every forecast should include an estimate of error. The goal of the forecaster is to anticipate actual demand variation so that appropriate service and safety stock levels can be established. Therefore, a forecast should include an estimate of error. Forecasts are more accurate for groups rather than individual items and for shorter rather than distant time periods. In addition, some forecast error is expected in forecasts.

A company that manufactures roofing material uses housing start statistics to develop its sales forecast. Using this data is an example of what type of forecasting? A. Intrinsic B. Adaptive C. Exponential D. Extrinsic

D. Extrinsic Extrinsic forecasting models use historical data occurring outside the organization to help determine the best forecast.

Which option would be most likely to result in a realistic and achievable schedule while also taking advantage of excess capacity? A. Finite backward scheduling B. Infinite backward scheduling C. Infinite forward scheduling D. Finite forward scheduling

D. Finite forward scheduling

In a warehouse that primarily does a lot of small order fulfillment of online orders, what is the best thing the warehouse can implement if storage capacity is becoming an issue? A. Honeycombing B. Cross-docking C. Floating inventory D. Flow-through

D. Flow-through Flow-through also emphasizes throughput, but it involves using some or all of a shipment to immediately replenish a picking area. In this case, cross-docking is not appropriate because of the online order fulfillment business model being used.

What is the definition of the term "supply chain"? A. Process reference model developed and endorsed by the Supply Chain Council as the cross-industry, standard diagnostic tool B. Comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses C. When supply chain partners interact at all levels to maximize mutual benefits D. Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash

D. Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash

How do gross requirements differ from net requirements? A. Gross requirements are a direct feed from the master production schedule. B. Gross requirements consider available inventory but not scheduled receipts C. Gross requirements are frozen within the demand time fence. D. Gross requirements do not consider available inventory or scheduled receipts.

D. Gross requirements do not consider available inventory or scheduled receipts. Gross requirements do not net available inventory receipts from the value.

Which of the following is a graph of contiguous vertical bars that allows an organization to identify patterns in measurements of quality data? A.Flowchart B. Statistical process control chart C. Cause-and-effect diagram D. Histogram

D. Histogram A histogram is made up of bars that represent a frequency distribution in which groups or classes of items are marked on the x axis and the number of items in each class is indicated on the y axis. The pictorial nature of the histogram makes it easier to identify patterns.

Which task is completed at the end of the periodic inventory process? A. Cycle counting B. Item segmentation C. Physical inventory D. Inventory adjustment

D. Inventory adjustment Inventory adjustment takes place at the end of a periodic inventory count, once discrepancies between actual counts and inventory records are scrutinized.

Which of the following statements describes the strategic plan? A. It is a statement of long-range strategy and revenue, cost, and profit objectives and is usually accompanied by budgets, a projected balance sheet, and a cash flow. B. It consists of tactical plans that direct the business to achieve competitive advantage on a continuous basis. C. It is a time-phased statement of expected customer orders anticipated to be received. D. It defines how to marshal and determine actions to support the mission, goals, and objectives of an organization.

D. It defines how to marshal and determine actions to support the mission, goals, and objectives of an organization.

Which of the following areas in the UN Global Compact contains the principle calling for the elimination of discrimination in respect of employment and occupation? A. Anti-Corruption B. Environment C. Human Rights D. Labour

D. Labour Principle 6, which is located within the Labour area of the UN Global Compact, calls for the elimination of discrimination in respect of employment and occupation.

Which is an objective of a master production schedule? A. Minimize inventory investment. B. Keep the sales department satisfied. C. Maximize equipment utilization. D. Maintain the targeted level of customer service.

D. Maintain the targeted level of customer service. Customer service is the primary objective of the MPS, but it must balance the objectives of different functions as reflected in the other answers.

Where would a worker find details of the actual days to be worked on any given assignment? A. Planning horizon B. Queue time C. Time bucket D. Manufacturing calendar

D. Manufacturing calendar A manufacturing calendar consecutively numbers only the workdays so that the component and work order scheduling may be done on the actual number of workdays available. Non-workdays are omitted from the sequential count.

Which of the following warehouse activities involves bringing goods together and checking for omissions or errors in the order? A. Dispatching the shipment B. Picking goods C. Dispatching goods to storage D. Marshalling the shipment

D. Marshalling the shipment In marshalling, goods making up a single order are brought together and checked for omissions or errors. Order records are updated. Picking is the process of selecting items from storage and bringing them to a marshalling area. Dispatching goods to storage is the process of sorting goods upon receipt and placing them in a storage area. Dispatching the shipment is the process of order packing, preparing shipping documents, and loading items on the correct transport vehicles.

Which is a major input to a material requirements planning system? A. Production activity control schedule. B. Capacity requirements plan. C. Production plan. D. Master production schedule.

D. Master production schedule. Although the production plan is an input to the MPS and therefore indirectly an input to MRP, it is more accurate to identify the master production schedule as a major input to a material requirement planning system. Capacity requirements plans and production activity control schedules validate and implement the priority plan produced by the MRP system.

How is the order point determined for dependent demand items? A. Periodic review system B. Economic order quantity C. Order point system D. Material requirements planning

D. Material requirements planning Dependent demand items are ordered using material requirements planning in a conventional manufacturing planning and control system. Order point systems and periodic review systems are used for independent demand items.

The usually small-scale, incremental focus of continuous improvement allows for which of the following? A. Increased order winners B. Considerable performance enhancements C. Considerable increase in production rate D. Minimal disruption to overall functions and duties

D. Minimal disruption to overall functions and duties Continuous improvement is small-scale and therefore sustainable. While large, exhaustive projects may be needed on occasion, these cannot be conducted without disrupting operations and taking people away from their regular duties. Smaller improvements can be built into the regular course of operations and job duties, without major or noticeable (i.e., potentially costly) disruption.

Which is a category of performance measures that relates to daily work routines, such as cycle time and utilization? A. Strategic metrics B. Tactical metrics C. Sustainability metrics D. Operational metrics

D. Operational metrics Operational metrics relate to daily work. Tactical metrics relate to intermediate-term goals to support the strategic plan. Strategic metrics relate to the long-term goals of a business. Although sustainability can be measured, it is not necessarily associated with daily operations.

A scheduling system sends part of a lot on to the next stage in processing before it has completed working on all materials it has received. What is the name given to this useful expediting tool? A. Split scheduling B. Manufacturing order C. Infinite loading D. Overlapped scheduling

D. Overlapped scheduling Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers.

What does the drum in the drum-buffer-rope method represent? A. Pace specified in labor agreements B. Pace needed to meet customer demand C. Pace of the slowest machine in the process D. Pace of the constraint in the process

D. Pace of the constraint in the process In the theory of constraints, the drum represents the pace of the constraint, which sets the production pace for the entire system.

Which of the following tools would be most appropriate to use to rank persistent quality problems? A. Process map B. Affinity diagram C. Tree diagram D. Pareto chart

D. Pareto chart The Pareto chart is a graphical tool for ranking causes from most to least significant.

What information do item master files provide to production activity control? A. Shop floor pick lists for the shop order packet B. Operations required and sequence of work centers used C. Shop order quantities and order due dates D. Part number and description

D. Part number and description The item master files provide the part number and description; quantity on hand, available, and on order; manufacturing lead times and lot size quantities.

Which type of legal risk refers to the misuse of intellectual property? A. Contract B. Compliance C. Bribery and corruption D. Patent infringement

D. Patent infringement Trademark or patent infringement refers to the misuse of intellectual property or using a trademark without authorization. It may result in financial and legal damages.

Which of the following terms applies to a suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing material requirements planning (MRP)? A. Reschedule recommendation B. Planned order release C. Planned order receipt D. Planned order

D. Planned order

Which is an output of material requirements planning and is also part of the priority plan evaluated in capacity requirements planning? A. Validated capacity for components and assemblies. B. Open order quantities for families of products. C. Priority plan due dates and quantities for end items rather than work center outputs. D. Planned order receipt dates for work center outputs.

D. Planned order receipt dates for work center outputs. The outputs of MRP include planned order quantities and release dates and the due dates or planned order receipt dates for completion of subassemblies and end items. Note that the question specifies that this is just being sent to capacity requirements planning, so it has yet to be validated.

An organization is pursuing a product differentiation strategy. Which is a production environment that could accommodate this strategy while also minimizing related inventories of components and/or finished goods? A. Cellular layout B. Decoupling C. Make-to-stock D. Postponement

D. Postponement Product differentiation as a strategy seeks to create unique product characteristics or selling points that differ from those of competitors. Postponement, a subtype of an assemble-to-order production environment, is a product design or supply chain strategy that deliberately delays final differentiation (assembly, production, packaging, tagging, etc.) until the latest possible time in the process. This shifts product differentiation closer to the consumer to reduce the anticipatory risk, eliminating excess inventory in the form of finished goods in the supply chain. Note that neither decoupling nor cellular layouts are terms that refer to a production environment.

Which of the following is a planned series of actions or operations that advances a material or procedure from one stage of completion to another? A. Task B. Work-in-process C. Project D. Process

D. Process A process is a planned series of actions or operations (e.g., mechanical, electrical, chemical, inspection, test) that advances a material or procedure from one stage of completion to another.

Which are primary activities in manufacturing planning and control? A. Inventory management and cost information. B. Sales support and cost information. C. Sales support, demand management, and purchasing. D. Production planning and inventory management.

D. Production planning and inventory management. MPC is a method of determining how to prioritize the use of available resources to best satisfy customer demand. These resources include materials and available equipment and worker capacity. Inventory management and cost information is incorrect because cost information is not an activity (though it is an input to manufacturing planning and control). Sales support is not a major activity of MPC, though sales does provide important data used in MPC.

Which of the four Ps influences how physical distribution planning and execution addresses product volume, location of demand, and demand fluctuations? A. Price B. Place C. Product D. Promotion

D. Promotion

A company has developed a new, innovative product that is taking over the market. Early sales consume everything the company can produce, but things have started to slow down. Both production and sales continue to grow. What are the typical challenges that would be expected in this growth phase of the product's life? A. Design and availability B. Price and delivery C. Design and quality D. Quality and delivery

D. Quality and delivery In the growth phase of a product, rapid expansion and increased production often lead to degradation in quality and delivery.

Which is less expensive for long-distance line haul of large, bulky loads and why? A. Road is less expensive than rail because most of road's operating cost is a variable cost. B. Road is less expensive than rail because road does not need to add pickup and delivery cost. C. Rail is less expensive than road because rail does not need to add as much packaging. D. Rail is less expensive than road because most of rail's operating cost is a fixed cost.

D. Rail is less expensive than road because most of rail's operating cost is a fixed cost. Most of the operating cost for a railway is fixed; therefore, large volume can be moved at very reasonable prices per carrying capacity.

In which stocking technique are parts placed in any space that is empty when they arrive at the storeroom? A. Warehousing B. Automated storage and retrieval C. Dedicated-location storage D. Random-location storage

D. Random-location storage Random-location storage is a stocking technique in which parts are placed in any space that is empty when they arrive at the storeroom.

Which is a positive benefit that can be realized by implementing a new raw material ordering system that reduces the total lead time of in-transit inventory by a full day? A. Anticipation inventory levels at the plant can be reduced. B. The plant should experience lower overall setup costs and produce higher numbers of units overall. C. Fewer raw material transportation vehicles will need to be used. D. Raw material inventory levels held at the plant for decoupling purposes can be reduced.

D. Raw material inventory levels held at the plant for decoupling purposes can be reduced. Inventory can decouple supply from demand at the supply chain level by, for example, allowing raw materials to be pulled from inventory rather than relying on order lead times or maintaining inventories of finished goods rather than producing based on actual orders. If the lead time for raw materials can be reduced by a full day, up to one day's worth of raw materials inventory held for decoupling purposes can be eliminated with no impact on production.

Considering the service desired and the relative cost of the items, which would most likely be shipped by road for a fairly long line haul portion of a trip? A. Regular shipments of grain direct to a mill. B. Emergency maintenance parts direct to an auto plant. C. Regular shipments of iron ore direct to a foundry. D. Regular shipment of cut flowers direct to a florist shop.

D. Regular shipment of cut flowers direct to a florist shop. Regularly shipments of cut flowers direct to a florist shop would be appropriate to ship by truck because road transportation offers door-to-door service and fast service. Regular shipments of iron or to a foundry and grain to a mill would be better shipped by rail due to their high weight and bulk. Emergency maintenance parts would be better shipped by air for a faster response, depending on distance.

What is production activity control responsible for? A. Creating the material requirements plan B. Purchasing components C. Running capacity requirements planning D. Releasing work orders to manufacturing

D. Releasing work orders to manufacturing Production activity control is the function of routing and dispatching the work to be accomplished through the production facility.

In developing the standard economic order quantity formula, which assumption is made? A. Replenishment is in split lots. B. Demand for the item is subject to only random variation. C. Ordering and carrying costs are subject to normal market variation. D. Replacement occurs all at once.

D. Replacement occurs all at once. Replenishment occurs all at once, meaning that the full reorder is available at receipt. The other answers are incorrect and the actual assumptions are as follows: Demand is known and relatively constant; items are purchased or made in batches or lots; and ordering costs and carrying costs are known and the curves are stable.

The master production schedule (MPS) serves as the basis for communication between which two functions? A. Purchasing and sales B. Manufacturing and purchasing C. Sales and marketing D. Sales and manufacturing

D. Sales and manufacturing The MPS takes the forecast and order information from sales and outputs a schedule for manufacturing.

Which manufacturer would be most likely to use a chase strategy? A. Paint manufacturer. B. Compression socks manufacturer. C. Seasonal glassware manufacturer. D. Seasonal ice cream candy bar manufacturer.

D. Seasonal ice cream candy bar manufacturer. The seasonal ice cream candy bar manufacturer sells perishable products that also have distinct seasonality. Because perishable products cannot be produced long in advance of need, they cannot use a level strategy and may need to use a chase strategy.

Which is a characteristic of demand? A. Maturity B. Standard deviation C. Mean absolute deviation D. Seasonal variation

D. Seasonal variation Seasonal variation is the only demand characteristic shown. Other major characteristics are trend, random variation, and cyclical variation. The other answers describe some of the tools used in analyzing historical demand data and measuring forecast error.

A printing firm maintains a high level of paper safety stock. This is likely because of: A. product obsolescence. B. the cost of carrying inventory. C. the cost of placing an order. D. variability of demand.

D. variability of demand. When demand variability is high, forecast error rates will be high, and higher amounts of safety stock will be needed to provide a targeted customer service level.

What is the risk posed to an organization by measuring too many key performance indicators (KPIs)? A. Oversimplification of performance B. Slower production times C. Goals not being tracked D. Slowed decision making

D. Slowed decision making Tracking too many KPIs can complicate tracking and slow decision making down. Measuring KPIs should not affect production times. Goals not being tracked and or oversimplification of performance are risks of tracking too few KPIs.

Which of the following can cause problems within inventory loss mitigation strategies? A. Segregation of duties B. Regular audit procedures C. Operational and financial controls D. Special exceptions for controls

D. Special exceptions for controls Incomplete enforcement or special exceptions for controls can cause problems. Segregation of duties, operational and financial controls, and regular audit procedures all assist with the proper execution of inventory loss mitigation strategies.

Establishing which of the following requires extensive, time-consuming observation of workers and activities? A. Manufacturing calendar B. Work schedules C. Inventory D. Standard times

D. Standard times Establishing standard times usually requires extensive observation of workers and activities. This type of information can be time-consuming and expensive to gather.

Which of the following terms pertains to the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally? A. Strategic planning B. Supplier partnership C. Supplier relationship management D. Supply chain management

D. Supply chain management

Which of the following sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system? A. Buffer B. Drum C. Sensei D. Takt time

D. Takt time Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system.

Consider the metaphor of a funnel with a certain amount of "product" in the funneling cone leading to a choke point. Which part of this metaphor would correspond to the capacity available? A. The rate at which "product" is added to the funneling cone. B. The quantity of "product" in the funneling cone. C. The internal area of the funneling cone. D. The diameter of the choke point.

D. The diameter of the choke point. In the funnel metaphor, the capacity available is the rate at which the work center can produce output, so this would correspond to the diameter of the choke point. A wider diameter would let more "product" through faster and thus there would be a higher rate of output per time period.

Which of the following goals of cycle counting is a benefit for production? A. The material count is accurate within a tolerance. B. Material value overages are offset by shortages. C. Material count overages are offset by shortages. D. The material count is accurate by location.

D. The material count is accurate by location. Cycle counting breaks down counts by item and location and tracks accuracy by location. This reduces downtime due to missing inventory. The other answers refer to disadvantages of periodic physical inventory.

An assembly is manufactured in a single work center without any intermediate steps or processes. The bill of material for the assembly has multiple levels. What, if any, action should be taken? A. The bills of material should be changed to a single bill of material, but no changes to any routings are required. B. It is not necessary to reflect how products are actually made. No changes are required. C. Material requirements planning can handle the material explosion, and there are no other adverse effects. D. The multiple bill-of-material levels should be consolidated into a single-level bill of material.

D. The multiple bill-of-material levels should be consolidated into a single-level bill of material. The multiple bill-of-material levels serve no purpose, as there are no intermediate steps or processes. Converting to a single-level bill of material will reflect how the product is actually produced and eliminate unnecessary receipts and issues.

If customers refuse to provide information on demand and only provide orders, what is one possible alternative solution to reduce the bullwhip effect? A. Consignment B. Sole-source supplier agreements C. Single-source supplier agreements D. Vendor-managed inventory

D. Vendor-managed inventory Vendor-managed inventory can reduce the bullwhip effect because the supplier takes over management of the inventories at the customer's location. This type of arrangement would, of course, require the customer to agree to the arrangement. Note that there are other ways to manage the bullwhip effect, such as fine-tuning in-house inventory management policies and controls.

Accountants use the first-in, first-out valuation method for determining the value of inventory on the financial statements. In a period of rising costs, which will occur in relation to the recorded versus actual cost of goods sold (COGS)? A. The recorded COGS will be an average of historical and current prices, so inventory value will be close but not exact. INCORRECT B. The recorded COGS will be greater than the current COGS, so COGS will be overvalued. C. The recorded COGS will match the current COGS, so inventory will be fairly stated. D. The recorded COGS will be less than the current COGS, so COGS will be undervalued.

D. The recorded COGS will be less than the current COGS, so COGS will be undervalued. The cost of goods made a month ago will be less than for those made today. The inventory replacement costs of these goods will be higher than their assumed costs were a month ago. Therefore, the inventory will be undervalued.

Why is it important to track a forecast? A. To start relying more on actual sales data. B. To satisfy marketing's need for reporting. C. To compare actual sales versus the forecast. D. To improve the forecasting method.

D. To improve the forecasting method. The ability to improve on your forecasting method is the most important reason for monitoring the forecast in order to understand demand characteristics, variation, and stability—and to improve the forecast by narrowing the range of forecast error.

What is the primary reason organizations choose to use a floating-location system for warehouses? A. To minimize warehouse management system costs B. To decrease materials handling costs C. To increase picking speed D. To maximize cube utilization

D. To maximize cube utilization Because any item can be assigned to any empty space, a floating location system improves cube utilization. However, using this type of system generally requires using a warehouse management system to direct put away and picking. Either a fixed location system or a floating location system could be designed to minimize materials handling costs or picking speed.

What is the term for an acceptable departure from a target value for a product's ability to function as established by engineers? A. Specification limits B. Statistical process control C. Spread D. Tolerance

D. Tolerance Specification results falling inside a product's tolerance limits are considered acceptable. Results falling outside of tolerance limits are rejected and require either rework or scrapping. Specification limits are set by customer requirements and engineers and are usually fixed.

Which channel of distribution is concerned with the transfer of ownership, specifically negotiation, selling, and contracting? A. Transportation B. Logistics C. Distribution D. Transaction

D. Transaction

In quality function deployment (QFD), what is typically the next step once the voice-of-the-customer requirements are known? A. Construct a current reality tree. B. Have all the functional areas of the firm participate simultaneously in the product design activity. C. Compare these requirements to existing products in the market. D. Translate the wants into engineering specifications through a series of well-defined steps.

D. Translate the wants into engineering specifications through a series of well-defined steps. The next step in QFD is to construct a house of quality that takes the requirements, prioritizes them, and sets the engineering target values for the new design.

Which is an example of a special cause as opposed to a common cause of a variation in a process? A. Room temperature variations throughout the day B. Poor process design C. Poorly trained operators D. Use of expired materials

D. Use of expired materials Special causes can be isolated and assigned to a particular source, and use of expired materials fits this description. Common causes are sources of variation that are inherent in a process such as poor process design, poor working conditions, poor operator training, or normal variations in room temperature. While both are subject to improvement, the special causes show up as spikes or dips on control charts and can be remedied quickly once the root cause is found, while common causes require more long-term process improvement activities.

Which of the following actions can reduce overall transportation costs? A. Shipping smaller amounts B. Making all shipments to local users bypassing warehouses C. Breaking up large shipments into smaller ones to the same location D. Using warehouses to consolidate shipments

D. Using warehouses to consolidate shipments Consolidating into fewer shipments will lower overall transportation costs. The other responses increase the number of shipments, thus increasing costs.

Which of the following statements characterizes a job shop environment? A. Work center load is predictable. B. Routings for all products are the same. C. Kanban is the most appropriate scheduling method. D. Work centers are organized by function.

D. Work centers are organized by function. In a job shop plant, the different methods and equipment for producing inventory are separated into departments. Production jobs pass serially through each department as detailed in the production order routing. Production is intermittent in a job shop, not predictable. The products in a job shop are often make-to-order with very different routings. Kanban is better fit to a continuous production environment.

A fishbone diagram most often is used to identify: A. a process. B. the organizational flow. C. a problem. D. a cause.

D. a cause. A fishbone diagram illustrates the main causes and subcauses leading to an effect (symptom). The cause-and-effect diagram is one of the seven tools of quality.

Reducing setup time to enable quick changeovers of products on a manufacturing line is an example of: A. continuous exchange of products. B. continuous production. C. continuous replenishment. D. continuous process improvement.

D. continuous process improvement. Continuous process improvement is a never-ending effort to expose and eliminate the root causes of problems, focusing on small-step improvement as opposed to big-step improvement.

The cost associated with providing defective or substandard products or services is known as the A. rework cost. B. cost of complaints. C. scrap rate. D. cost of poor quality.

D. cost of poor quality.

Packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination is known as: A. load-sorting. B. break-pointing. C. load-splitting. D. cross-docking.

D. cross-docking. Cross-docking involves packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination.

The function of recognizing all demands for goods and services to support the marketplace is called: A. demand forecasting. B. demand chain management. C. demand planning. D. demand management.

D. demand management. Demand management is the function of recognizing all demands for goods and services to support the marketplace.

Multiplying the requirements for each material or component in a bill of material by its usage quantity and recording the results in a product tree is known as: A. resource planning. B. production planning. C. stock taking. D. exploding the bill of material.

D. exploding the bill of material. Exploding the bill of material is the process for determining and indicating the component identities, quantities needed, and other parent-child relationships in a bill of material.

A lead-time offset is a technique used in material requirements planning (MRP) where a planned order receipt in one time period will require the release of that order: A. in an earlier time period based on the lead time for the finished product. B. in a later time period based on the lead time for the item. C. in a later time period based on dynamic load on the shop floor. D. in an earlier time period based on the lead time for the item.

D. in an earlier time period based on the lead time for the item. A lead-time offset is a technique used in MRP where a planned order receipt in one time period will require the release of that order in an earlier time period based on the lead time for the item.

A company is debating whether to add production capacity or outsource the additional volume. The process they must go through is called a: A. total cost decision. B. capital expenditure request. C. core competency evaluation. D. make-or buy decision.

D. make-or buy decision. A make-or buy decision is the act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing.

Characteristics that encourage customers to choose one product or service over another are called: A. customer preferences. B. order preferences. C. order qualifiers. D. order winners

D. order winners

The competitive characteristics that persuade a customer to choose one company's products over those of another company are called: A. specifications. B. low price. C. order qualifiers. D. order winners.

D. order winners.

A group of products with similar characteristics, often used in production planning or (sales and operations planning), is known as a: A. product portfolio. B. phantom bill of material. C. planning bill of material. D. product family.

D. product family.

A manager who knows the available hours of a workstation as well as its efficiency and utilization can calculate the workstation's: A. workload. B. efficiency. C. capacity. D. rated capacity.

D. rated capacity. Rated capacity is calculated by the following formula: Rated Capacity = Available Time x Utilization x Efficiency

The components for a product have been identified. The demand for each component must then be calculated before the MRP record can be completed. This is known as: A. bill-of-material explosion. B. availability. C. net requirements. D. requirements explosion.

D. requirements explosion.

In its narrowest sense, an organization that provides an intangible product is in the: A. hospitality industry. B. real estate industry. C. health-care industry. D. service industry.

D. service industry.

Assets can be defined as: A. the costs related to problems found after the product reaches the customer. B. those items of cost related to the activities associated with the movement and storage of finished products. C. the debts or obligations owed by a company to creditors. D. the resources owned by a company, whether tangible (cash, inventories) or intangible (patents, goodwill).

D. the resources owned by a company, whether tangible (cash, inventories) or intangible (patents, goodwill). Assets are property owned by a person or company. They are regarded as having value and are available to meet debts.

Reducing the number of times, a package is handled in distribution can be achieved through: A. aggregation. B. palletization. C. reverse logistics. D. unitization.

D. unitization. Unitization is the consolidation of several units into larger units for fewer handlings.

What is Flow manufacturing

Flow is a form of manufacturing in which work flows from one workstation to another in a nearly constant rate and with no delays.

More on Order Winners

Order winners can be a unique capability or quality no competitor has or a combination of price, product features, quality, and related services that customers will see as a superior value. Adding a feature while still failing to meet minimum requirements is an order disqualifier. Order winners usually focus on one (rarely more than two) of the following strategic initiatives: price/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image. Trying to focus on four of these is likely to result in mediocre results in all of them. Becoming an order winner requires meeting both needs and expectations.

What is a build sequence

The build sequence lists the order of jobs to be worked on at a workstation.

What is the final assembly schedule

The final assembly schedule identifies the end items necessary to complete a specific customer's order.

What is a mission statement?

The mission statement is a short statement of why an organization exists (i.e., it outlines the organization's purpose for existing).

What types of orders does the planner control

The planner controls firm planned orders and released (open) orders. While released (open) orders may incur a cost to change them, the planner could delay, expedite, or cancel these orders.

What is a shop floor schedule

The shop floor schedule is the actual assignment of starting or completion dates to operations or groups of operations to show when these must be done if the manufacturing order is to be completed on time.

Shop Order Packet

The shop order packet is made up of all the manufacturing orders that are waiting to start operations or are works in progress.

What is a Strategic Plan

The strategic plan defines which actions will be taken by an organization to support its mission and achieve its goals and objectives

What are the two primary objectives of materials management

The two primary objectives of materials management are - to provide the desired level of customer service - to make the best use of company resources.

What is value chain analysis?

Value chain analysis is an examination of all links a company uses to produce and deliver its products and services, starting from the origination point and continuing through delivery to the final customer.

What is the formula for utilization

actual hours /available hours

Which is recorded in control charts? a)Average of specification limits over time b)Root causes of process variation c)Range of each set of samples taken over time d)Mean of the results from product inspection

c)Range of each set of samples taken over time