mktg ch. 21

MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.

True

MRP stands for Material Requirements Planning

True

Net change MRP reflects the exact status of each item managed by the system in "real time."

True

What is the planned-order release using an MRP program if the gross requirement is 1,600 and the inventory on hand is 600?

1,000

A product tree can do which of the following? A. Help to compute component usage. B. Reduce product scrap. C. Reduce labor overtime. D. Reduce regular time labor. E. Locate raw material supplies.

A- Help to compute component usage

Which of the following is considered a secondary report in an MRP system? A. Planned order schedule B. Exceptions reports C. Inventory record D. Firm orders from known customers E. Engineering change reports

B- exceptions reports

Under the lot-for-lot (L4L) lot sizing technique as used in MRP, we would expect which of the following? A. A consistent lag of supply behind demand B. Minimized carrying costs C. Minimized setup costs D. A just-in-time management philosophy E. Minimized quality problems

B- minimized carrying costs

One of the main purposes of an MRP system is which of the following? A. Track inventory levels. B. Create productive capacity. C. Decrease layers of management. D. Develop schedules specifying when each component should be ordered or produced. E. Upgrade manufacturing's professionalism.

D- develop schedules specifying when each component should be ordered or produced

If annual demand is 1,000 units, annual holding cost is $0.50 per unit, and the cost per order is $10, what is the EOQ?

200

"Projected available balance" is a term referring to unsold finished goods inventory.

False

Generally, determining lot sizes in MRP systems is simple.

False

In a net change MRP program, a change in one item will result in a completely new inventory plan and schedule for every item in the master production schedule.

False

Which of the following is the net requirement using an MRP program if the gross requirement is 1,250 and the inventory on hand is 50? A. 1,200 B. 1,300 C. 1,150 D. 2,450 E. None of these

A- 1,200

Which of the following is an input file necessary to run an MRP system? A. Bill of materials (BOM) file B. Quality management report C. Exception reports D. Planned-order schedules E. Purchasing contracts

A- Bill of materials (BOM) file

MRP is based on dependent demand.

True

Which of the following is most closely related to the reason a firm might implement MRP? A. So it can order the right parts B. So it can order parts sufficient for immediate use C. So it can ensure that parts to arrive prior to when they are needed D. To ensure appropriate quality levels E. To keep process costs between the LCL and the UCL

A- so it can order the right parts

Low-level coding in MRP indicates the exact status of each item managed by the system in "real time."

False

MRP is least valuable in industries where a number of products are made in batches using the same productive equipment.

False

MRP stands for manufacturing requirements planning

False

The MRP program performs its analysis from the bottom up of the product structure trees, imploding requirements level by level.

False

A BOM file is often called a product structure file or product tree because it shows how a product is put together.

True

A lot-for-lot (L4L) lot-sizing technique does not take into account setup costs or capacity limitations.

True

A master production schedule is an input to a material requirements planning (MRP) system.

True

A modular bill of materials is the term for an item that can be produced and stocked as a subassembly.

True

An input to the material requirements planning (MRP) system is an inventory records file.

True

Computing the quantity of each component that goes into a finished product can be done by expanding (or exploding) each item in a product structure file and summing at all levels.

True

In a net change MRP system, requirements and schedules are updated whenever a transaction is processed that has an impact on the item.

True

MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item.

True

MRP is most valuable where a number of products are made in batches using the same productive equipment.

True

Manufacturing firms maintain bill of materials (BOM) files, which are simply a sequencing of everything that goes into a final product.

True

Projected available balance is the amount of inventory that is expected as of the beginning of a period.

True

Time fences are periods of time having some specified level of opportunity for the customer to make changes.

True

In an MRP program, the program accesses the status segment of an inventory record according to specific periods called which of the following? A. Cubed time units B. Time buckets C. BOM units D. Time modules E. Time lines

B- time buckets

We would expect to see which of the following in an MRP system's inventory status file? A. End items produced B. Late/early delivery records C. Scrap parts D. Labor efficiency E. Computer errors

C- scrap parts

What is the name for demand caused by the demand for a higher-level item? __________________________

dependent demand

The customer grace period is a time span having some specified level of opportunity for the customer to make changes.

false

What is the name for a bill of materials that includes items with fractional options? __________________________

super bill of materials

Lot-for-lot (L4L) is the most common lot-sizing technique.

True

Net change MRP systems are "activity" driven.

True

The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to become "lumpy."

True

The economic order quantity (EOQ) lot-sizing technique uses the "square root formula" to balance setup cost and carrying cost.

True

The least total cost method (LTC) lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal.

True

The least unit cost method of lot-sizing technique adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost.

True

The master production schedule states the number of items to be produced during specific time periods.

True

The three main inputs to an MRP system are the bill of materials, the master schedule, and the inventory records file.

True

The time-phased plan specifying how many and when the firm plans to build each end item is called the master production schedule (MPS).

True

In MRP, how is demand information for a level 0 (zero) item derived? _________________________

from the master production scheduling process

If annual demand is 6,125 units, annual holding cost is $5 per unit, and setup cost per order is $50, which of the following is the EOQ lot size? A. 350 B. 247 C. 23 D. 185 E. 78

A- 350

Which of the following industry types will not benefit greatly from the application of MRP? A. Fabricate-to-order B. Assemble-to-stock C. Assemble-to-order D. Manufacture-to-order E. None of these

A- Fabricate-to-order

A BOM file is also called which of the following? A. Product tree B. Stocking plan C. Inventory usage record D. Production parts plan E. Time bucket schedule

A- Product tree

Which of the following is considered a primary report in an MRP system? A. Planned order schedule B. Peg report C. Planning report D. Inventory accuracy report E. Aggregate production plan report

A- planned order schedule

Which of the following is one of the main purposes of an MRP system? A. Educate personnel in basic work rules. B. Determine the amount of materials needed to produce each end item. C. Stimulate the work force. D. Decrease labor requirements. E. Increase inventory accuracy.

B- Determine the amount of materials needed to produce each end item

MRP systems seek to achieve which of the following? A. Minimize lot sizes. B. Determine the number of dependent demand items needed. C. Relieve capacity bottlenecks. D. Provide a yardstick for future improvements. E. Improve on JIT methods.

B- Determine the number of dependent demand items needed

Which of the following is an input to the master production schedule (MPS)? A. Inventory records file B. The aggregate plan C. The bill of materials D. The exception report E. Planned order schedules

B- The aggregate plan

Which of the following is the planned-order release using an MRP program if the gross requirement is 5,000, inventory on hand is 1,200, and planned receipts are 800? A. 7,000 B. 4,200 C. 3,000 D. 2,000 E. 1,200

C- 3,000

Which of the following is the net requirement using an MRP program if the gross requirement is 1,000 and the inventory on hand is 500? A. 1,000 B. 950 C. 500 D. 400 E. 350

C- 500

Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-order B. Hospitals C. Assemble-to-order D. Aircraft manufacturers E. Oil refineries

C- Assemble-to-order

Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-stock B. Fabricate-to-order C. Assemble-to-stock D. Continuous process E. Service and repair parts

C- Assemble-to-stock

Which of the following is an input file necessary to run an MRP system? A. Exception report B. Computer-aided-design files C. Inventory records file D. Personnel files E. Planned order schedule

C- Inventory records file

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal? A. Economic order quantity B. Lot-for-lot C. Least total cost D. Least unit cost E. ABC analysis

C- Least total cost

Which of the following can be used for lot sizing in an MRP system? A. Low-level coding B. Time bucket size C. Least unit cost D. Inventory record file E. Peg inventory

C- least unit cost

Which of the following is the planned-order release using an MRP program if the gross requirement is 670 and the inventory on hand is 600? A. 670 B. 600 C. 530 D. 70 E. None of these

D- 70

Which of the following is a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost? A. Economic order quantity B. Lot-for-lot C. Least total cost D. Least unit cost E. Inventory item averaging

D- least unit cost

Which of the following is considered a primary report in an MRP system? A. Planning reports B. Performance reports C. Exception reports D. Planned order schedules E. Cycle counting reports

D- planned order schedules

If annual demand is 12,000 units, annual holding cost is $15 per unit, and setup cost per order is $25, which of the following is the EOQ lot size? A. 2,000 B. 1,200 C. 1,000 D. 300 E. 200

E- 200

Which of the following is not a production activity report generated by MRP? A. Exception report B. Planning report C. Performance control report D. Planned-order schedules E. Bill of materials report

E- Bill of materials report

Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? A. Planning bill of materials file B. Modular bill of materials file C. Super bill of materials file D. Exception report file E. Peg record file

E- Peg record file

Which of the following is an input to the master production schedule? A. Prototype products from product development B. Aggregate component schedule C. Peg reports D. Exception reports E. Forecasts of random demand from customers

E- forecasts of random demand from customers

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot size in which these are most nearly equal? A. Kanban B. Just-in-time system C. MRP D. Least unit cost E. Least total cost

E- least total cost

In a typical inventory status record, which of the following would you not expect to see? A. Scrap allowance B. Order quantity C. Gross requirements D. Planned-order releases E. Lost items

E- lost items

Which of the following is an input to the master production schedule? A. Bill of materials (BOM) file B. Inventory records file C. Exception reports D. Planned-order schedules E. None of these

E- none of these

Which of the following is not a lot-sizing technique used in MRP systems? A. Lot-for-lot (L4L) B. Economic order quantity (EOQ) C. Least total cost (LTC) D. Least unit cost (LUC) E. Warehouse loading factor (WLF)

E- warehouse loading factor (WLF)

A modular bill of materials includes items with fractional options.

False

An input to the material requirements planning (MRP) system is an exception report.

False

An output of MRP is a bill of materials (BOM) file.

False

In a net change MRP system, requirements and schedules are considered rigid and never updated.

False

The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to smooth out and become even over time.

False

The economic order quantity (EOQ) lot-sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.

False

The economic order quantity (EOQ) lot-sizing technique uses the "square root formula" to balance setup cost, carrying cost, and cost of stockouts.

False

The least unit cost method (LUC) lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal.

False

The least unit cost method of lot-sizing adds ordering, stockout, and inventory carrying costs for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost.

False

The lot-for-lot (L4L) lot-sizing technique minimizes carrying cost by taking into account setup costs and capacity limitations.

False

The time-phased plan specifying how many and when the firm plans to build each end item is called the materials requirements plan (MRP.)

False

When implemented correctly, MRP links all areas of the business.

False