MSIS Quiz 4 CHapter 12, 13 and 17

net-change system

Approach that updates MRP records continuously.

regenerative system

Approach that updates MRP records periodically.

Independence

Assumption that path duration times are independent of each other; requiring that activity times be independent, and that each activity is on only one path.

order releases

Authorization for the execution of planned orders.

b

Suppose we use the economic order quantity when we should be using the economic production quantity. As a consequence, our annual __________ cost will be much higher than it should be. A) holding B) setup C) service D) stockout

perpetual inventory system

System that keeps track of removals from inventory continuously, thus monitoring current levels of each item.

c

Suppose the EOQ model is in use. Which of the following would typically cause the optimal order quantity to decrease? A) an increase in ordering cost B) an increase in demand C) an increase in holding cost D) an increase in safety stock

service level

Probability that demand will not exceed supply during lead time.

Work breakdown structure (WBS)

A hierarchical listing of what must be done during a project.

c

A key goal of MRP is to: A) minimize variable cost. B) use scheduled receipts only when necessary. C) match what is on hand with what is needed to be on hand. D) order early to avoid late-order penalties.

distribution resource planning (DRP)

A method used for planning orders in a supply chain.

Project champion

A person who promotes and supports a project.

Critical activities

Activities on the critical path.

A-B-C approach

Classifying inventory according to some measure of importance, and allocating control efforts accordingly.

a

Closed-loop MRP relates most closely to: A) capacity planning. B) ERP. C) scheduled receipts. D) planned order receipts.

exception reports

Data on any major discrepancies encountered.

planning reports

Data useful for assessing future material requirements.

backflushing

Exploding an end item's BOM to determine the quantities of the components that were used to make the item.

safety stock

Extra inventory carried to reduce the probability of a stockout due to demand and/or lead time variability.

enterprise resource planning (ERP)

Integration of financial, manufacturing, and human resources on a single computer system.

lead time

Time interval between ordering and receiving the order.

b

Low-level coding refers to: A) having low-level employees input product codes into computer data banks. B) structuring a bill of materials so that multiple occurrences of an item coincide with the lowest level at which the item occurs. C) using low levels of coding to simplify identification of components in an MRP setup. D) keeping item record numbers as simple as possible.

fixed-order-interval (FOI) model

Orders are placed at fixed time intervals.

PERT

Program evaluation and review technique, for planning and coordinating large projects.

Activities

Project steps that consume resources and/or time.

planned-order receipts

Quantity expected to be received by the beginning of the period in which it is shown.

low-level coding

Restructuring the bill of materials so that multiple occurrences of a component all coincide with the lowest level at which the component occurs.

time fences

Series of time intervals during which order changes are allowed or restricted; the nearest fence is most restrictive to change, the farthest is least restrictive.

Crash

Shortening activity durations.

Virtual project teams

Some or all of the team members are geographically separated.

net requirements

The actual amount needed in each time period.

cycle stock

The amount of inventory needed to meet expected demand.

purchase cost

The amount paid to buy the inventory.

Little's Law

The average amount of inventory in a system is equal to the product of the average demand rate and the average time a unit is in the system.

setup costs

The costs involved in preparing equipment for a job.

Events

The starting and finishing of activities, designated by nodes in the AOA convention.

cumulative lead time

The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly.

a

The two basic questions in inventory management involve __________ and __________. A) quantity; timing B) quantity; costs C) costs; timing D) service; costs

Deterministic

Time estimates that are fairly certain.

two-bin system

Two containers of inventory; reorder when the first is empty.

b

Two units of subcomponent Z go into each unit of component Q, and Z doesn't go into anything other than Q. Z's lead time is one week. Q's lead time is two weeks. Q has a planned order release of 400 units in week 5. As regards Z, therefore, ____________ in week __________ are 800. A) net requirements; 5 B) gross requirements; 5 C) net requirements; 4 D) gross requirements; 4

Projects

Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame.

Beta distribution

Used to describe the inherent variability in activity time estimates.

reorder point (ROP)

When the quantity on hand of an item drops to this amount, the item is reordered.

a

Which is true about scheduled receipts? A) They are orders previously placed, and not yet completed or received. B) They must be less than the net requirements in any period. C) They are included in planned order receipts. D) They are added to gross requirements to get net requirements.

material requirements planning (MRP)

A computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.

cycle counting

A physical count of items in inventory.

Path

A sequence of activities that leads from the starting node to the finishing node.

inventory

A stock or store of goods.

b

A stockout occurs when demand during lead time is __________ the __________. A) less than; order quantity B) greater than; reorder point C) greater than; safety stock D) less than; lead time

product structure tree

A visual depiction of the requirements in a bill of materials, where all components are listed by levels.

changes

Revisions of due dates or order quantities, or cancellations of orders.

Slack

Allowable slippage for a path; the difference between the length of a path and the length of the critical path.

universal product code (UPC)

Bar code printed on a label that has information about the item to which it is attached.

holding (carrying) cost

Cost to carry an item in inventory for a length of time, usually a year.

ordering costs

Costs of ordering and receiving inventory.

shortage costs

Costs resulting when demand exceeds the supply of inventory; often unrealized profit per unit.

CPM

Critical path method, for planning and coordinating large projects.

dependent demand

Demand for items that are subassemblies or component parts to be used in the production of finished goods.

load reports

Department or work center reports that compare known and expected future capacity requirements with projected capacity availability.

Network (precedence) diagram

Diagram of project activities that shows sequential relationships by use of arrows and nodes.

excess cost

Difference between purchase cost and salvage value of items left over at the end of a period.

Probabilistic

Estimates of times that allow for variation.

performance-control reports

Evaluation of system operation, including deviations from plans and cost information.

manufacturing resources planning (MRP II)

Expanded approach to production resource planning, involving other areas of a firm in the planning process and enabling capacity requirements planning.

projected on hand

Expected amount of inventory that will be on hand at the beginning of each time period.

d

If lot-for-lot ordering is used, then planned order releases will be equal to: A) gross requirements. B) projected on hand less safety stock. C) projected on hand plus safety stock. D) net requirements.

c

In A-B-C inventory analysis, the challenge is to clarify which items: A) have the highest per-unit costs. B) have the lowest ordering costs. C) have the highest total periodic cost. D) have the lowest stockout risk.

b

In MRP, planned order receipts must always equal: A) scheduled receipts. B) planned order releases. C) net requirements D) gross requirements.

c

In MRP, the listing of all the subassemblies and components needed to produce a unit of an end item is called the: A) material requirements plan. B) master schedule. C) bill of materials. D) master production schedule.

a

In MRP, which one of these would not generally be a factor in determining the net requirements of a component? A) planned order releases B) scheduled receipts C) projected on hand D) gross requirements

c

MRP is primarily used in this setting: A) job shop B) continuous C) batch

b

MRP is used for: A) independent demand items. B) dependent demand items. C) available-to-promise items. D) disaggregated items. E) pegged items.

quantity discounts

Price reductions for larger orders.

single-period model

Model for ordering of perishables and other items with limited useful lives.

Activity-on-arrow (AOA)

Network diagram convention in which arrows designate activities.

Activity-on-node (AON)

Network diagram convention in which nodes designate activities.

inventory records

One of the three primary inputs in MRP; includes information on the status of each item by time period.

bill of materials (BOM)

One of the three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.

master schedule

One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities.

scheduled receipts

Open orders scheduled to arrive from vendors or elsewhere in the pipeline.

periodic system

Physical count of items in inventory made at periodic intervals (weekly, monthly).

planned-order releases

Planned amount to order in each time period; planned-order receipts offset by lead time.

d

Product Alpha consists of two units of component X and four units of component Y. Component X consists of four units of component Y and two units of component Z. Component Y's lead time is two weeks, there are no units of component Y on hand, and there are no scheduled receipts for component Y. There are 400 units of component X on hand. Neither X nor Y go into any other item or subcomponent. If 100 units of Alpha are to be produced beginning in week 4, then __________ units of component Y will need to be begun in week __________. A) 400; 3 B) 1,200; 1 C) 800; 3 D) 400; 2

inventory turnover

Ratio of average cost of goods sold to average inventory investment.

point-of-sale (POS) system

Record items at time of sale.

planned orders

Schedule indicating the amount and timing of future orders.

c

Suppose demand for an item is 500 units per year. It costs $100 to place an order for this item, and to hold one unit of this item in inventory for a year costs $10. Whatever order quantity is used, that quantity arrives in full two weeks after the order is placed. If an order quantity of 150 is used, annual holding costs will be approximately __________ annual ordering costs. A) equal to B) $333 less than C) $417 more than D) $750 more than

Optimistic time

The length of time required under optimal conditions.

Pessimistic time

The length of time required under the worst conditions.

Critical path

The longest path; determines expected project duration.

Most likely time

The most probable length of time that will be required.

economic order quantity (EOQ)

The order size that minimizes total annual cost.

fill rate

The percentage of demand filled by the stock on hand.

capacity requirements planning

The process of determining short-range capacity requirements.

pegging

The process of identifying the parent items that have generated a given set of material requirements for an item.

gross requirements

Total expected demand for an item or raw material in a time period.

c

Which of the following is not a direct input into MRP? A) the master production schedule B) bills of materials C) the aggregate plan D) inventory records

d

Which of these describes lot sizing? Determining: A) planned order releases B) net requirements C) when to order D) how much to order

d

Which one of these is a secondary, rather than a primary, report that will result from MRP? A) planned orders B) order releases C) changes D) exceptions