OM TEST 2
. Aggregate planning in manufacturing ties organizational strategic goals to a production plan.
True
A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
True
Controlling the cost of labor in services involves quick response to consumer demand, on-call labor for unexpected demand, flexibility of labor for reallocation, and flexibility of hours or rate of output of individual workers.
True
If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.
True
In ABC analysis, "A" Items are the most tightly controlled
True
In aggregate planning, the amount of overtime, extent of outsourcing (or subcontracting), and the size of the work force are the adjustable elements of capacity.
True
In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.
True
MRP is generally practiced on items with dependent demand.
True
One advantage of cycle counting is that it maintains accurate inventory records
True
One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.
True
One of the principal things needed for aggregate planning is a logical overall unit for measuring sales and output.
True
The strategies of aggregate planning are broadly divided into demand options and capacity options.
True
The only objective of aggregate planning is to minimize the cost of matching capacity to demand over the planning period.
False
Cycle counting A) is a process by which inventory records are verified once a year B) provides a measure of inventory accuracy C) provides a measure of inventory turnover D) assumes that all inventory records must be verified with the same frequency E) assumes that the most frequently used items must be counted more frequently
B
A production order quantity problem has daily demand rate = 10 and daily production rate = 50. The production order quantity for this problem is approximately 612 units. The average inventory for this problem is approximately A) 61 B) 245 C) 300 D) 306 E) 490
: B = ½(Q/p)(p-d) = ½ (612/50)(50-10)= ½ ((612X40)/50)= 612X40/100=245
Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A) close relationships with trust B) close relationships with skepticism C) distant relationships with trust D) distant relationships with skepticism E) none of the above
A
In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will A) increase by about 41% B) increase by 100% C) increase by 200% D) increase, but more data is needed to say by how much E) either increase or decrease
A
Each R requires 4 of component S; each S requires 3 of part T. The lead time for assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for the procurement of T is 6 weeks. The cumulative lead time for R is __________ weeks. A) 6 B) 9 C) 12 D) 18 E) 28
B
Which of the following is not a key benefit of MRP? A) quality increases B) better response times to customer orders C) faster response to market changes D) improved utilization of facilities E) reduced inventory levels
A
A firm's demand in the next four quarters (its aggregate planning horizon) is forecast to be 80, 50, 40, and 90 units. Last quarter, the firm produced 60 units. If it uses level scheduling, the firm will. A) hire workers to permit production of 65 units per quarter for the next four quarters B) hire 20 workers C) have an increase in inventory of 20 units in the next quarter D) have a decrease in inventory of 5 units in the next quarter E) change its workforce each quarter so that inventory does not change
A (80+50+40+90)/4 = 65
A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? A) 16 B) 70 C) 110 D) 183 E) 600
C
Which of the following aggregate planning strategies might direct your client to a competitor? A) Using pure chase strategy B) subcontracting C) changing inventory level D) varying production rates through overtime or idle time E) varying work force size by hiring or layoffs
B
Which of the following statements about aggregate planning is false? A) Hiring, layoffs, overtime, and subcontracting are methods of manipulating capacity. B) Aggregate planning produces a plan detailing which products are made and in what quantities. C) Yield management is a way of manipulating product or service demand. D) Aggregate planning uses the adjustable part of capacity to meet production requirements. E) The transportation method is an optimizing technique for aggregate planning.
B
Which of these aggregate planning strategies adjusts capacity to match demand? A) back ordering B) Chase strategy C) counterseasonal product mixing D) changing price E) None of the above is a capacity option.
B
A master production schedule specifies A) the raw materials required to complete the product B) what component is to be made, and when C) what product is to be made, and when D) the labor hours required for production E) the financial resources required for production
C
Following table is an example of: *clothes washer/dryer/freeze* with week 1, 2, 3: A) aggregate plan B) load report C) master production schedule D) capacity plan E) inventory record
C
For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model was 200 units and the total annual inventory (carrying and setup) cost was $600. The inventory carrying cost per unit per year for this item is A) $1.50 B) $2.00 C) $3.00 D) $150.00 E) not enough data to determine
C
In the basic EOQ model, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately A) 24 B) 100 C) 141 D) 490 E) 600
C
The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately A) 139 B) 174 C) 184 D) 365 E) 548
C
The two most basic inventory questions answered by the typical inventory model are A) timing and cost of orders B) quantity and cost of orders C) timing and quantity of orders D) order quantity and service level E) ordering cost and carrying cost
C
The typical time horizon for aggregate planning is A) less than a month B) up to 3 months C) 3 to 18 months D) over one year E) over 5 years
C
A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be A) $500 B) $2,500 C) $7,500 D) $7,000 E) $12,500
C (100X5+200X5+300X20+0 = $ 7,500)
A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period) it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that A) the January daily requirement is below level production of 400 units B) level production is approximately 8,750 units per day C) level production of 420 units per day is below the January requirement D) level production is approximately 8000 units per month E) the firm must hire workers between December and January
C (105,000/250 = 420 units per day, 22 (Jan)X420 = 9,240 is less than January requirement of 11,000 units)
A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be A) $500 B) $2,500 C) $7,500 D) $7,000 E) $12,500
C = 100X(unit firing cost)+ 200X(unit firing cost)+300X(unit hiring cost)+0 = 500+1,000+6,000 $ 7,500
A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand during this period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. In following the chase strategy, the firm will during this period A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100 unit difference D) lay off workers to match the 200 unit difference E) implement a lower price point to increase demand
D
A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. In following the chase strategy, the firm will A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100 unit difference D) lay off workers to match the 200 unit difference E) implement a lower price point to increase demand
D
Aggregate planning would entail which of the following production aspects at BMW for a 12 month period? A) number of cars with a hi-fi stereo system to produce B) number of two-door vs. four-door cars to produce C) number of green cars to produce D) total number of cars to produce E) B, C, and D
D
All of the following statements about ABC analysis are true except A) inventory may be categorized by measures other than dollar volume B) it categorizes on-hand inventory into three groups based on annual dollar volume C) it is an application of the Pareto principle D) it states that all items require the same degree of control E) it states that there are the critical few and the trivial many inventory items
D
It is week 1 and there are currently 20 As in stock. The MPS calls for 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week when and how large of an order should be placed to meet the requirement of 300 As? A) Week 1, 300 A s B) Week 1, 40 A s C) Week 5, 40 A s D) Week 4, 40 A s E) Week 4, 300 A s
D
The EOQ model with quantity discounts attempts to determine A) what is the lowest amount of inventory necessary to satisfy a certain service level B) what is the lowest purchasing price C) whether to use fixed-quantity or fixed-period order policy D) how many units should be ordered E) what is the shortest lead time
D
The primary purpose of the basic economic order quantity model is A) to calculate the reorder point, so that replenishments take place at the proper time B) to minimize the sum of carrying cost and holding cost C) to maximize the customer service level D) to minimize the sum of setup cost and holding cost E) to calculate the optimum safety stock
D
Which of the following is not an assumption of the economic order quantity model ? A) Demand is known, constant, and independent. B) Lead time is known and constant. C) Quantity discounts are not possible. D) Production and use can occur simultaneously. E) The only variable costs are setup cost and holding (or carrying) cost.
D
Which of the following statements regarding a pull system is true? A) Large lots are pulled from upstream stations. B) Work is pulled to the downstream stations before it is actually needed. C) Manufacturing cycle time is increased. D) Problems become more obvious. E) None of the above is true of a pull system.
D
Which one of the following is a characteristic of a JIT partnership? A) large number of suppliers B) maximal product specifications imposed on supplier C) active pursuit of vertical integration D) removal of incoming inspection E) frequent deliveries in large lot quantities
D
Which of the following inputs helps an aggregate planner select the rate of output for a facility over a medium time horizon (3-18 months)? A) facility capacity B) inventory on hand C) workforce size D) demand forecasts E) all of the above
E
Which of the following is a function of inventory? A) to decouple or separate parts of the production process B) to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers C) to take advantage of quantity discounts D) to hedge against inflation E) All of the above are functions of inventory.
E
Which of the following is generally found in most JIT environments? A) a push or pull system, depending upon the rate of demand B) a push system for high margin items and a pull system for low margin items C) a push system for purchased parts and a pull system for manufactured parts D) push systems E) pull systems
E
The Aggregate Plan, derived from the Master Production Schedule, specifies in more detail how much of which products is to be made at what times.
False
ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.
False
ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.
False
Because service firms do not inventory their output, pure chase strategy is not appropriate.
False
Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
False
