Questions I got wrong

Which of the following is least likely to focus on throughput? A. Lean manufacturing B. Theory of constraints C. Activity-based costing D. Total quality management

C. Activity-based costing Activity-based costing is focused on the actual costs incurred for one item.

Which costing method is more commonly used for items imported for resale when substantial changes in the exchange rate are regularly experienced? A. Standard B. Average C. Actual D. Activity-based

C. Actual With actual costing, the item costs are tracked by lot, batch, or order. It is used when item costs may fluctuate greatly between inventory purchases. This is the only way to establish true cost.

Which is a good way to manage customer demand variability for services? . A. Alter the customer's service requirements to match service capacity. B. Determine which customers are more valuable and automatically reschedule less valuable customers to slower periods. C. Add automated kiosks to increase capacity for customers who are willing to participate in the service process. D. Quickly change the level of the workforce on a regular basis to reflect the day's load.

C. Add automated kiosks to increase capacity for customers who are willing to participate in the service process. Customer-introduced variability in demand for services creates service capacity issues for organizations. Since changing the level of the workforce cannot usually be done quickly, adding automated kiosks is an option that can leverage automation to meet peak demand by servicing customers who are willing to help themselves. Another example would be to add online and app-based solutions.

If a company changes to activity-based costing, which of the following traditional measures will be affected? A. Profit before taxes and depreciation B. Direct labor costs and profit before taxes and depreciation C. Allocation of overhead cost and unit product cost D. Direct labor costs, allocation of overhead cost, and unit product cost

C. Allocation of overhead cost and unit product cost Activity-based costing particularly impacts allocating overhead costs. Instead of using a calculation, such as a percentage of labor cost, it uses cost drivers that seek to separate and calculate the different forms of overhead costs that constitute an item. Since overheads will be calculated differently, the unit product cost will also be affected.

The process of costing is commonly done in two steps. The first is cost accumulation. What is the second? A. Totaling of all timecard-hour reporting at the order number level B. Complete physical count of all work in process, semi-finished goods, and finished goods within the facility C. Assignment of these costs to products D. Valuation of labor and overhead for all jobs as they are completed

C. Assignment of these costs to products Costing systems are used to collect costs and assign them to the cost object. This is essentially a two-step process: the measurement of costs that are applicable to manufacturing operations during a given accounting period and the assignment of these costs to products.

Which of the following is of most value to the master scheduler in developing a valid master schedule because it could help with evaluating alternate scenarios? A. Quantification of constraints B. Incorporation of business rules C. Availability of decision support tools D. Having real-time feedback

C. Availability of decision support tools Having decision support capability enables alternate scenarios to be evaluated in order to develop and then maintain a valid master schedule.

Which of the following approaches will have the least effect in reducing the cost of transactions? A. Backflushing to floor stock balances B. Vendor scheduling C. Blanket purchase order with multiple receipts D. Kanban system

C. Blanket purchase order with multiple receipts Blanket order receipts still require transactions.

Which of the following elements related to closing the demand/supply loop is most likely to be included within rough-cut capacity planning? A. Constraining operations B. Theoretical capacity C. Bottleneck work centers D. Final assembly

C. Bottleneck work centers Rough-cut capacity planning is at the key or bottleneck work center level.

A part has a historical yield of 99%. What quantity should be started in order to produce 1,000 parts? A. 990 B. 1,000 C. 1,010 D. 1,011

D. 1,011 1,000/0.99 = 1,011 (rounded up). Note that even though standard rounding rules for 1,010.10101 would indicate to round down, if only 1,010 units were started, the result would be 999.9 units. Therefore, the rule for calculating planned order releases adjusted for a scrap factor is always to round up. In this case, historical yield was provided rather than the scrap factor, but one is the complement of the other. If instead the scrap factor had been provided (1% in this case), the planned order release would be calculated as 1,000/(1 - 0.01) = 1,011 rounded up.

Based on the information provided below, what is the rated capacity of the work center? Work center information Hours available: 7.2 Internal setup hours: 0.2 Standard hours produced: 7.0 Actual hours worked: 7.1 Scheduled downtime hours: 0.8 Hours per shift: 8 Shifts per day: 1 Days per week: 5.5 Number of resources: 20 workers A. 855 hours B. 867 hours C. 879 hours D. 880 hours

A. 855 hours Available hours x utilization x efficiency = [(20 workers x 8 hours x 1 shift x 5.5 days) - 0.8 hours] x (7.1 hours/7.2 hours) x (7.0 hours/7.1 hours) = (880 hours - 0.8 hours) x 0.9861 x 0.9859 = 855 hours (rounded).

A company manufactures and assembles large systems with a lead time of four months. Shipments are scheduled toward the end of each month, and backlog ensures that shipments are fairly leveled each month. What is indicated by a weekly work-in-process report showing a decrease? A. A system has been completed. B. There is a reporting mistake. C. Queue times are decreasing. D. Throughput is increasing.

A. A system has been completed. Work in process would decrease as systems are completed and shipped.

Which is an example of how customer participation can be used to reduce customer-introduced variability for a service? A. Adding automated kiosks B. Adding better scheduling tools and practices C. Extending service hours D. Adding ability for the customer to customize the service

A. Adding automated kiosks Customer participation is when a customer participates in some part of the service or sales process by helping themselves. This often takes the form of automated kiosks for self-help. It reduces the load on the service staff.

What does mixed-flow scheduling mean? A. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage. B. The last stage is scheduled first when the first stage is constrained by material supply only. C. Each stage may use either processor or material-dominated scheduling. D. The first stage is scheduled first when demand is low.

A. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage. Flow scheduling is an intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage. Low demand does not require the first stage to be scheduled first, whereas constrained supply probably would. While it is true that each stage may use either processor or material-dominated scheduling, it is not directly related to mixed-flow scheduling.

A new product has been introduced, and it has a fairly stable production schedule. Which of the following actions is the best use of capacity requirements planning? A. Assessing the need for overtime or inventory buildup to support a sales promotion B. Identifying available load so material planning can increase the forecast to consume it C. Evaluating available load over time to identify projected capacity increases or decreases D. Helping material planning identify which customers to delay at bottleneck work centers

A. Assessing the need for overtime or inventory buildup to support a sales promotion Capacity planning supports planning by showing needs over a horizon. Load is not determined by knowing available capacity.

Material requirements planning (MRP) has which of the following information to support the final assembly schedule (FAS)? A. Bill of material B. Due date C. End item product number D. Required quantity

A. Bill of material MRP provides the bill of material for FAS operations. The FAS already has the other information.

What is the term for the volume/mix of throughput on which overhead absorption rates are established? A. Budgeted capacity B. Cost pool C. Cost center D. Overhead capacity

A. Budgeted capacity Budgeted capacity is the volume/mix of throughput on which financial budgets were set and overhead/burden absorption rates established.

Which two of the following action messages may be generated by material requirements planning (MRP)? A. Cancel the order and change the lot size B. Cancel the order and release the order C. Cancel the order and generate the overload D. Change the lot size and release the order

A. Cancel the order and change the lot size "Cancel the order" and "Release the order" are valid MRP action messages because they refer to order scheduling and management.

Which of the following business characteristics would typically make a lead capacity strategy appropriate? A. Capacity can be activated or deactivated in increments. B. Price is the competitive priority being pursued. C. Activating and deactivating capacity is costly. D. Both material and capacity constraints exist.

A. Capacity can be activated or deactivated in increments. A lead capacity strategy is one where, as demand is increasing, capacity is added prior to the realization of demand. If capacity can be activated and deactivated in increments, the business can respond accordingly to changing demand.

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. 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. B. 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. 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.

A. 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 The combination of product and related services will delight customers when their order qualifiers are all met and their order winner qualities are kept as the highest priority. In this case, the organization does not try to make all things be order winners but focuses on great product design. They use slow shipping methods and make-to-order to keep their costs down and offer a price that keeps it as an order qualifier. Any extra costs required to ensure above-average delivery reliability could then be absorbed.

If carrying costs were adjusted upward for all items, with all other parameters remaining the same, how would future economic order quantities (EOQ) compare to current EOQs? A. Decreased and remaining the same until the carrying cost is revised again B. Increased and remaining the same until the carrying cost is revised again C. No effect at all D. Decreased slightly for one ordering cycle only

A. Decreased and remaining the same until the carrying cost is revised again Carrying cost is the denominator of the EOQ equation. Any increase in the carrying cost results in a decrease in the EOQ. None of the other answers would be correct.

An assemble-to-order environment using a mixed-model production schedule has a bottleneck work center. What is the best rough-cut capacity planning approach for determining the feasibility of the master production schedule? A. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it. B. Define capacity as rated capacity times utilization times efficiency to factor the engineering standard. C. Define capacity as 85% of rated capacity to provide 15% to accept additional customer orders. D. Define capacity as some percentage less than 100% of rated capacity by management policy.

A. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it. Bottlenecks should be scheduled at the rated capacity if there is sufficient business volume to justify it.

The master scheduler would ignore which of the following elements when setting up the bill of resources? A. Demand B. Equipment C. Setup D. Labor

A. Demand. Demand is external, not a resource or a constraint on a resource.

A small motor is used in an appliance production line. The demand varies due to seasonality and is overplanned in the master schedule. The motor also has service part independent demand through a chain of repair shops; this varies by hours of product usage. Which of the following is true of the safety stock? A. Dependent demand variability is ignored when determining safety stock. B. Actual demand is netted against forecast to determine safety stock. C. Safety stock is minimal since repair shops will carry some in stock. D. Safety stock is carried by each repair shop.

A. Dependent demand variability is ignored when determining safety stock. Safety stock is required only for independent demand parts, since it is overplanned in the master production schedule.

What is another name for the bill of distribution? A. Distribution network structure B. Supply chain network C. Bill of resources D. Bill of labor

A. Distribution network structure The bill of distribution is also called the distribution network structure.

A vaccine needs to be manufactured, transported, and stored between -80 and -60 degrees Celsius. Which is an inventory goal specific to this type of good? A. Ensure that workers have and use proper personal protective equipment (PPE). B. Ensure very high product turnover. C. Ensure that the product is 100 percent effective. D. Ensure that the temperature is verified once, at the point of handoff.

A. Ensure that workers have and use proper personal protective equipment (PPE). One goal in handling temperature-controlled goods is to provide policies, procedures, and equipment for worker health and safety, including sufficient PPE to protect against temperature extremes. While another goal is to ensure product efficacy, safety, quality, and saleability, a 100 percent efficacy rate may not be a claim made by the vaccine manufacturer, so the goal would be to maintain the vaccine's rated efficacy, in part by verifying and recording the temperature regularly over time, not just at the point of handoff.

An organization has a product end-of-life plan that focuses on using up all of the raw materials and components not used in the replacement product being planned. What else needs to be a key part of this plan? A. Ensuring that the old product will still be available during a transition period B. Building enough finished goods inventory to satisfy lifetime buy quantities for the old product C. Ensuring that the new product doesn't suffer the same decline as the product being ended D. Selling off the old product's remaining finished goods inventory well before the new product will be released

A. Ensuring that the old product will still be available during a transition period The APICS Dictionary, 16th edition, defines end-of-life management as follows: "Planning for phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of and an out-of-stock situation with the old product before the replacement product is available." While building an inventory to satisfy lifetime demand could be a strategy (such as to accommodate customers who cannot easily incorporate a new model into their existing systems), having lifetime buy quantities is not the same thing.

Which of the following is the most appropriate first step in a significant organizational change? A. Establishing a sense of urgency that change is needed B. Setting breakthrough objectives for the effort C. Consolidating previous improvements D. Developing the vision of the future state for the organization

A. Establishing a sense of urgency that change is needed An important first step in organizational change is to motivate people to change by creating a sense of urgency. This may be due to a change in the organization's competitive situation, market position, technological trends, financial performance, and so on.

Which of the following departments is likely least affected by frequently overloaded work centers that lead to unrealistic master schedules? A. Finance B. Production C. Sales D. Purchasing

A. Finance Finance is more concerned with mid- to long-term financial issues.

Which functional role is most likely to oppose increasing multiple work-in-process (WIP) buffer sizes after a series of missed customer orders? A. Finance B. Marketing C. Operations D. No one

A. Finance The goals of finance are to increase profit and cash flow and reduce investment. Increasing WIP buffer sizes will likely increase inventory investment.

A retailer sells seasonal items in addition to its year-round product lines. They have three distribution centers that service their stores around the country. They are in the process of ordering items for the Easter holiday. These items will not be ordered by the stores but will instead be distributed in total based on a percentage of the business that each store typically averages. Which of the following safety stock techniques is most appropriate? A. Fixed B. Percentage C. Time period D. Statistical

A. Fixed Since the replenishment system being used is a push system, normally safety stock can be kept at the central warehouse. This means that safety stock quantities would be calculated as a fixed amount (aggregate) meant to be large enough to cover the demand uncertainties of all downstream warehouses.

What must leadership do when multiple important tasks remain for the company to pursue? A. Focus on a few goals while putting some others aside. B. Articulate each and every goal in priority sequence. C. Align bonus rewards by group based on departmental goals. D. Prioritize all important tasks.

A. Focus on a few goals while putting some others aside. Strategy involves focus and choice. Choice means setting aside some goals in favor of others. When this hard work of prioritization is not done, weak strategy is the result.

A medium-size package delivery service has a large market share in its home country. It projects slowing growth in that country and is planning to expand into five neighboring countries. Which of the following would be the most appropriate strategy for entering these five countries at the same time? A. Franchising its brand in each of the countries B. Developing service tailored to each country C. Forming a strategic alliance with a service in one of the countries D. Expanding current operations into those countries

A. Franchising its brand in each of the countries Franchising is well suited to expansion of services and retailing enterprises and to building a simultaneous presence in foreign markets. The franchisee bears most of the cost and risk of establishing foreign locations.

A make-to-order company is in the process of implementing lean manufacturing techniques, making equipment layout changes and standardizing the designs of their highest-value products in order to transition to assemble-to-order. They begin building the options that the customers will select. Which of the following actions should also be taken? A. Gradually reduce marketing's quoted lead time as the changes reduce the backlog. B. Work overtime until the backlog has been reduced so the changes can be permanent. C. Don't take orders for the assemble-to-order products a time to enable the backlog to go to zero as the changes come into effect. D. No action is required, since the backlog will reduce automatically.

A. Gradually reduce marketing's quoted lead time as the changes reduce the backlog. As product design and production improvements shorten cycle time, the backlog will be reduced as well. However, if the quoted lead time is not reduced, customers will continue to order too far in advance.

In a make-to-stock environment, what indicates that the correct level of finished goods is being planned in a time of increasing sales? A. High customer service levels B. Increasing customer base C. Increasing inventory turnover D. Actual sales exceeding plan

A. High customer service levels If high service levels are being maintained, the proper mix and quantity of inventory is being produced.

Which of the following descriptions of the decoupling point does not apply in all manufacturing environments? A. Location of subassemblies awaiting final assembly B. Where inventory is placed to create independence between processes or entities C. Latest point in the supply process at which a supplier holds inventory in expectation of a customer order D. Strategic decision that determines customer lead time and inventory investment

A. Location of subassemblies awaiting final assembly The location of subassemblies awaiting final assembly is the correct answer, because it describes the decoupling point only in an ATO manufacturing environment. All of the other answers apply to all manufacturing environments.

A company's high-volume products are produced on an automated manufacturing line, and its low-volume products are produced using a labor-intensive method. The use of a cost accounting system in which overheads are allocated to product cost as a percentage of direct labor hours will have which of the following results? A. High-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions B. High-volume products will be undercosted and cost reduction efforts will be biased in favor of material cost reductions C. Low-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions D. Low-volume products will be undercosted and cost reduction efforts will be biased in favor of material cost reductions

A. High-volume products will be undercosted and cost reduction efforts will be biased in favor of labor cost reductions Because overhead costs are allocated by a percentage of labor hours, the actual usage of production by high-volume items will be understated. In a high-volume environment, the cost of labor is very small, perhaps as low as 5%, making overheads difficult to accurately calculate. Because labor is the only cost driver, cost reduction efforts will focus on reduction of labor costs, and, because the labor content will be higher in the low-volume products, they will be overcosted.

Why do companies that are striving to continuously improve environmentally often require suppliers to obtain third-party ISO 14001 certification? A. ISO 14001 allows companies to outline their own environmental policies. B. It avoids the legal liability of accepting a supplier's personal assertion that they're ISO 14001-compliant. C. When advertising the use of an environmentally compliant supply chain, the company can refer to authorized certification entities. D. If the supplier commits an egregious environmental error, the company can claim innocence.

A. ISO 14001 allows companies to outline their own environmental policies. ISO 14001 describes an environmental management system intended to continually improve the environmental performance of a company. However, companies set their own goals, so improvement is not standardized. As a result, third-party certification is often required by customers to ensure that suppliers are following stringent standards.

Which of the following is an international standard that assists organizations in contributing to sustainable development through an understanding of social responsibility? A. ISO 26000 B. ISO 9000 C. GRI D. GAMP

A. ISO 26000 ISO 26000 is an international standard adopted by the International Standards Organization to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility.

What is the rule for using net present value for project justification? A. If the net present value is positive, accept the project. Otherwise, reject it. B. If the net present value is negative, accept the project. Otherwise, reject it. C. If the net present value is greater than the calculated internal rate of return, then accept the project. Otherwise, reject it. D. If the net present value is greater than the current rate of return available through normal investment institutions, then accept the project. Otherwise, reject it.

A. If the net present value is positive, accept the project. Otherwise, reject it. The rule for using net present value (NPV) for project justification is that if the NPV is positive, the project should be accepted.

What is the most likely reason for schedules determined in material requirements planning (MRP) to be changed in production? A. Infinite loading does not account for sequencing. B. Lead times are based on standards and not actuals. C. Work center capacity has changed since planning began. D. Schedules are based on often incorrect forecasts.

A. Infinite loading does not account for sequencing. MRP does not account for sequencing at a work center but goes by due dates only.

Distribution requirements planning (DRP) serves which of the following purposes in the marketplace? A. It captures demand data. B. It provides input for supply planning. C. It determines shipping quantities from central stores. D. It manages logistics systems.

A. It captures demand data. As a process, DRP is used to identify channel inventory requirements by placing demand on the prime distribution center or manufacturing plant. Because the question is concerned with DRP in the marketplace, DRP's ability to capture channel demand data is the correct answer.

In which of the following types of environments is capacity control likely to be of more importance than material control? A. Job shop B. Repetitive manufacturing C. Assembly line D. Flow shop

A. Job shop Capacity control is more likely to be necessary where jobs take different routes through production but compete for the same resources.

A company wants to lower costs for products purchased from a single-source supplier. What is the most effective way to accomplish this? A. Jointly eliminate waste in the product and share the savings. B. Use facilitators to lead the price negotiations. C. Automate the purchasing process. D. Identify competitor prices to use as incentives.

A. Jointly eliminate waste in the product and share the savings. Eliminating waste in the product and process will lower costs. The savings can then be shared by both parties.

What must operations do when the overall strategy is to compete with low-cost, no-frills products? A. Leverage low labor costs in countries with low labor rates without the assistance of sophisticated technology. B. Use outsourcing as much as possible regardless of supply chain complexity. C. Compromise from time to time with low-cost/low-quality component suppliers. D. Use technology. Robots that replace people don't look for breaks, vacations, or raises.

A. Leverage low labor costs in countries with low labor rates without the assistance of sophisticated technology. When a European car manufacturer acquired an existing automobile facility in an emerging nation just moving from central planning to market-driven planning, its hope was to build low-cost, no-frills cars. Leveraging existing platforms and a low cost design imperative, they succeeded. The facility was bare-bones with no robot technology, leveraging low labor rates.

Which of the following customer service measures is appropriate for mature make-to-stock products? A. Line-item fill rate B. Total manufacturing cycle time C. Finished goods inventory turnover D. Capacity planning using overall factors (CPOF)

A. Line-item fill rate The line-item fill rate measures the performance by line. The percentage of orders shipped on schedule would be a good complementary metric.

The four products in a product family of commercial doors differ in two dimensions: graffiti resistance and break-in resistance. What is a good way to visually show how all of the products line up along these dimensions? A. Matrix data analysis chart B. Tree diagram C. Matrix diagram D. Relationship diagram

A. Matrix data analysis chart A matrix data analysis chart is one of the seven new tools of quality. It can be used to show the relationships between groups of information. The chart has vertical and horizontal axes, and each can be mapped to the dimensions of the product. A matrix diagram could also be used, but it is not a visual tool.

What is the primary goal of the theory of constraints? A. Maximizing throughput B. Identifying bottlenecks C. Elevating constraints D. Managing buffers

A. Maximizing throughput The primary goal of the theory of constraints is to maximize throughput. This is done by identifying bottlenecks, or constraints, and elevating them so that they are no longer constraints. Sometimes this will include buffering the constraint with either time or inventory.

What is the best way listed for a planner to be proactive in a production environment that has high throughput? A. Monitor buffer status frequently but make changes only when needed. B. Monitor buffer status periodically and make frequent small corrections. C. When a buffer is depleted, promptly increase the buffer size to reduce recurrence risk. D. When a buffer is depleted, make its replenishment a top priority.

A. Monitor buffer status frequently but make changes only when needed. Abnormality control is a concept from lean that can apply to production monitoring in any environment. The concept is that when things are going smoothly, there is little need for correction, but the planners need to frequently check the status of operations so they can spring into action when needed. Regular monitoring of buffer status is an important example. The buffers need to be refreshed but in a way that does not de-prioritize actual customer requirements.

Which information could be evaluated prior to the end of the month in order to streamline the sales and operations planning process? A. New product review B. Forecast accuracy C. Finished goods levels D. On-time performance

A. New product review No history exists for new products, so the information can be reviewed any time. The other information is all dependent on end-of-period figures.

During the S&OP process, performing a financial evaluation of alternative strategies includes which of the following? A. Number and productivity of workers, cost of changing work levels, and inventory costs B. Inventory costs only C. Cost of changing work levels and inventory costs D. Number and productivity of workers, cost of changing work levels, inventory costs, and priority sequence of load

A. Number and productivity of workers, cost of changing work levels, and inventory costs "Cost of changing work levels and inventory costs" would be correct if it were to include the number and productivity of the workers, which does have a financial impact. "Inventory costs" is incorrect because, in addition to excluding the number and productivity of workers, it also excludes the cost of changing work levels, which has an impact on the financial alternatives. "Number and productivity of workers, cost of changing work levels, inventory costs, and priority sequence of load" is incorrect because it includes the priority sequence of the load, which is determined at the execution level of MPC and not during the S&OP process.

Which of the following are examples of fringe benefits that can be used to enhance employee motivation? A. On-site child care and sharing company financial data B. Sharing sales associates' goals and commissions and flextime C. On-site workout facilities and sharing executive financial packages D. Personal travel services and sharing top management's personal goals and objectives

A. On-site child care and sharing company financial data Some nonfinancial rewards companies use to enhance employee motivation are: Providing additional perquisites and fringe benefits such as on-site child care. Providing public recognition. Promoting from within when possible. Implementing employee suggestions. Sharing financial data with employees.

Which of the following key performance indicators is the master scheduler most likely to monitor to determine if the master schedule is imbalanced? A. Percentage of on-time order completeness B. Frequency of master scheduling C. Need for frequent planned overtime D. Number of schedule date changes

A. Percentage of on-time order completeness On-time completions indicate that there is a demand/supply balance.

Attribute sampling has rejected a lot of 200 of a purchased part. There is an immediate need for 50 items for the current week and for 50 more the following week. The supplier has indicated that a new shipment can be made in two weeks for 200 units. Which of the following actions should be recommended by the quality department? A. Perform 100% inspection until 100 acceptable items are obtained. B. Reject the material and update the supplier part record accordingly. C. Return the material and add a two-week safety lead time to future orders. D. Return the material and expedite a replacement quantity.

A. Perform 100% inspection until 100 acceptable items are obtained. Since sampling was used, there may be enough parts in the entire lot to be used for the two-week period.

A company is experiencing a change in demand from steady to sporadic. It currently uses economic order quantity (EOQ) to determine purchase quantities for a key component. Which of the following models should it use in the future? A. Period order quantity B. Kanban C. Min-max D. EOQ

A. Period order quantity As a product moves from continuous to intermittent demand, a better inventory replenishment tool is a period order quantity, where inventory balances are reviewed periodically and a quantity is purchased up to a specific maximum. In contrast, EOQ, min-max, and kanban are all based on continuous demand characteristics.

Which of the following computerized system components is most necessary with a random location storage system? A. Picking lists with locations B. Storage selection during put-away C. Exception identification report D. Random locator report

A. Picking lists with locations Pickers will not necessarily know the location or picking rules, so the logic must be computerized.

A company wanting to maintain a high level of customer service at the lowest inventory carrying cost should take which of the following actions? A. Place safety stock in a central warehouse. B. Split safety stock between central and field warehouses. C. Use faster modes of transportation. D. Place safety stock in field warehouses.

A. Place safety stock in a central warehouse. By placing safety stock in a central warehouse, safety inventory can be reduced by aggregating demand.

What is the most significant factor affecting the difference between planned lead time and actual lead time for a specific order or batch in a shop? A. Priority B. Labor C. Component availability D. Setup

A. Priority A planned order has its lead time calculated by reference to the product's standard routing. A released order can have its lead time altered by queue, move, or wait times or by the use of an alternate routing, order splitting, or overlapping. The lead time reduction would be driven by the order's priority.

Which technique facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences? A. Processor-dominated scheduling B. Material-dominated scheduling C. Mixed-model scheduling D. Mixed-flow scheduling

A. Processor-dominated scheduling Processor-dominated scheduling is a technique that schedules equipment (processor) before materials.

During the production strategy review portion of developing the supply plan, which would be a good reason to consider changing from chase production to a hybrid strategy of level production plus some outsourcing? A. Product family load profiles are becoming smoother, but competitor failures sometimes cause a spike in demand. B. The review of production rates finds that there is not sufficient aggregate capacity to meet the production plan's load requirements. C. The production performance review indicates that flexibility metrics for production are higher than targeted. D. The financial plan review indicates that the cost of maintaining excess capacity is low.

A. Product family load profiles are becoming smoother, but competitor failures sometimes cause a spike in demand. The production and inventory planning process that results in a supply plan starts with corporate strategy and includes a review of production strategy, then financial plans, then production rates, and then production performance. During the production strategy review phase, the inputs to that strategy are assessed for changes. The correct answer is an example of such changes. The other answer choices are from later in the process.

Which of the following is used by capacity requirements planning to determine the total load on work centers in a job shop environment? A. Product routings B. Schedule accuracy C. Customer orders D. Demonstrated capacity

A. Product routings Routings tie actual and planned orders to work centers for load planning.

Which of the following is not an advantage of multifunctional design teams? A. Rapid problem solving B. Structured communication C. Iterative process of product improvement D. Improved manufacturability

A. Rapid problem solving Multifunctional design teams are an approach of concurrent engineering. They require much discussion and input as decisions on product design and rollout are made. However, the result should be a product that is easier to manufacture.

Which of the following benefits of setup reduction is most immediate? A. Reduced product cost B. Reduced work in process C. Improved quality D. Reduced queue time

A. Reduced product cost When the setup time is reduced, it will immediately reduce the overall cost of the product.

Why is it important for an organization to consider setting waste hierarchy policies for its suppliers? A. Reputation risk B. Liability risk C. Regulatory compliance risk D. It is worth the added expense.

A. Reputation risk Setting policies for suppliers related to the waste hierarchy is important because the organization can be held responsible for its supply chain partners' activities in terms of public opinion. Enforcement of efficiency-related policies can also help drive unnecessary costs out of the supply chain. Liability and regulatory compliance are risks for the supplier, not the buyer.

A company has been a preferred supplier for several parts for a number of years. Which of the following information is of most importance on a purchase order?. A. Required order due date B. Required order quantity C. Required terms/conditions D. Required part number

A. Required order due date With a preferred supplier, most of the information is already known, except for the due date for the next order.

Which of the following is an activity included in the master planning of resources? A. S&OP B. Strategic planning C. MRP D. Business planning

A. S&OP Sales and operations planning (S&OP), demand management, and master scheduling are the activities included in the master planning of resources. Business and strategic planning are incorrect because they take place before the master planning of resources begins. Material requirements planning (MRP) is incorrect because it is performed at a lower level.

A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. What does this allow the company to do? A. See that the true suppliers of raw material realize a higher price for their efforts. B. Promote the farmers to tier one suppliers, facilitating tighter controls. C. Increase its hold on the farmers by eliminating an echelon. D. Reduce the costs associated with an entire echelon, thus driving its profit margins up.

A. See that the true suppliers of raw material realize a higher price for their efforts. A popular coffee roasting company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This has allowed the company to see that farmers realize a higher price for their efforts.

What will happen if internal setup tasks are converted to external tasks (for example, organizing tools and materials for setup while the machine is still running a batch)? A. Setup time will be reduced and the operation's throughput and velocity will be increased. B. Setup time will be increased and the operation's throughput and velocity will be reduced C. The complexity of the setup will be increased, thus increasing the lead time to make a product. D. The overall lead time for the product won't be affected.

A. Setup time will be reduced and the operation's throughput and velocity will be increased. Converting internal setup tasks to external tasks is one of the five steps for reducing setup time. Reducing setup time increases operations velocity and throughput.

What equation is used to calculate actual labor hour requirements? A. Standard Hours/(Efficiency x Utilization) B. Standard Hours/Utilization C. Standard Hours x (Efficiency x Utilization) D. Standard Hours/(Efficiency - Utilization)

A. Standard Hours/(Efficiency x Utilization) The question asks what the actual labor hours are, not what the standard capacity would be. As such, the calculation would first multiply the efficiency (either by work center or product) by the utilization (by work center) for the product to be built. Next, the standard hours to build the product would be determined. Finally, the actual hours would have to be determined by factoring in the efficiency and utilization. This would be done by dividing the standard hours by the efficiency and utilization.

Why is stockout duration important when considering the customer service level? A. Stockout duration is most likely associated with the number of orders shipped late. B. Stockout duration is assumed to be constant, so variability affects the customer service level. C. Stockout duration is immaterial as it is not related to the number of exposures to stockout. D. Stockout duration is important because customer service isn't 100% until all line items ship.

A. Stockout duration is most likely associated with the number of orders shipped late. Stockout duration is the amount of time an item is stocked out and is not available for sales. Stockout duration directly impacts the number of orders that are shipped on time.

What is a key benefit of using certified suppliers? A. The need for incoming inspection is eliminated. B. The need for price negotiation is eliminated. C. Purchasing lead times are reduced. D. The firm will receive the best possible price for the goods.

A. The need for incoming inspection is eliminated. Parts coming from certified suppliers do not require incoming inspection.

In the sales and operations plan of a make-to-stock company, which of the following indicates that a chase production strategy is being employed? A. The production plan closely approximates the sales plan. B. The backlog plan remains level as the production level changes. C. The quality plan closely approximates the sales plan. D. The inventory plan increases and decreases along with sales.

A. The production plan closely approximates the sales plan. In a chase strategy, the sales and production plans approximate each other.

A work center is consistently overloaded, to the point where overtime is required nightly and on weekends. This seems to be a problem for only this work center. What is the most likely reason? A. The work center is not considered a key work center for capacity planning. B. The rated capacity is understated. C. The work center is overloaded due to a 100% load on a bottleneck work center. D. The orders being processed do not account for setup time.

A. The work center is not considered a key work center for capacity planning. Capacity is not being checked against the master production schedule, meaning that it is not a key work center.

Why would a company choose make-to-stock instead of make-to-order for specific products? A. There is a need to decouple manufacturing processes from customer orders because customer lead time is less than the time needed to make the product. B. There is more risk involved when building a product with a firm customer order in hand. C. There is a need to decouple manufacturing processes from customer orders because customer lead time exceeds the time needed to make the product. D. Customer product specifications require a unique design.

A. There is a need to decouple manufacturing processes from customer orders because customer lead time is less than the time needed to make the product. When the lead time that the customer requires is longer than the lead time needed to make the product, then the company must make-to-stock and keep the finished goods in inventory until an order arrives. If the customer lead time is shorter than the lead time needed to make the product, then the company can make-to-order, which has the advantage of less risk since the customer order is in hand. Engineer-to-order has customer product specifications that require a unique design.

Two defective inexpensive parts are discovered in a sample during incoming inspection, but the lot itself is accepted. What is done with the defective parts? A. They are removed from the lot and disposed of or scrapped. B. They are removed and sent to the material review board. C. They are removed from the lot and returned to the supplier. D. They are identified as such and returned to the lot.

A. They are removed from the lot and disposed of or scrapped. Inexpensive items are removed and scrapped through a formal process after being recorded against the lot.

What is the role of upper management in a quality organization? A. To provide resources and training for quality activities B. To facilitate the quality teams C. To supervise the quality functions and activities D. To hire outside resources to provide quality oversight

A. To provide resources and training for quality activities The main role for upper management is to provide the resources for quality activities and provide training in quality methodologies.

An organization sets a goal of a new product introduction for a product to possess three specific order winners. The team wants to get to the details of the requirements for each of these order winners. Which of the seven new tools of quality would be most helpful in this task? A. Tree diagram B. Matrix data analysis chart C. Relationship diagram D. Process decision program chart

A. Tree diagram A tree diagram is a tool that delineates tasks and activities in increasingly finer detail in order to meet a specific goal.

In an approach using both just in time (JIT) and total quality control (TQC), what is the role of TQC? A. Understanding root causes B. Providing feedback C. Identifying waste D. Stimulating conversation

A. Understanding root causes The role of TQC is the identification and elimination of root causes of quality defects.

Early customer involvement in the design process can result in: A. a longer product life cycle. B. key performance indicators. C. improved manufacturability. D. lower training costs.

A. a longer product life cycle. Ensuring that products are aligned with customers' requirements can lengthen the life cycle of the product.

When the number of a company's distribution centers serving a geographical area increases but the level of customer service remains the same, the result is generally: A. an increase in transportation costs. B. a decrease in the company's investment in real property. C. an increase in delivery lead times. D. a decrease in aggregate inventory levels.

A. an increase in transportation costs. More service centers will increase transportation costs because there will be more less-than-truckload (LTL) miles.

The total cost tradeoff for distribution transportation costs compares the cost of transportation with the cost of A. carrying in-transit inventory. B. loading and unloading. C. dealing with multiple transportation nodes. D. regulatory compliance for each type of transportation.

A. carrying in-transit inventory. Larger shipments cause larger carrying costs but fewer transportation costs and vice versa. The tradeoff between these two elements must be considered.

A design engineering group has dismantled a new product from another supplier. This is an example of: A. competitive analysis. B. thievery. C. unethical behavior. D. disintermediation.

A. competitive analysis. Performing a competitive analysis of a competitor or its products allows a company to understand the competitor's strategies, capabilities, prices, and costs.

Utilization of assets in distribution can be measured by the ratio of: A. cubic volume used to cubic volume available. B. rack space used to rack space available. C. vehicle space used to vehicle space available. D. floor space used to floor space available.

A. cubic volume used to cubic volume available. The utilization of assets in distribution can be measured by the ratio of space used to space available.

The carrying cost rate used in the economic order quantity is: A. determined by management policy. B. based on the unit cost. C. a percentage of the ordering cost. D. calculated by the master scheduler.

A. determined by management policy. Carrying costs include the cost of capital, risk costs, storage costs, etc. Management determines how much of the cost to apply to inventory based on a percentage of the financial value of inventory.

Analyzing capital investments by estimating future cash flows and translating them into equivalent amounts in today's terms is called: A. discounted cash flow analysis. B. payback analysis. C. average return on investment analysis. D. internal rate of return analysis.

A. discounted cash flow analysis. Discounted cash flow analysis is a method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.

Earliest job due date is an example of: A. dispatching. B. infinite scheduling. C. a chase strategy. D. available-to-promise.

A. dispatching. Earliest job due date is one of the dispatching rules used to determine which job should be run first at an operation.

The kanban system is responsible not only for implementing the production schedule but also for: A. facilitating the continuous improvement of execution and control. B. facilitating the material requirements plan. C. replacing the annual physical inventory process. D. eliminating the need for a raw material or component warehouse.

A. facilitating the continuous improvement of execution and control. The kanban system is responsible not only for implementing the production schedule but also for facilitating the continuous improvement of execution and control.

Using phantom bills of material will result in a reduction in: A. inventory transactions and work orders. B. product structures and work orders. C. inventory transactions and lot sizes. D. lot sizes and product structures.

A. inventory transactions and work orders. Using phantom bills of material means that subassemblies are noted on the bill of material but are not stocked as assemblies, so they do not require inventory transactions.

A make-to-order company believes that reducing customer lead time will result in a competitive advantage and increased sales. The sales and operations planning process should authorize an increase in: A. production. B. the sales forecast. C. finished product inventory levels. D. work in process.

A. production. A make-to-order company believes that reducing customer lead time will result in a competitive advantage and increased sales. The sales and operations planning process should authorize an increase in:

The length of a forecast horizon is determined primarily by the: A. purpose of the forecast. B. length of the manufacturing cycle. C. delivery time allowed by the customer. D. longest component lead time.

A. purpose of the forecast. How far into the future a company wants to forecast is a critical decision determining the size of the forecast horizon.

The integration effort of cable companies to diversify into providing internet and telephone services is an example of: A. strategic fit in R&D and technological activities. B. the need for more government regulations. C. a larger company restraining industry opportunities. D. a company seeking to become a monopoly.

A. strategic fit in R&D and technological activities. Businesses with a strategic fit in R&D or technology activities perform better together than apart because of potential cost savings.

Rough-cut capacity planning checks whether critical resources are available to: A. support the preliminary master production schedules. B. create work center load capacity profiles. C. establish the takt time of the work cells. D. keep track of past-due orders.

A. support the preliminary master production schedules. Rough-cut capacity planning checks whether critical resources are available to support the preliminary master production schedules. Critical resources include bottleneck operations, labor, and critical materials.

The number of exposures to stockouts is related to: A. the number of replenishment orders. B. the reorder point. C. the level of safety stock. D. the required customer service level.

A. the number of replenishment orders. The chance of stocking out occurs when inventory is low, which occurs at the time an order is being placed.

Subdividing project tasks into a hierarchy of individual tasks is done using a: A. work breakdown structure. B. resource graph. C. Gantt chart. D. task list.

A. work breakdown structure. The work breakdown structure develops a structure of tasks by subdividing the work into manageable tasks.

Material requirements planning (MRP) may recalculate planned orders as a direct result of changes in: A. work order receipt dates. B. capacity. C. the planning horizon. D. customer order dates.

A. work order receipt dates. A change in a scheduled receipt may cause the replanning of a planned order.

An organization's annual sales for a particular motor scooter total $50 million. Variable costs for the product over the year amounted to $30 million. It had $10 million in fixed costs for the year. What is the organization's contribution margin (CM) ratio for the year? A. 20% B. 40% C. 60% D. 80%

B. 40% The contribution margin (CM) is sales minus variable costs, or $50 million minus $30 million, which equals $20 million. The CM ratio is CM divided by sales, or $20 million divided by $50 million, which equals 0.4, or 40%. Fixed costs are not needed to calculate the CM ratio.

The flow of received purchased parts is from receipt at the dock to receiving/inspection and then to receipt at the stores, at which time the quantity received is entered in the enterprise resources planning (ERP) system. Which of the following statements about this situation are true? A. A supplier delivery performance measurement should be based on actual receipts at the dock, and purchase orders should be manually updated when parts are received at the stores. B. A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. C. Purchase orders should be manually updated when parts are received at the stores, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. D. A supplier delivery performance measurement should be based on actual receipts at the dock, purchase orders should be manually updated when parts are received at the stores, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule.

B. A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule. A supplier delivery performance measurement should be based on actual receipts at the dock, and a resource constraint could cause parts to be received at the dock but not into the stores on schedule.

Which of the following outputs from material requirements planning is of most use to the rest of the organization for achieving the material plan? A. Time-phased plan B. Action messages C. Purchase requisitions D. Released orders

B. Action messages Action messages identify what to do to balance supply and demand. Examples include purchase requisitions, released orders, rescheduling receipts, etc.

A component is defined on only one bill of material at level 6, but it also has independent demand. Which of the following statements is true? A. As a service part, the low-level code is 0. B. As a service part, the low-level code is 6. C. It is treated as a phantom subassembly. D. The item cannot be planned by material requirements planning due to the independent demand.

B. As a service part, the low-level code is 6. The low-level code of a component does not change based on how it is used as long as it has a parent item.

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

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

Which of the following is true if a work center is overstated in terms of available production capacity? A. Efficiency will increase. B. Capacity requirements planning becomes less useful as a feedback tool. C. The company will add capacity via additional personnel, tooling, or equipment. D. Planned order-required dates won't match customers' order-required dates.

B. Capacity requirements planning becomes less useful as a feedback tool. Capacity requirements planning becomes less useful because it does not give accurate information and an overload condition appears to be satisfactory.

Why does capacity requirements planning use infinite rather than finite planning? A. The material requirements plan cannot provide sufficient detail for finite loading. B. Capacity requirements planning is simply a reflection of the requirements from the material plan. C. Customer demand is inconsistent and requires variable work center capacity. D. Infinite capacity matches the level of detail as defined in the planning hierarchy.

B. Capacity requirements planning is simply a reflection of the requirements from the material plan. The materials plan drives the requirements for capacity planning.

In the implementation of lean, which of the following is the most significant change for the accounting function? A. Budgeted scrap and rework costs that create variances are reduced. B. Cellular processes no longer report every operation to accounting. C. Physical work-in-process inventory is more time-consuming. D. Costs of incentive programs increase.

B. Cellular processes no longer report every operation to accounting. In a lean process, production occurs based on the demand-pull from the next downstream work center and not a work order. When production occurs, operators do not normally report each demand kanban's labor and overheads. Costs are usually posted on an aggregate basis for the work center.

Which factor contributes most to the success of a change initiative? A. Education and training at the top of the organization B. Communicating to employees the reason for the change C. Day-to-day involvement of top management in implementation and control D. Using supervisors as coaches

B. Communicating to employees the reason for the change The most critical step listed is to communicate the purpose and objectives behind the initiative to employees. This creates a sense of urgency and involvement and reduces resistance.

Which manufacturing environment is the most economical production approach, with long runs, high capacity utilization rates, and few setups? A. Intermittent B. Continuous flow C. Cellular D. Batch

B. Continuous flow Continuous flow is the most economical production approach. It has long runs, high capacity utilization rates, and few setups, which, because of the size of the technology, can be expensive.

Which factor would result in an organization needing to think about a make-or-buy decision carefully rather than pointing strongly to either make or to buy? . A. Creates strategic risk B. Creates significant operations risk C. Leverages potential supplier's unique economies of scale D. Is a core competency

B. Creates significant operations risk If an activity is not strategically important but creates a high risk to meeting operations objectives, this is a situation that could result in either a make or a buy decision and so requires careful consideration. The other answers point strongly to either make or to buy.

Which is one way that the risk of operations interruptions from unexpected equipment failures can be mitigated? A. Safety stocks of finished goods inventory B. Decoupled work-in-process inventory C. Volume purchases of raw materials for use in operations D. Long production runs with fewer changeovers

B. Decoupled work-in-process inventory Decoupled WIP inventory can enable the later stages of an operation to continue working while an equipment failure is being addressed. Finished goods inventory safety stocks can reduce the risk of failure to meet customer demand, but the question is asking about the risk of operations interruptions in particular.

A company uses a level production strategy to build inventory prior to a peak season. Which of the following inventory turns should be expected? A. Stable prior to peak season, increasing during peak season B. Decreasing prior to peak season, increasing during peak season C. Decreasing prior to peak season, stable during peak season D. Increasing prior to peak season, decreasing during peak season

B. Decreasing prior to peak season, increasing during peak season Sales are low prior to the peak season, and finished goods inventory is building. During the peak season, sales increase and finished goods decrease. Note: The question is asking about inventory turns, not inventory levels. When building inventory in advance of a peak season, the turns would be decreasing; then, when the peak season hits, sales are strong and inventory turns increase.

What are the main components of advanced planning and scheduling (APS)? A. Forecasting, sales and operations planning, production scheduling, distribution planning, and transportation planning B. Demand planning, production planning, production scheduling, distribution planning, and transportation planning C. Demand planning, sales and operations planning, master production scheduling, material requirements planning, and distribution planning D. Demand planning, production planning, production scheduling, material requirements planning, and final assembly scheduling

B. Demand planning, production planning, production scheduling, distribution planning, and transportation planning The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

Which of the following is more characteristic of a general business contract than a customer-supplier partnership? A. Supplier dedicates a portion of its capacity over a long-term basis to the customer. B. Distributor provides all of the company's hardware and standard electrical components. C. Customer and supplier perform concurrent engineering on the design of a new product. D. Customer establishes a single-source relationship with the supplier for certain products.

B. Distributor provides all of the company's hardware and standard electrical components. This would be a contractual purchase agreement that does not involve the mutual commitment of a partnership.

Which of the following is the overall goal of a distribution system? A. Maximum distribution efficiency at lowest cost B. Efficient, timely service with minimal inventory investment C. Customer service D. Minimum inventory investment and lowest-cost distribution

B. Efficient, timely service with minimal inventory investment This is the overall goal of a distribution system. The other answers are incorrect because customer service is an important goal but not the complete goal. Customer service must, however, be a factor, which is why the other two answers (maximum distribution efficiency at lowest cost, and minimum inventory investment and lowest-cost distribution) are incorrect.

Which production environment is most likely to use actual cost? A. Make-to-order B. Engineer-to-order C. Mass customization D. Assemble-to-order

B. Engineer-to-order Even though commonly used items may be valued at standard cost, many of the costs in an engineer-to-order environment are unique to the order and can be valued at actual cost.

Which of the following is the most important consideration when implementing an information system to control shop floor operations? A. Supporting differentiation between functional areas and production operations B. Ensuring that shop personnel have input into the choice or the design of the new technology C. Providing staff specialists with the information needed to control production operations D. Encouraging users to operate independently with a minimal amount of training

B. Ensuring that shop personnel have input into the choice or the design of the new technology An effective information system should place as much responsibility for managing production operations as possible on factory personnel. This requires then that these personnel have input into designing the system that they will be required to use.

An organization's goal is to reduce the workforce and invest heavily in cross-training the remaining employees. What process technology requirement would be the most valuable for this organization? A. Equipment with very little need for regular maintenance B. Equipment with significant mistake-proofing and visual signals C. Equipment with high throughput rates D. Equipment with flexibility to produce many different products

B. Equipment with significant mistake-proofing and visual signals Mistake-proofing and visual signals are examples of process technology features that would reduce the amount of time needed for cross-training because the equipment is intuitive.

What is necessary to ensure that demand-influencing activities fulfill their promise of generating demand at the level committed to by the organization? A. Ability to change the baseline to reflect actual results B. Feedback and course correction process C. Sales and operations planning (S&OP) D. Ideal sales market conditions

B. Feedback and course correction process Succeeding at influencing demand requires not only generating and executing marketing and sales initiatives but also determining if the plans are working as intended. If they are not, there must be a process in place to make course corrections during execution. S&OP is the process by which these commitments were made. The marketing and sales plan that was agreed to as part of S&OP is the baseline, so changing it to reflect actual results would fail to deliver on the promises that were made.

What business priority is most likely to be in conflict when a business decides to invest in inventory? A. Marketing B. Financial management C. Purchasing D. Operations

B. Financial management Financial management's goal is to increase the cost performance of the organization. Purchasing inventory decreases liquidity and increases the risk of financial loss if inventory cannot be sold.

A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy? A. Existing store growth rate B. Finished goods inventory turns C. Geographic location of new stores D. Capacity of current distribution centers

B. Finished goods inventory turns Inventory turns affect finances, distribution center capacity, and operations.

A plant refines a raw material into a bulk liquid chemical using a highly automated production process. Which of the following would be the most appropriate operational unit of measure for capacity and load in this situation? A. Standard labor hours B. Gallons of the bulk chemical C. Plant operating hours D. Monetary units of the chemical

B. Gallons of the bulk chemical The volume of the liquid chemical is the most appropriate operational unit of measure. Although monetary units can be used in such a case, volume is a more typical unit of measure.

Often suboptimal performance is a result of activities occurring across multiple departments. What is the best way to remedy this? A. Implement or re-implement an enterprise resources planning system. B. Have an executive champion spearhead a business process reengineering effort. C. Create process flow diagrams of the entire process, document, and train. D. Hire a certified project manager and assign him or her to solve this problem.

B. Have an executive champion spearhead a business process reengineering effort. Companies searching for ways to improve their operations have sometimes discovered that the execution of strategy-critical activities is hampered by a disconnected organizational arrangement in which pieces of an activity are performed in several different functional departments, with no one group or manager being accountable for optimal performance of the entire activity. To address suboptimal performance, a company can reengineer the work effort using business process reengineering.

An organization creates a separate network organizational structure, using a "big opportunity" to help form the core of this network that operates alongside the traditional hierarchical structure. What will help this network keep an entrepreneurial spirit? A. Start using formal project management techniques to ensure that the next "big opportunity" is developed quickly. B. Have core members recruit new volunteers and provide guidance on how to stay unstructured yet self-motivated. C. Assign a team member to develop a budget for the next "big opportunity" so it gets the time and energy it requires. D. Assign formal roles to network team members to reduce duplication of effort.

B. Have core members recruit new volunteers and provide guidance on how to stay unstructured yet self-motivated.. As a network team forms alongside the traditional hierarchical structure, the network members will need guidance to understand how a network needs to differ from a hierarchy so that they keep that entrepreneurial spirit rather than starting to build a hierarchy within the network (e.g., a focus on budgets, project management, roles, etc.).

Ensuring ease of access to safety data sheets can reduce which of the following risks? A. Operator electrocution B. Improper disposal of hazardous materials C. Environmental harm following proper use D. Excessive scrap factors

B. Improper disposal of hazardous materials The APICS Dictionary, 16th edition, defines a safety data sheet in part as a document that is "prepared by the manufacturer and provides information regarding the safety and chemical properties to downstream users and (if necessary) the long-term storage, handling, and disposal of the product." It does not address production equipment risks such as of electrocution. It will reduce the risk of environmental harm from improper use but will not affect any environmental damage caused by proper use.

Which of the following actions may result in unmanageable backlog? A. Increasing available capacity B. Increasing planned lead time C. Productivity gains D. Purchase of single-purpose equipment

B. Increasing planned lead time Increasing planned lead time means that each job will be on the shop floor longer, which increases work in process and queues, and that it will take longer to process jobs.

Which of the following techniques is used in a push system but not in a pull system to ensure that inventory is available for an order prior to release to a work center? A. Point-of-use staging B. Kitting C. Safety stock D. Point-of-fit staging

B. Kitting Kitting is the process of constructing and staging kits to verify that parts are available. This would not be necessary in a pull environment, as parts would be pulled.

What is the best time to measure master scheduling performance? A. Over the entire planning horizon to provide forward planning visibility to the organization B. Last period where actual production can be compared to company-planned targets C. Between the current period and the planning time fence to encompass the cumulative lead time D. Between the current period and the demand time fence to encompass released and firm planned orders

B. Last period where actual production can be compared to company-planned targets Performance can be measured only after production has occurred; the other responses do not have performance measures.

A make-to-order company has typically employed the fixed-order-quantity approach for its commonly used components. This has resulted in excess inventory over time due to customer changes and new product configurations. The planner should consider which lot-sizing technique to get the problem under control? A. Fixed period B. Lot-for-lot C. Economic order quantity D. Minimum

B. Lot-for-lot Lot-for-lot will minimize or eliminate any residual inventory.

Distribution requirements planning (DRP) provides direct input into which of the following functions in the manufacturing planning and control (MPC) system? A. Production planning B. Master production scheduling (MPS) C. Sales and operations planning (S&OP) D. Demand management

B. Master production scheduling (MPS) Once the DRP calculation has been performed, the requirements identified for channel inventory replenishment are directly input into the master production schedule in a MPC system.

What is the best reason for using planning bills of material in master scheduling? A. A single bill can be used no matter how many products are in a product family. B. Material procurement or production occurs prior to knowing actual end items. C. Planning bills do not require actual engineering or manufacturing bills of material. D. The company is make-to-stock, and planning bills match planned production levels.

B. Material procurement or production occurs prior to knowing actual end items. Planning bills are used to get necessary components on order prior to knowing the actual configuration. In other words, planning bills enable flexibility in what will be produced.

Why does sales and operations planning (S&OP) address both monetary units and product families? A. The planning horizon covers both long- and short-term planning. B. Monetary units are an input, and product family plans are an output. C. Accounting needs monetary unit information, and production needs product information. D. Knowing both enables a cross-check to ensure consistency.

B. Monetary units are an input, and product family plans are an output. The business plan is an input to the demand part of S&OP and is stated in monetary units; the production plan is an output and is stated in product families. S&OP is considered a medium-term planning horizon.

A company uses a chase production strategy to schedule production. A product family consists of ten end items, produced every month. Four high-volume units comprise 70% of total production. The two lowest-volume units comprise only a very small percentage. How would sales and operations planning plan the items in this product family? A. One line for the highest-volume units and one for the remaining six products B. One line for the total number of units with no consideration for mix C. Separate line for each type of unit D. Four lines for the highest-volume units, one for the two lowest, and one for the balance

B. One line for the total number of units with no consideration for mix Regardless of the number of end items, they are all one product family, so they are planned as one line, with consideration for volume.

A resource plan is based on which of the following components? A. One lot size of each product B. One unit of a typical product C. One lot size of a typical product D. One unit of each product

B. One unit of a typical product A bill of resources lists the required capacity and key resources needed to manufacture one unit of a selected item or family

A part has an effectivity date that goes into force tomorrow. What will change at that time? A. Engineering drawings but not part ID number B. Part ID number at the class level C. Part ID number at the instance level only D. Part ID numbers at the batch/lot and instance levels only

B. Part ID number at the class level At the class level, a product or part ID code identifies the unique product or part class. An effectivity date is the date when a new set of engineering drawings and documents come into effect. At that time, the new part will have a new part ID number at the class level. The instance level is a unique serialized ID to identify a unique instance of a product.

Which of the following actions would most likely be considered to address a missing part problem in a push environment but not in a pull environment? A. Working overtime B. Partially completing an order C. Using an alternate part D. Using an alternate routing

B. Partially completing an order Orders can be completed to the point of the missing part and then put aside until the part is available.

The firm planned order (FPO) technique may be used to achieve which of the following results? A. Prevent automatic rescheduling of planned orders by material requirements planning (MRP). B. Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and reduce plant load fluctuation. C. Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and increase plant capacity. D. Reduce plant load fluctuation, and trigger MRP to replan higher-level items.

B. Prevent automatic rescheduling of planned orders by material requirements planning (MRP), and reduce plant load fluctuation. When a planned order is firmed in the material requirements plan, it is frozen and will not be changed by the MRP processor. Since it is frozen, it will help in dampening small changes in supply and demand.

Which is the best way listed for an organization to encourage suppliers to avoid use of hazardous materials when feasible? A. Zero tolerance policy B. Pricing incentives C. Education D. Supplier co-location

B. Pricing incentives Pricing incentives help promote voluntary compliance. Education would also be helpful but may not be as effective without the pricing incentives. A zero tolerance policy may result in losing suppliers who are valuable in many other ways. Working with the supplier in a more flexible way could lead to buy-in and eventual compliance.

Mixed-model scheduling is most appropriately used to accomplish which of the following? A. Increase daily production efficiency. B. Produce the products expected to be sold that day. C. Build inventory in advance of peak demand. D. Reduce cumulative lead time

B. Produce the products expected to be sold that day. Mixed-model production makes several different products in varying lot sizes so that a factory produces close to the same mix of products that will be sold that day.

What is the purpose of the inventory investment report as part of the logistics resource requirements plan (LRRP)? A. Determines product family storage profiles for inventory based on product dimensions B. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment C. States actual item-level inventory costs for a past period based in part on shipping costs and inventory balances D. Projects item-level inventory costs for a weekly planning horizon based in part on shipping costs and inventory balances

B. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment The inventory investment report portion of the LRRP projects aggregate inventory levels and the related supply chain costs over a planning horizon, based on product-family level replenishment, shipping costs, and inventory balances.

Which forecasting method would be most appropriate for reconciling the sum of the product forecasts with the aggregate forecast used in business planning? A. Exponential smoothing B. Pyramid C. Simple average D. Least-squares

B. Pyramid Pyramid forecasting enables management to review and adjust forecasts made at an aggregate level. The procedure begins with the roll-up of item forecasts into forecasts by product group. The forecast for a product group is then forced down to individual item forecasts so that they are consistent with the aggregate plan.

What is a lean kaizen event? A. Primary way to relieve bottlenecks B. Rapid improvement of a limited process area, for example, a production cell, with the objective of eliminating non-value-added work C. Event that creates a workplace suitable for lean production by sorting, simplifying, scrubbing, standardizing, and sustaining D. Way of managing inventory and improving picking by making all parts easy to take off of a shelf

B. Rapid improvement of a limited process area, for example, a production cell, with the objective of eliminating non-value-added work A kaizen event is a short, focused project targeted at improving a specific, small product or process defect.

Which two of the following approaches to product design most positively impact manufacturing performance? A. Reducing parts complexity, and organizing design processes. B. Reducing parts complexity, and integrating product and process design. C. Organizing design processes, and debugging during the manufacturing cycle. D. Organizing design processes, and integrating product and process design.

B. Reducing parts complexity, and integrating product and process design. By reducing parts complexity and closely integrating product and process design, the manufacture of products is more rationalized and simplified, thereby improving performance.

A stated goal of a continuous improvement project related to the order cycle is to significantly reduce the number of customers who are lost due to unacceptably long lead times. Which improvement would help most with this? A. Reducing the average duration of the order cycle B. Reducing the maximum duration of the order cycle C. Eliminating the order processing step D. Regularly expediting orders with a chance of being late

B. Reducing the maximum duration of the order cycle While reducing the average duration of the order cycle is also a useful improvement, it is the lead times that miss the target by the largest number of days that have the most chance of being significant to these customers.

An information system implementation project is six months behind schedule because many people involved with the project are working on a serious problem with product quality. Which of the following actions should the executive steering committee take in this situation? A. Let the project manager handle the problem and get the project back on schedule. B. Reschedule implementation efforts based on the resources currently available. C. Cancel the system implementation because it is adversely affecting product quality. D. Contract with an outside systems and consulting group to implement the system.

B. Reschedule implementation efforts based on the resources currently available. The executive sponsors of the project need to get the project restarted. This will probably mean that schedule dates, costs, and resources will need to be changed from the original plan.

What is a direct input into CRP? A. Dispatch list B. Routing data C. Preventive maintenance schedule D. Work center load report

B. Routing data Routing data is an input to CRP and is used to determine work centers, load, and sequence timing. The other answers are incorrect because reports and schedules of order releases are outputs; and the preventive maintenance schedule may affect available capacity, but is not a direct input to CRP.

A company seeks to maximize the life span and utilization of all products delivered. From this perspective, which of the following would an elevator company do? A. Sell the elevators and service contracts. B. Sell the elevators as a service, maintaining ownership itself. C. Sell the elevators at a breakeven or a loss and manage service as its key revenue generator. D. Sell the elevators and provide free service.

B. Sell the elevators as a service, maintaining ownership itself. The concept of natural capitalism divides the world's resources into four basic areas: natural, human, manufactured, and financial capital. Under this philosophy, an elevator company would see the elevator as a service, maintaining ownership itself.

Which of the following data elements is required to backward schedule work orders for component parts in a push production environment? A. Current backlog for required work centers B. Sequence of operations and work centers needed C. Importance of the order for sales D. Efficiency for required work centers

B. Sequence of operations and work centers needed In backward scheduling, the schedule is computed starting with the due date for the order and working backward to determine the required start date and/or due dates for each operation. Thus, the sequence of operations and work centers needed must be known.

What is the significance of a higher inventory turn rate for finished goods? A. Lower cost of goods sold B. Smaller risk of obsolescence C. Lower customer service D. Higher warehouse cost

B. Smaller risk of obsolescence Higher warehouse costs is incorrect because higher turns means goods move quicker through the warehouse. Lower customer service is incorrect because the opposite is likely to occur. Lower cost of goods sold is also incorrect because for higher inventory turns you would expect a higher ratio of cost of goods sold to average inventory value.

Which step of the reverse logistics process would be most helpful in supporting an organization's sustainable waste hierarchy claims? A. Retrieve B. Sort C. Dispose D. Transport

B. Sort The sort step involves logging in the returned products, inspecting them, and sorting them. The data collected at this point can be used for reporting purposes, such as the weight of the material recycled.

A work center needs to process units more quickly in order to get up to takt time. What tool can be used to specify work elements, their sequence, and how long each step should take, including walking to get parts and so on? A. Standardized work analysis chart B. Standardized work combination table C. Production capacity chart D. Job element sheets

B. Standardized work combination table A standardized work combination table is used to identify work elements and their required sequence. It can show walking, automatic, and manual steps. It considers takt time.

Which of the following goals of pull systems is easiest to implement as compared to push systems? A. Shortened cycle times B. Synchronized production C. Reduced inventory D. Continuous improvement

B. Synchronized production Synchronized production is difficult to achieve in push systems but is critical for a pull system.

Which of the following statements best characterizes the relationship between sales and operations planning (S&OP) and lean production? A. S&OP and lean are not compatible. B. The chase production planning approach should be used to facilitate response to demand. C. The S&OP output represents the schedule for lean production. D. Resource planning will be more complicated after implementing lean production methods.

B. The chase production planning approach should be used to facilitate response to demand. The use of lean production methods means that production would be based on the demand-pull originating with the customer. As such, the appropriate production planning technique would be a chase strategy where production follows demand requirements.

Which of the following best describes the results of total quality control? A. Statistical tests of production identify sources of defects. B. The product meets the expectations of the customer. C. The cost of scrap and rework is below budget. D. The number of inspection stations in the production process is decreased.

B. The product meets the expectations of the customer. The end result of a total quality control effort should always be meeting the product quality expectations of the customer.

Which of the following is a planning logic for independent demand items where the planned order releases are input to the master schedule? A. Distribution resources planning B. Time-phased order point C. Final assembly scheduling D. Distribution planning

B. Time-phased order point Time-phased order point is a planning logic for independent demand items where gross requirements come from a forecast, not via explosion.

Material is staged for which of the following reasons? A. To use warehouse space efficiently B. To minimize the impact of inventory errors C. To offset poor storeroom response D. To balance the workload in the storeroom

B. To minimize the impact of inventory errors Staging inventory before put-away, use, or shipment enables inventory control to validate balance records.

What is an important metric for reverse cash flows in the reverse supply chain? A. Pareto analysis of reasons for returns B. Total cost of returns in aggregate by product family C. Total cost of ownership of the reverse supply chain D. Total cost of returns by end item

B. Total cost of returns in aggregate by product family The total cost of returns in aggregate by product family will indicate the magnitude of the reverse cash flows. The aggregate product family level will provide the right level of detail for decision making. The total cost of ownership and Pareto analysis are good metrics but do not relate to reverse cash flows in particular.

A company's strategic objectives are not on target, and attainment of clearly stated goals is the objective. The company is inexperienced in determining what the effect of a suggested strategic change might be. What should it consider? A. Delphi method B. Trial and error C. Benchmarking D. Competitive espionage

B. Trial and error If strategic objectives are relatively unambiguous but the effect of interventions is not known and the activity is repetitive, the organization can gain knowledge through trial and error.

In a culturally diverse problem-solving group with varying priorities, what is a common impediment to achieving the best solution? A. Adapting team leadership styles B. Valuing expediency instead of discussion C. Lack of technical knowledge D. Collecting support data

B. Valuing expediency instead of discussion The basis of group discussion focused on problem solving is to consider all possible opinions and judgments before a decision is made. Solving a problem by taking the most expedient path closes discussion and can lead to a suboptimal solution.

The inventory for a dependent demand item was incorrect during the last cycle count, and there is no safety stock. Which date from material requirements planning (MRP) is of most use to the material planner to ensure availability of the part? A. When the next cycle count will take place B. When the next planned order is scheduled C. When the part's next scheduled receipt is scheduled D. When the next gross requirement will occur

B. When the next planned order is scheduled The date of the planned order is when MRP has determined that inventory will be zero and a new order will be required.

Operations strategy formulation should be: A. a five-year rolling activity updated biannually. B. a relatively infrequent event. C. an annual process with quarterly adjustments. D. a monthly seven-step process involving top management.

B. a relatively infrequent event. The process of formulating an entirely new operations strategy should be a relatively infrequent event.

It is highly likely that when diversifying into a different market space that has solid financial opportunities, a company will: A. develop the business itself. B. acquire an established company. C. acquire a privately held firm. D. acquire a start-up company.

B. acquire an established company. Companies that diversify into an industry where good financial results exist nearly always enter new business by acquiring an established company rather than by forming or acquiring a start-up.

The top level of the distribution requirements planning record should be: A. at the manufacturing facility. B. at the point closest to the customer. C. at the distribution center. D. at the master production schedule level.

B. at the point closest to the customer. The best information to drive the planning would come from the point closest to the customer, whether that be direct information from the customer or from the distribution center closest to the customer.

When an organization buys capital equipment, a large payment is typically followed by a series of smaller receipts or inflows recognized as either additional revenue or: A. supplier rebates. B. cost savings. C. accrued interest. D. accelerated payments.

B. cost savings. Capital expenditure is typically a large "outflow" investment followed by a series of smaller inflows in the form of either additional revenue or cost savings.

Acquiring elements of the finished goods distribution channel is called: A. a partnership. B. forward integration. C. backward integration. D. alliance development.

B. forward integration. Forward integration is the process of buying or owning elements of the production cycle and the channel of distribution forward toward the final customer.

A company has a lag capacity strategy. If demand growth is predictable, this strategy: A. increases the risk of inventory loss (e.g., obsolescence, theft, damage). B. fully utilizes capacity, so unit costs are lower. C. will always generate high levels of past-due customer orders. D. should be paired with a chase manufacturing strategy.

B. fully utilizes capacity, so unit costs are lower. A lag capacity strategy will add capacity after it is needed, which will mean that equipment remains at full utilization. When demand growth is predictable, a lag capacity strategy works well if inventory is manufactured ahead of time; demand that cannot be met using current-period capacity can be met using inventory that was produced ahead of time. Using a chase manufacturing strategy would not produce such inventory in advance and so some demand would not be met in a timely fashion.

Infinite loading is useful for: A. scheduling daily operations. B. identifying bottlenecks. C. subcontracting underloads. D. increasing the efficiency of a work center.

B. identifying bottlenecks. Infinite loading will highlight those work centers that are potential bottlenecks for upcoming load.

Aggregate inventory management establishes the overall level of inventory desired: A. in physical units. B. in monetary units. C. as a percentage of revenue. D. as a desired return on investment.

B. in monetary units. Aggregate inventory management establishes the overall dollar value of inventory desired and implements controls to achieve this goal.

Distribution requirements planning (DRP) should directly interface with: A. material requirements planning. B. master scheduling. C. capacity requirements planning. D. purchasing planning.

B. master scheduling. The output of the DRP plan is placed in the master schedule along with other sources of demand on items. This enables the planner to completely plan the requirements on an item.

An effective operations strategy identifies: A. the order-winning criteria. B. performance objectives. C. an appropriate plant layout. D. an approach to waste reduction.

B. performance objectives. An effective operations strategy identifies: A vision of how the business's operations and processes can contribute to its overall strategy. Operations performance objectives. The broad decisions that will provide the basis for the business's sustainable development.

Maintaining physical control of point-of-use is accomplished by: A. limited access. B. procedures. C. receipt and issue transactions. D. cycle counting.

B. procedures.

Feedback of production information in a company using kanbans is most likely to exclude: A. scrap by quantity and operation. B. quantity produced in excess of target. C. number of units that were reworked. D. production quantity completed.

B. quantity produced in excess of target. Production beyond what is needed to complete a kanban quantity is not allowed.

On-time supplier deliveries can be impacted most by: A. purchase order quantities. B. supplier capacity. C. dedicated transportation carriers. D. long lead times.

B. supplier capacity. Supplier capacity that is adequate for meeting the dates has the most impact on on-time deliveries.

The development of corporate strategy ideally starts at the top, cascading downward throughout the organization and ultimately reaching: A. the HR department for further input. B. the associated functional and operating levels. C. the front-line employees for review and approval. D. key buyers and customers.

B. the associated functional and operating levels. As a general rule, strategy making must start at the top and then proceed downward from corporate levels to the business levels and then down to the associated functional and operational levels.

A distribution channel is defined as: A. the distribution route from the production facility to the consumer. B. the distribution route, from raw materials through consumption, that a product travels. C. the path a product travels through the distribution center from receipt to shipment. D. the routes between the production facility and the distribution centers.

B. the distribution route, from raw materials through consumption, that a product travels. A distribution channel is the distribution route, from raw materials through consumption, along which products travel.

The warehouse and procurement functions are working together to coordinate incoming shipments. This action will most likely improve the management of: A. supplier quality. B. transportation costs. C. stockouts. C. inventory levels.

B. transportation costs. Coordinating the transportation of both incoming materials from suppliers and shipments between warehouses and logistics centers can lower transportation costs.

At the master production schedule level, safety stock is: A. not required by the master scheduler. B. used to provide a hedge against uncertain demand. C. used to account for possible scrap. D. used in make-to-order companies.

B. used to provide a hedge against uncertain demand. Safety stock can be planned as production against forecast error and/or short-term changes in demand.

During the assessment period of an acquisition, specific synergies are observed and found to be positive. However, the acquiring organization's strategists keep in mind that risks continue to lie in the fulfillment of the overall strategic goal. Strategically, the decision to acquire then becomes a question of: A. how long it will take to successfully implement a common order entry system. B. whether it is faster or cheaper to buy rather than develop internally. C. the compatibility of company cultures and how they can be made more similar. D. What the international market thinks of them.

B. whether it is faster or cheaper to buy rather than develop internally. The decision to acquire is a question of whether it is faster and more economical to buy something that the company could have developed on its own.

Capacity requirements planning data used to calculate available labor and machine capacity is most likely to be located in the: A. capacity planning bill of labor. B. work center data. C. labor reporting database. D. routing operation details.

B. work center data. The work center master record contains all of the data regarding the capacity properties of the productive resource. This data is used whenever any job is assigned to be completed at the work center.

Large-scale productivity software often experiences implementation delays or initially performs below expectations. What mitigation strategy could be used in this situation? A. Keep the old system running in parallel until there is 100% functionality and user acceptance. B. Implement it in small pieces while keeping existing systems in place. C. Budget for additional time and reduced performance after implementation. D. Hire a third party to implement it.

C. Budget for additional time and reduced performance after implementation. With productivity software implementations, it is often the case that performance drops below existing and projected levels until the application "works as expected."

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

C. Buffer A process buffer consists of raw materials, components, or subassemblies that are waiting to be used in production when the demand-pull occurs.

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. Available-to-promise B. Make-to-order C. Capable-to-promise D. Engineer-to-order

C. Capable-to-promise Capable-to-promise uses 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.

Which is a benefit related to service design? A. Services can be designed independently from related product design. B. Services can be patented or copyrighted. C. Changing or customizing a service can be rapid and inexpensive. D. Service design can prioritize cost minimization since services have minimal impact on customer satisfaction.

C. Changing or customizing a service can be rapid and inexpensive. Unlike products, it is difficult to protect services from imitation since they typically cannot be copyrighted, though a process or related products might be patented or copyrighted. On the plus side, a service can be easily changed or customized very quickly and with very little expense, especially in the case of basic services. Services strongly impact customer satisfaction, and service design is inseparable from related product design.

An organization is forming a strategic partnership with three other organizations in its supply chain. They all use different enterprise resources planning (ERP) systems, some of which are overdue for upgrade or replacement. What solution could help them get real-time visibility into demand or supply issues very quickly? A. Agreement to adopt the partner ERP system that is most in need of an upgrade B. Data analytics C. Cloud computing D. Agreement to adopt the partner ERP system that is most up to date

C. Cloud computing Cloud computing is the only option that could be completed very quickly. With cloud computing, supply chain partners could easily sign up for the same service and participate to gain real-time visibility into demand or supply issues.

A medium-sized make-to-order manufacturing company has three operating divisions and four locations, with three plants in one country and one plant in another country. The second largest division is a recent acquisition. There are three different software packages in use at the plants, and each plant has its own way of operating its business. The overall costs per transaction for the company are the highest in its industry. Senior management has decided that the plants should standardize on one software package and one approach to all major business processes to achieve some economies of scale. A new software package is selected and a project leader is named. The new project leader has assembled a team to perform the implementation. For the change to be effective, what should senior management do first? A. Build the project team from key members of each division. B. Send out a memo to the plant managers explaining the decision. C. Create a sense of urgency among the company's leaders. D. Create a vision statement about this new strategy.

C. Create a sense of urgency among the company's leaders. Senior managers should start the project by communicating a sense of urgency and the importance of the new implementation project to the project team and the company as a whole.

Which of the following sequences of steps is preferred to help identify the root cause of a production problem? A. Identify specific potential causes; prioritize the causes; establish cause categories; describe the problem. B. Establish cause categories; describe the problem; prioritize the causes; identify specific potential causes. C. Describe the problem; establish cause categories; identify specific potential causes; prioritize the causes. D. Describe the problem; identify specific potential causes; establish cause categories; prioritize the causes.

C. Describe the problem; establish cause categories; identify specific potential causes; prioritize the causes. The sequence begins with problem description, moves to establishing the causes, then specific causes are identified, and finally the causes are prioritized.

Master planning of resources for a company that manufactures a wide variety of products using batch production would typically include which of the following? A. Providing standard product lead times to customers B. Providing the material required to meet customer demand C. Determining the level of capacity needed to meet market requirements D. Scheduling operations to meet production requirements

C. Determining the level of capacity needed to meet market requirements Master planning of resources matches manufacturing plans and capacity.

Which of the following actions is part of the pre-sales and operations planning meeting? A. Ensuring that all aspects of demand are determined B. Reviewing business performance C. Developing an updated financial view of the business D. Identifying spending changes for production

C. Developing an updated financial view of the business Updating the financial view of the business is an important output of the pre-sales and operations planning process.

The purposes of a modular bill of material include which of the following? A. Translating the sales and operations plan to the master production schedule B. Providing for easier material requirements planning processing C. Facilitating forecasting D. Minimizing inventory for unique components

C. Facilitating forecasting A modular bill of material is a type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features.

At the close of a project to design a new process for operations, an important unit manager refuses to cooperate in implementing the process. What is the most likely cause for this problem? A. Insufficient budget to meet all stakeholder needs B. A personality conflict with the project manager C. Failure to engage the unit manager earlier in the process D. Poor quality in the new process

C. Failure to engage the unit manager earlier in the process The most likely problem when a customer rejects a deliverable is that this critical stakeholder was not involved early in the project and engaged throughout the project. The other choices are all possible but would have appeared and been addressed earlier.

Using phantom bills of material (BOMs) will result in which of the following? A. Fewer work orders and smaller lot sizes B. Simpler product structures and smaller lot sizes C. Fewer inventory transactions and work orders D. Fewer inventory transactions and smaller lot sizes

C. Fewer inventory transactions and work orders A phantom BOM will not have any work orders because the requirements will pass straight through the parent item to the components. Since there are no work orders, the number of transactions will be less.

Which inventory transaction type is most likely found in an environment that produces to a forecast as opposed to an environment that produces to a customer order? A. Raw materials B. Work in process C. Finished goods D. Service parts

C. Finished goods. Make-to-stock environments must receive, issue, and adjust finished goods inventory that has been produced mainly to a forecast.

There is available inventory of 100 units of a component. There are five parent orders that each require 100 of the component, for a total requirement of 500 units. The five end items are being produced to a forecast, and no actual demand is known. Which of the following actions is the planner most likely to do? A. Release one of the parent orders on the scheduled date and hold the others. B. Wait and see which parent is the first to stock out and release that parent. C. Firm the planned orders of the parents for 20 each and release all five. D. Expedite the component and release the five orders on their scheduled release dates.

C. Firm the planned orders of the parents for 20 each and release all five. The planner will allocate the available inventory so as to produce some of each parent.

Which of the following statements is true of forecast demand in the master production schedule as it relates to material requirements planning? A. Forecast demand is ignored within the cumulative lead time. B. Forecast demand is ignored beyond the cumulative lead time. C. Forecast demand is treated like any other gross demand. D. Forecast demand is treated like safety stock replenishment.

C. Forecast demand is treated like any other gross demand. Demand is demand, no matter what the source.

A manufacturing system is characterized by the emergence of standard designs, price competition, and the importance of process development. It is in which of the following stages of the life cycle? A. Maturity B. Decline C. Growth D. Introduction

C. Growth. The emergence of standards, price competition, and growing importance of process development describe a product that has moved past the introduction stage but as yet has not reached the level of standardization of the maturity stage.

A make-to-order company is ready to introduce a new product family that has many of the criteria the market is demanding. Which of the following production strategies is most applicable for the introduction phase of the new product family? A. Chase B. Level C. Hybrid D. Ramp-up

C. Hybrid Demand is unknown, but the company believes that sales will be good. Some inventory buildup enables the company to be somewhat flexible for the actual timing and quantity of demand.

As an organization becomes more horizontal, which of the following will occur? A. Decreasing exposure to integration and culture risk B. Neutral risk, because many suppliers provide the same components C. Increased exposure to supplier risk D. Need to expand the supplier base with redundant suppliers to reduce overall risks to supply chain performance

C. Increased exposure to supplier risk Increased reliance on suppliers in the supply chain increases exposure to supplier risk. Also, if the horizontal integration involves entering new global markets, this may increase risks related to cultural differences. If the horizontal integration requires new business partnerships, mergers, etc., this will increase integration risk. However, horizontal integration can increase diversification, which reduces overall business risk.

Which of the following statements about pyramid forecasting is most accurate? A. It strives to overcome the instability of aggregate forecasts. B. It disaggregates item demand to project demand for a product family. C. It enables senior management to influence the aggregate forecast. D. It facilitates management review of item-level forecasts.

C. It enables senior management to influence the aggregate forecast. Pyramid forecasting enables senior management to coordinate and integrate the forecast and ensure consistency between the forecast and any company constraints or goals.

Which of the following is true of an aggregate forecast of a group of items? A. It is of little value when stock keeping unit (SKU) forecasts are available. B. It may be divided by the number of SKUs to establish the SKU forecasts. C. It is usually a better forecast than the SKUs forecasted individually. D. It is used to establish the economic order quantity.

C. It is usually a better forecast than the SKUs forecasted individually. Forecasting product families is easier than forecasting individual items.

A standard cost accounting system is often tied directly to the routing and dispatching systems as well as the product structure. Which of the following cost measures are determined from this data? A. Overhead costs and job costs B. Overhead costs and standard variances C. Job costs and standard variances D. Overhead costs, job costs, and standard variances

C. Job costs and standard variances When a production order is created and produced, operators will report direct labor and materials for the order. Accounting is able to view all costs accumulated to the job and to contrast them with costing standards to determine variances. Overheads are normally reported indirectly as a percentage of labor reported and are not impacted by routing and dispatching systems.

An infinite capacity planning report would typically show what type of load profile? A. Load based on demonstrated available capacity B. Load based on rated capacity C. Load based on planned and existing manufacturing orders D. Load based on maximum available capacity

C. Load based on planned and existing manufacturing orders Infinite capacity planning uses planned and firm planned orders as well as the uncompleted operations of scheduled receipt to calculate load requirements, without regard to any kind of available capacity.

The design of a manufacturing process for high production volumes would likely facilitate which two of the following outcomes? A. High frequency of new product introduction and low level of finished goods inventory B. High frequency of new product introduction and low process flexibility except for options C. Low level of work-in-process inventory and low level of finished goods inventory D. Low level of work-in-process inventory and low process flexibility except for options

C. Low level of work-in-process inventory and low level of finished goods inventory Processes with a high volume of output will have a high degree of repeatability and specialization and a narrow variety of finished goods. Work-in-process and finished goods inventories will be low because of the high volume.

Which of the following is a primary advantage of material requirements planning (MRP) over use of the reorder point for determining replenishment order timing in a make-to-order environment? A. MRP does not need to account for safety stock. B. MRP uses only actual requirements for order timing. C. MRP uses time phasing to balance requirements against supply. D. MRP can plan both independent and dependent demand.

C. MRP uses time phasing to balance requirements against supply. MRP balances demand against supply; the reorder point replenishes inventory based on a projection of demand.

In which environment is the demand management function least likely to provide customers with promise dates? A. Engineer-to-order B. Assemble-to-order C. Make-to-stock D. Make-to-order

C. Make-to-stock In a make-to-stock environment, customers buy directly from the available inventory, so customer service is determined by whether the item is in stock or not.

Which is a market strategic driver with strong potential to result in changes to the attributes of an existing product? A. Observation of a new competitor product that addresses target customer segment needs in an entirely new way B. Inquiry into supplier costs that indicates a different process could result in an identical supplied component at a lower cost C. Observation of a customer configuring the product in an undocumented way that improves performance in high winds D. Inquiry into customer satisfaction levels that indicates customers are highly satisfied with the product in normal wind conditions

C. Observation of a customer configuring the product in an undocumented way that improves performance in high winds Strategic drivers influence business unit and manufacturing strategies. Market research can use observation, such as observation of customer product use in relevant conditions. In this case, the product is capable of being improved for use in windy conditions. Product development could test out these changes, and, if they are valid, the product attributes could be changed in simple ways. For example, this could involve adding the relevant instructions to the user manual and adding visual guides to the product to ensure correct reconfiguration for windy conditions. A competitor product that approaches customer needs in entirely new ways could result in the need for a new product rather than a change to existing product attributes (assuming no other existing products could serve as a viable substitute and the new approach is determined to be needed).

Which of the following would be least useful in determining the sales and operations planning time horizon? A. Cumulative lead time B. Capacity acquisition lead time C. Order backlog D. Business plan

C. Order backlog The order backlog provides the data relating to orders that have been booked by the company.

What kinds of items are supplier partnerships most compatible with? A. Supplies targeted for cost reduction B. Items with low supply risk and profit impact C. Strategic purchases with high supply risk D. Components connected directly with profitability

C. Strategic purchases with high supply risk Supplier partnerships especially are important for ensuring adequate supply when items are critical to profitability and at risk for supply, potentially because of a low number of suppliers or competition for limited supplies.

A production plan has established 1,000 units in a period for a stocked product family. Specific percentages for end items are not known with certainty. Which of the following alternatives should the master schedule ignore when translating the product family into specific master production schedule quantities? A. Use a modular bill of material and overplan the options to provide for some uncertainty. B. Make an estimate of the number of actual end items to produce based on history. C. Overplan the end items based on historical deviations to provide for some uncertainty. D. Use a super bill of material to overplan the percentages in a two-level master production schedule.

C. Overplan the end items based on historical deviations to provide for some uncertainty. The end item quantities should not be overplanned, as they must equal the quantity in the production plan.

Which of the following is an activity associated with sort, one of the five Ss? A. Identify the relative location of machines, tools, and equipment in a work cell that minimizes motion during production. B. Review the opportunities for improving machine reliability and rank them. C. Place red tags on items that should be taken to a red tag storage location. D. Identify and place appropriate cleaning materials near workstations.

C. Place red tags on items that should be taken to a red tag storage location. Red tags mean that an item is not needed in the workplace and needs to be sorted out and taken to a storage area or disposed of, so this is an example of sort (seiri). To identify the relative location of machines, tools, and equipment in a work cell that minimizes motion during production is descriptive of simplify (seiton) because it involves setting things in order. To identify and place appropriate cleaning materials near workstations is descriptive of scrub (seiso). To review the opportunities for improving machine reliability and rank them is incorrect because improving machine reliability also is a scrub activity (keeping things in a condition so they are ready to be used when needed).

Which of the following planning tools would most likely drive the process in a manufacturing environment using a push system? A. Reorder point control B. Lean-based production methods C. Production activity control based on material requirements planning (MRP) D. Inventory management based on distribution requirements planning (DRP)

C. Production activity control based on material requirements planning (MRP) In a production environment, MRP is used to identify production and then to push production orders to the plant floor and to continuously reschedule them until completion.

During the material requirements planning process, what is the key purpose of the BOM? A. Provide a structure to guide netting B. Generate a pick list of components needed for an item C. Provide a structure to guide the explosion D. Describe assembly details

C. Provide a structure to guide the explosion The key purpose of a bill of materials is to provide a structure to guide the explosion. The BOM may form a pick list of components needed for an item, but not during the MRP process. The BOM does not guide netting. The BOM describes the material structure of an item, but gives few details about its assembly.

Which of the following is the most appropriate output of master planning of resources for a firm that produces to forecast using production lines? A. Schedule of orders over time for each line B. Projected backlog for each product family C. Required production rate for each line D. Capacity required for each work center

C. Required production rate for each line A production line is a series of pieces of equipment dedicated to the manufacture of a specific number of products or families. For this system, production rates for execution are appropriate outputs.

Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels? A. Master scheduling and MRP B. Strategic planning and MRP C. S&OP and master scheduling D. Business planning and MRP

C. S&OP and master scheduling Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late, respectively, to plan distribution logistics at the product family or end-item level. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.

In an annual new product planning activity, using forecasts of product groups by dollars is often regarded as step two, with step one being a competitive: A. competence assessment. B. merger policy. C. SWOT analysis. D. reverse engineering activity.

C. SWOT analysis. A SWOT analysis looks at the strengths, weaknesses, opportunities, and threats of and to an organization. SWOT analysis is useful in developing strategy. It is important to recognize what a company's strengths and weaknesses are in terms of a new product.

What are the four concerns of sales and operations planning (S&OP)? A. Demand, supply, forecast, inventory B. Volume, mix, money, sales C. Sales, production, inventory, money D. Volume, mix, demand, supply

C. Sales, production, inventory, money The four concerns of S&OP are sales, production, inventory, and money.

Which of the following aspects of a job most determines the day and time when the job will be done? A. Availability B. Queue C. Sequence D. Priority

C. Sequence Sequence determines in what order jobs are done.

Production material is issued upon release of an order, and costs are accumulated by department for a customer order based on direct material, direct labor, and allocated overhead. What would direct cost include? A. Tool sharpening as required for released orders B. Floor stock materials included on the bill of material C. Sheet metal layout in the shearing operation D. Direct sales by the sales and service departments

C. Sheet metal layout in the shearing operation Layout is part of internal setup, so it would be a direct labor cost. The others are all part of allocated overhead.

A cash register manufacturer and distributor has a network of dealers. The dealers have been returning too many units for insufficient cause despite the organization having a return policy. What can be done to enforce the policy while ensuring good customer service? A. Start using a supplier relationship management (SRM) form. B. Start implementing a waste hierarchy policy and welcome higher returns. C. Start requiring a return material authorization (RMA) form. D. Start implementing a warranty policy and accept only warranty returns.

C. Start requiring a return material authorization (RMA) form. An RMA is an official request to return products that needs to be approved by a responsible party. It will enable the organization to better enforce its existing return policy.

Capacity requirements planning has been used to check the validity of the material plan, and no constraining work centers have been identified. Which of the following is most likely the reason? A. The production operations are balanced and have no individual bottlenecks. B. Capacity requirements planning used infinite capacity rather than finite loading. C. The available capacity is greater than that required by the volume and mix. D. The capacity check did not include the various constraining work centers.

C. The available capacity is greater than that required by the volume and mix. The only scenario that is known is that there is enough available capacity. Individual operations within a work center may still have bottlenecks.

An organization uses absorption costing and assigns overhead to products based on their direct materials costs. In quarter 1, direct materials cost for one family of products was $2,000,000 in total and fixed costs were $400,000. In quarter 2, fixed costs for the family of products remained the same but the materials manager reduced direct materials cost by 20% without altering total unit production. In the first quarter, the total direct materials cost was $4,000,000 for the family of products. In the second quarter, it was $3,600,000. Unit sales in both quarters for the family of products was 10,000 units. Which of the following best summarizes the impact of reducing these materials costs? A. The change increases the fixed overhead rate and the total unit cost. B. The change decreases the fixed overhead rate and the total unit cost. C. The change increases the fixed overhead rate, but the total unit cost is reduced. D. The change decreases the fixed overhead rate, but the total unit cost is increased.

C. The change increases the fixed overhead rate, but the total unit cost is reduced. In absorption costing, fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or materials costs. In this case, the organization uses direct materials costs. The calculations are as follows: The fixed overhead rate is calculated by dividing the fixed overhead by the direct materials costs. In quarter 1, this was $400,000/$2,000,000 = 0.20. Reducing the direct materials costs by 20% would be a reduction of $400,000, resulting in $1,600,000 in direct materials costs. The quarter 2 fixed overhead rate is $400,000/$1,600,000 = 0.25. In quarter 1: ($4,000,000 x 0.2)/10,000 units = $80 unit fixed overhead. Unit direct cost is $4,000,000/10,000 = $400. The quarter 1 total is $480 per unit. In quarter 2: ($3,600,000 x 0.25)/10,000 = $90 unit fixed overhead. Unit direct cost is $3,600,000/10,000 = $360 per unit. The quarter 2 total is $450 per unit. Therefore, while the material cost reduction increased the fixed overhead rate (and the unit fixed overhead amount), the total unit cost went down.

Which of the following is most correct regarding the production plan in a make-to-stock environment? A. Past-due load in the production plan receives an increased priority by the planner's use of the critical ratio technique. B. An overloaded production plan alerts the master scheduler to correct the condition in the master production schedule. C. The production plan is the time-phased plan of overall output, and it may be stated in terms of units, tons, or linear feet. D. A production plan cannot be used for one-of-a-kind products that have not been assigned to a product family.

C. The production plan is the time-phased plan of overall output, and it may be stated in terms of units, tons, or linear feet. The production plan is the time-phased plan of overall output.

What is a "red flag" that a sales trend projection may need to be revised rather than accepted as is? A. The trend has historically been subject to a small amount of error. B. The economic market has continued to be in a recession. C. The projection is for a month, and supply lead time just dropped from four to three weeks. D. The projection was recently changed from individual item trends to a product family trend.

C. The projection is for a month, and supply lead time just dropped from four to three weeks. Finding ways to shorten supply and manufacturing lead times enables forecasts to be created for shorter periods. Shorter lead times enable suppliers to rely more on customer orders than on forecast demand. Other reasons to revise a forecast include when underlying factors change, but this did not occur in the incorrect answer choices. Even the move from individual item to product family forecasting has already occurred, and doing so will only improve this forecast

A company is considering the adoption of a highly automated form of manufacturing technology that will have a major impact on its production process. Which of the following situations will most likely cause the longest delay in the implementation of this new technology? A. The company has too few skilled technicians and experienced implementers of this type of new technology. B. The proposed changes will cause a mismatch between products and processes. C. The technology conflicts with the company's capabilities and culture. D. The necessary support and maintenance systems do not currently exist and must be developed.

C. The technology conflicts with the company's capabilities and culture. All four of the possible answers may hinder the speedy implementation of a complex technology. Maintenance systems, products and processes, and new people skills will all be needed to implement the new technology, and the less the company has of each, the longer it will take to fully implement the new technology. However, technology conflict with the company's existing capabilities and culture will most likely cause the longest delay, because this has to do with changing the people side of the organization.

What is the relationship between the number of weeks in the backlog and the number of weeks in the master scheduling demand time fence? A. They are equal. B. Backlog weeks are greater. C. There is no correlation. D. There is a direct correlation.

C. There is no correlation. The demand time fence indicates when production schedules should be firmed, so there is no correlation with backlog.

Neither an organization nor its suppliers have much public awareness or exposure due to the nature of the industry. What is a reason this organization may want to set waste hierarchy policies for its suppliers? A. To build public awareness for the industry and the organization B. To avoid being held liable for suppliers' waste hierarchy choices C. To drive unnecessary costs out of the supply chain D. To avoid being held responsible for suppliers' sustainability choices

C. To drive unnecessary costs out of the supply chain Waste hierarchy policies help organizations and their suppliers be more efficient and drive unnecessary costs out of the supply chain. While avoiding being held responsible for a supplier's sustainability choices is also a good answer, it is less important to this organization since it has no public awareness and likely does not need any to continue operating due to the nature of the industry. A buyer cannot be held legally liable for the actions of a separate legal entity.

How is the time-phased load by operation for capacity requirements planning (CRP) calculated? A. Using actual setup and run times B. Using average setup and run times C. Using standard setup and run times D. Using setup and run times calculated by material requirements planning

C. Using standard setup and run times CRP uses the run and setup times within the standard routings to determine the load on each work center.

Which of the following would typically be considered a strategic use of the conclusions from a SWOT analysis? A. Using the threats as a tool to motivate employees B. Developing promotional material to emphasize the strengths C. Using strengths to limit the impact of external threats D. Sharing the four lists with all employees

C. Using strengths to limit the impact of external threats A SWOT analysis is used to develop strategies by analyzing an organization's internal strengths and weaknesses and external threats and opportunities. Part of the analysis includes using strengths to offset threats.

During MRP record balancing, if no safety stock is specified, when is the first net requirement triggered? A. When projected available first becomes zero B. When projected available is less than the gross requirements for the next period C. When projected available first becomes negative D. When projected available is less than the lot size

C. When projected available first becomes negative The first net requirement is triggered during MRP record balancing when projected available first becomes negative. The other answers are incorrect because carrying no inventory until there is an item needed is a major advantage of MRP; because MRP generates the net requirement in the next period; and because lot size has no relation to net requirement calculation.

What is a key up-front question concerning the viability of a process technology investment? A. How will the new system improve profitability? B. Is it cloud-based or client-server-based or both? C. Will it shorten the time between when a customer makes a request and when the product is delivered? D. What is the expected return on investment?

C. Will it shorten the time between when a customer makes a request and when the product is delivered? When evaluating the acceptability of a process technology investment, a key question is whether it will shorten the time between when a customer makes a request and when the order is confirmed or the product is delivered.

What does the work breakdown structure show? A. Project schedule B. Task assignments C. Work to be done D. Contingency funding

C. Work to be done The work breakdown structure should identify and organize the work that is required to produce the project deliverables. Task assignments is incorrect because the WBS does not show assignments, although it may provide references for the work being assigned. Pproject schedule cannot be addressed until the required work is identified. C ontingency funding would be included in the project budget but not the work breakdown structure.

Which factor has the least impact on the choice of process technology? A. Level of automation required B. Volume and variety of products C. Worker skills D. Scale and scalability

C. Worker skills Worker skills might have some effect on the choice but are not as important as the other factors. Of the choices offered, volume and variety are perhaps the most important factors. For example, very high volumes usually require higher levels of automation, and decisions about scale reflect performance objectives choices with respect to flexibility and cost—as in whether to have large-scale centralized operations or small-scale decentralized operations.

Which of the following actions would result in shorter purchasing lead times? A. Using premium transportation methods B. Using alternate suppliers C. Working with suppliers to reduce lot sizes D. Increasing the planning horizon

C. Working with suppliers to reduce lot sizes Similar to manufacturing lot sizes, smaller lot sizes require less run time and so result in faster delivery.

A company reporting on its environmental activities and results makes sustainability an issue most important to its: A. regulators. B. employees. C. competitors. D. suppliers.

C. competitors. Successful green initiatives can be used as a competitive weapon.

When outsourcing products or processes, a critical first step for all involved is identification of the company's: A. strategic plan. B. existing capacity strategy. C. core competencies. D. patents.

C. core competencies. Core competencies are the skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth.

Some companies have created electronic scorecards to gather statistics on topics such as inventory, sales, costs, and forecasts. This is often referred to as a: A. enterprise resources planning (ERP) system. B. wide area network (WAN). C. decision support system (DSS). D. information technology strategy.

C. decision support system (DSS). A DSS assists managers in selecting and evaluating courses of action by providing a logical, usually quantitative, analysis of the relevant factors.

A company has both functional/low variety products and innovative/high variety products. The distribution deployment should include: A. shipping products to customers in the same manner as the competition. B. shipping products from regionally positioned distribution warehouses. C. different strategies for the two different types of products. D. shipping all products consistently.

C. different strategies for the two different types of products. When deciding how to distribute product to customers, operations should deploy different strategies for functional/low variety products and innovative/high variety products.

The production forecast A. represents the product family forecast in two-level master scheduling. B. is based on production lead times. C. forecasts the family ATP multiplied by option percentages. D. is primarily used with master production scheduled items.

C. forecasts the family ATP multiplied by option percentages. The production forecast is used with two-level master scheduling and represents the ATP (MPS minus customer orders) at the family level multiplied by the option percentage. The other answers are incorrect because the production forecast is used with a subset of master-scheduled items only; the production forecast does not represent the product family forecast; and the production forecast is not based on production lead times.

Using simulation in manufacturing is most beneficial for: A. improving data collection. B. prototyping new technology. C. identifying potential continuous improvement areas. D. training new employees.

C. identifying potential continuous improvement areas. Simulating alternate processes can identify areas where improvements can be made.

Arranging for some suppliers to replenish frequently in small lots is a likely outcome from a task created to: A. facilitate postponement. B. improve customer service. C. improve supply chain efficiency. D. improve the quality of the end item.

C. improve supply chain efficiency. Improving supply chain efficiency includes partnering with suppliers to streamline the ordering and purchasing process to reduce inventory carrying costs via lean inventory practices.

A company is considering outsourcing one of its patented technologically advanced processes. Top on the list of concerns should be the fact that some countries do not always enforce laws on: A. labor. B. facility safety. C. intellectual property. D. hazardous material handling and training.

C. intellectual property. Intellectual property includes various legal entitlements to certain names, written and recorded media, and inventions. Outsourcing can put a company's proprietary technology at risk.

In a push environment, operators produce panels consisting of electrical components wired together. A supervisor is most likely to maintain a queue at the assembly work center to: A. keep equipment productive. B. maintain a high efficiency level. C. keep personnel fully occupied. D. maintain an on-time schedule.

C. keep personnel fully occupied. In a push system, keeping personnel fully occupied is of primary importance to supervisors.

Storage considerations related to inventory accuracy are most likely to include: A. use of bar codes for location identification. B. allowance for first in, first out usage. C. locked storage for high-value pilferable items. D. use of a temperature-controlled environment.

C. locked storage for high-value pilferable items. Locked storage allows for limited access.

A production leveling strategy refers to: A. producing a minimum level and matching demand through subcontracting. B. matching demand at any given time. C. producing to average levels. D. matching demand somewhat and using inventory to meet demand.

C. producing to average levels. A level production method maintains a stable production rate while varying inventory levels to meet demand.

A small group of people who normally work as a unit and who meet frequently to uncover and solve problems concerning the quality of items produced, process capability, or process control is most likely called a A. cross-functional team. B. self-directed work team. C. quality circle. D. business process quality team.

C. quality circle. A quality circle, also called a kaizen circle or a workforce team, is a small group of people who normally work as a unit and who meet frequently to uncover and solve problems concerning the quality of items produced, process capability, or process control. Quality circle members typically select the problems and are given training in problem-solving techniques. The other answers are incorrect because a cross-functional team includes members from different departments; business process quality teams are cross-functional teams that improve the quality of cross-functional processes; and self-directed work teams are permanent teams that have operational responsibilities and a much higher level of autonomy than quality circles.

A lot undergoing acceptance sampling inspection is most likely accepted because: A. the sample shows a quality issue but there is a need for the parts in production. B. no part variability outside of three standard deviations is detected. C. the sample conforms to the sampling plan with respect to defects. D. the sample measured values can be statistically compared to nominal values.

C. the sample conforms to the sampling plan with respect to defects. The sampling plan identifies the criteria for acceptance and rejection.

A company is going to begin an aggressive sales promotion for a new make-to-stock product line that will affect most work centers. Capacity requirements planning (CRP) can best be used to determine: A. the number of units that can be made. B. whether material storage can handle the expected volume C. the timing and impact of the forecasted load. D. whether the company is capable of meeting the forecast

C. the timing and impact of the forecasted load. CRP will help determine when the inventory buildup will have to start to prepare for the sales promotion.

When allocated on the basis of historical direct labor hours, overhead will be properly absorbed if: A. total volume increases. B. total volume decreases. C. total volume remains unchanged. D. fixed costs decrease.

C. total volume remains unchanged. If production volume remains stable, then the standard overhead that was originally calculated will also remain stable.

Which of the following cost accounting methods identifies profitable products based on cost drivers? A. Value-added B. Standard activity C. Actual market D. Activity-based

D. Activity-based Activity-based costing is a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products.

An organization wants all of its continuous improvement projects to be focused on a general theme of improving operations efficiency so no new hires need to be made. What new tool of quality would be the best way of ensuring that several small teams can each focus on a category of this theme without significant overlap between the teams? A. Relationship diagram B. Activity network diagram C. Matrix diagram D. Affinity diagram

D. Affinity diagram An affinity diagram is a tool for organizing a large number of brainstormed ideas. Participants in the brainstorming session provide anonymous ideas and suggestions. The ideas are posted, and the team determines how to group them by category. Each category could then be used as the focus area for each small continuous improvement team.

Which of the following are training subject areas for managers who will use a new enterprise resources planning (ERP) system? A. ERP principles and techniques B. Change in the behavior of the organization C. Application of the system to business problems D. All of the above

D. All of the above ERP project leaders must be fully conversant in ERP principles and techniques, be effective as change managers to overcome personnel and corporate culture issues, and be able to apply the ERP functionality to solve business problems.

Which of the following tools typically relies on a facilitator to ensure that all team members have a chance to contribute? A. Pareto chart B. Force-field analysis C. Affinity diagram D. Brainstorming

D. Brainstorming Brainstorming is a technique that teams use to generate ideas on a particular subject. Each person on the team is asked to think creatively and write down as many ideas as possible.

In an assemble-to-order environment, how can the execution and control function help ensure a valid material plan? A. By maintaining bottleneck flexibility through utilizations of at least 85% B. By providing accurate efficiency and utilization factors for work centers C. By identifying alternate routings if the primary routing is unavailable D. By achieving on-time start and completion dates for production orders

D. By achieving on-time start and completion dates for production orders In any environment, achieving start and completion dates best supports the material plan.

Managing consignment inventory is an essential function of which of the following processes? A. Forecasting B. Capacity management C. Master scheduling D. Demand management

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

What information can the tracking signal provide that the mean absolute deviation (MAD) and the mean squared error (MSE) cannot? A. Magnitude of the errors B. Full confidence in the forecast when the results are within tolerances C. Dispersion of data or of a variable D. Direction of any bias

D. Direction of any bias The tracking signal—the sum of the forecast deviations (not absolute) divided by the MAD—shows the direction of the bias if it is present. MAD uses absolute deviations, and MSE squares the deviations, effectively making them absolute. Therefore, neither of these methods can indicate whether the errors were overall higher or lower than the actual result on average (the bias).

Which of the following is true of the differences between inventory turns or costs in a distribution center (DC) versus for the manufacturer of the goods? A. Distribution environments tend to have higher turns because inventory remains in stock for only a short time compared to that for a manufacturer. B. Manufacturers typically approximate work-in-process value, so inventory turns tend to be more accurate in a distribution environment. C. The distribution environment has a higher cost of goods sold than does the manufacturer for the same finished goods. D. Distribution environments tend to have lower turns because they don't carry any raw material inventory.

D. Distribution environments tend to have lower turns because they don't carry any raw material inventory. Distribution cost of goods sold includes the cost to buy or transfer the goods from the warehouse as well as the additional material-handling costs. DCs carry inventory longer as it is based on a forecast; the manufacturer would ship directly to the DC based on demand.

What is a good method for mitigating an out-of-control internal manufacturing process? A. Hiring a public relations consultant B. Using the supplier of the raw materials as the temporary scapegoat C. Hiring more quality personnel D. Fact finding, educating, empowering, observing, adjusting, and repeating

D. Fact finding, educating, empowering, observing, adjusting, and repeating This method is illustrated in the example of a paper supplier. A major multinational customer reported to the paper supplier that their ink-jet paper product was curling (failing) under conditions of low humidity. A year later the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor. Then the major customer produced statistical proof that the supplier's process was out of control. This is a variation on the theme of plan, do, check, action.

What are the two different types of performance targets that should be used to achieve organizational stretch objectives? A. Operational and personal B. Strategic and tactical C. Tactical and financial D. Financial and strategic

D. Financial and strategic To achieve organizational stretch objectives, a company must develop two types of performance targets: financial and strategic.

Which of the following elements is used to reduce system nervousness? A. Economic order quantity B. Safety stock C. Planned orders D. Firm planned orders

D. Firm planned orders Firming planned orders allows the planner to make decisions on whether small changes are important enough to react to as well as locking in order quantities and dates for various reasons.

A retailer sells seasonal items in addition to its year-round product lines. Three distribution centers service the stores. Seasonal items are not ordered by the stores but are distributed based on the percentage of the business the store typically averages. Which of the following safety stock techniques is most appropriate for these items? A. Percentage B. Statistical C. Time period D. Fixed

D. Fixed Safety stock should be fixed at zero, since these items are not regularly stocked.

What issue is often overlooked when an organization eliminates a product line? A. If production is labor-paced, employee displacement may be necessary. B. Inventories may become out of balance. C. Some customers may continue to want the old product. D. Fixed costs continue, increasing costs for the remaining product lines.

D. Fixed costs continue, increasing costs for the remaining product lines. Caution must be exercised when considering dropping a product line from the production facility, primarily because the amount of common fixed costs typically continues even when a product line is dropped, thus causing a cost increase for remaining products .

Pegging shows sources of which of the following? A. Firm planned orders B. Component lists C. Scheduled receipts D. Gross requirements

D. Gross requirements Pegging is the capability to identify, for a given item, the sources of its gross requirements.

Design for manufacturability should result in which of the following? A. Delayed market introductions B. Reduced training needs C. Reduced product features D. Improved product quality

D. Improved product quality Design for manufacturability is focused on enabling a product to be easily and cost-effectively produced at the highest quality.

Engineering has suggested that a company's products would provide more value to customers if the products were capable of identifying and automatically reporting problems to service and repair associates. What would be the most likely effect of this strategy? A. Enhancing the product's order-qualifying features B. Facilitating a move to higher selling prices C. More frequent on-site service, thus increasing costs overall D. Increasing customer uptime, reducing customer repair costs

D. Increasing customer uptime, reducing customer repair costs An elevator company has diagnostic capabilities built into each system so that a worldwide 24-hour remote electronic monitoring system can detect any one of 325 problems with an elevator or escalator installed at a customer's site. After notification, the system can analyze and diagnose the problem. It then may make the call to a company service person at the nearest location and assists the mechanic in identification of the part(s) in question. This system helps keep outage times to less than three hours. Design is in the loop too, so that they can assess and update as necessary for recurring problems (continuous improvement). Customers also have access to the performance history of each of their elevators and escalators.

In which of the following stages of a product's life cycle is a product-focused manufacturing organization most appropriate? A. Introduction and maturity B. Maturity and decline C. Growth and maturity D. Introduction and decline

D. Introduction and decline A product-focused approach occurs mostly at the introduction and decline stages of the product life cycle. In the introduction stage, the product is new and will often require fixes as well as the addition of new features and options overlooked during product design. In the decline stage, the company will often try to revive sales by revamping the product or adding new features and options. In contrast, products in the growth and maturity stages have minimal, if any, changes to product structures. The focus is squarely on marketing and sales issues.

The use of bar-code technology in a manufacturing environment typically will have the least effect in which of the following areas? A. Distribution productivity B. Work-in-process accuracy C. Data entry efficiency D. Inventory turns

D. Inventory turns Inventory turns is a macro performance measurement that details the number of times that an inventory cycles, or "turns over," during the year. A bar-code technology will have the least impact on inventory turns. In contrast, as inventory records become more accurate, productivity, WIP accuracy, and data entry efficiency are greatly improved.

What effect does a write-off of inventory have on a company's profit and loss statement? A. It decreases current assets. B. It decreases the cost of goods sold. C. It decreases the sales value. D. It decreases net earnings.

D. It decreases net earnings. Writing off inventory increases operating expenses, which decreases gross profit and therefore net earnings. It also decreases assets, but we see this in the balance sheet, not in the profit and loss statement.

When companies diversify by moving into related markets and leverage similarities while avoiding the expense of maintaining duplicate resources, what will be the likely result for the diversified company? A. It will be completely assimilated into the acquiring company. B. It will be spun off as a separate entity. C. It will backward-integrate with its key suppliers. D. It will perform better financially.

D. It will perform better financially. Diversifying into related businesses where competitively valuable strategic-fit benefits can be captured puts a company's business in a position to perform better financially due to economies of scale gained from various shared services.

Which of the following inventory accounting methods will minimize inventory valuation at the end of a period of unexpected increasing costs and stable on-hand inventory balances? A. Standard cost B. Double-declining balance C. First in, first out (FIFO) D. Last in, first out (LIFO)

D. Last in, first out (LIFO) LIFO raises the inventory valuation at the end of the period because the lower-cost item (last in) is sold first (first out).

Which of the following cost methods causes inventory valuation to decrease when costs increase? A. Actual B. Average C. First in, first out (FIFO) D. Last in, first out (LIFO)

D. Last in, first out (LIFO) The LIFO method causes inventory valuation to decrease when costs increase. All the others would cause inventory valuation to increase when costs increase.

A company sells a broad range of herbs and spices for health and cooking. The weekly order to the distribution center replenishes the individual items sold each week due to lack of storage capacity. The order may be modified by the store based on upcoming sales promotions or seasonality. Which of the following measures of customer service is of most value to the store? A. Order cycle time B. On-time shipment C. Correct items shipped D. Line items shipped complete

D. Line items shipped complete While the correct items are shipped, the quantities may be incomplete. The order may arrive on time but not have the proper items or quantities.

A component has three qualified suppliers, but none has been designated as the primary supplier. Which of the following lead times should be used by material requirements planning in order to ensure delivery reliability? A. Average B. Historical C. Shortest D. Longest

D. Longest The longest lead time ensures that sufficient lead time is provided if that supplier is selected. If one of the other suppliers is selected, they receive an order and additional lead time for delivery.

Which of the following situations is a result of anticipation inventory? A. Higher required capacity B. Lower inventory carrying costs C. Higher subcontracting costs D. Lower overtime costs

D. Lower overtime costs Building up inventory in advance of an anticipated need would lower the need for overtime, subcontracting, and additional capacity later. It would also raise inventory costs.

What should a company look at when process flexibility becomes a key order winner? A. Outsourcing to many smaller suppliers in hopes that one will have excess capacity when needed B. Keeping manufacturing in house to provide shorter customer delivery lead times C. A dual strategy of outsourcing and insourcing benefiting from scheduling simplicity D. Outsourcing to a larger supplier with wider capabilities

D. Outsourcing to a larger supplier with wider capabilities If flexibility is a key order winner, the company should consider outsourcing to a larger supplier with wider capabilities.

What change has resulted from the acceptance of computer systems in delivering products and services? A. Pull systems are used, rather than push systems, in every aspect of the operation, both internally and externally. B. Computer-generated kanban reports are used rather than kanban cards. C. Monolithic, one-size-fits-all enterprise resources planning (ERP) systems are used instead of multiple smaller ERP systems. D. Performance data is distributed to a much wider audience, not just to executives.

D. Performance data is distributed to a much wider audience, not just to executives. In his discussion of systems, Tom Kotter contrasts 20th-century organizational characteristics with 21st-century characteristics. He finds the following changes: Dependence on a few performance information systems has changed to dependence on multiple performance systems, especially those focused on customers. Performance data is not only distributed to executives; it is now distributed widely. Management training and support systems are offered to many people, not just to management.

Use of which of the following best supports the planning needs of an assemble-to-order (ATO) manufacturer who produces a product with many options and whose order winner is delivery speed? A. Multilevel bills of material for assemblies and safety stock of finished products B. Planning bills that overplan options and safety stock of finished products C. Multilevel bills of material for assemblies and safety stock for components with long lead times D. Planning bills that overplan options and safety stock for components with long lead times

D. Planning bills that overplan options and safety stock for components with long lead times

Universal power supplies can be set to different voltages based on the country the customer resides in. What is this an example of? A. Decoupling B. Curve fitting C. Concurrent design D. Postponement

D. Postponement Postponement shifts product differentiation closer to the consumer by postponing specific changes to the last possible supply chain location.

Which of the following will have the greatest influence on an employee's evaluations and promotions? A. Performance to standard B. Product output C. Setup time D. Problem-solving skills

D. Problem-solving skills An employee's problem-solving skills provide the most value to an organization. The other measures will show productivity, but what is really valued is an employee's ability to propose new ideas and search for avenues for continuous improvement.

Which of the following cost systems relies on costs for a period for determining product cost? A. Product costing B. Standard costing C. Job costing D. Process costing

D. Process costing Process costing is a cost accounting system in which the costs are collected by time period and averaged over all the units produced during the period.

Which of the seven new tools of quality would be best for mapping out a plan to improve compliance with waste hierarchy policies while helping to ensure that the process avoids known common pitfalls? A. Matrix data analysis chart B. Relationship diagram C. Matrix diagram D. Process decision program chart

D. Process decision program chart A process decision program chart visually captures things that might possibly go wrong in a plan being developed. The chart can identify measures that should be taken in order to avoid undesirable consequences.

A company maintains a stable workforce and has varied production rates. Overhead is allocated based on direct labor. Which of the following is true if overhead is under-absorbed in month 2 as compared to being over-absorbed in month 1?. A. Overhead is less. B. Product unit cost is less. C. Direct labor is more efficient. D. Production volume is less.

D. Production volume is less. Fewer direct hours due to lower production volume will cause overhead to be under-absorbed.

A parent item has a net demand of 100 units in period 6. Its lead time is two periods. One of the components is used in quantities of 4 per unit, and it has 0 in inventory and a lead time of 1 week. It is purchased in 1,000-unit order quantities. Which of the following planned order receipts would be the result of the explosion process for the component? A. Quantity of 400 units in period 3 B. Quantity of 400 units in period 4 C. Quantity of 1,000 units in period 3 D. Quantity of 1,000 units in period 4

D. Quantity of 1,000 units in period 4 100 units x 4 = 400 units; period 6 - 2 periods = period 4; order quantity = 1,000 units

Which of the following documents provide opportunities to reduce paperwork with supplier partners? A. Receiving documents, purchase requisitions, and purchase orders B. Receiving documents and invoices C. Purchase requisitions and purchase orders D. Receiving documents, purchase requisitions, purchase orders, and invoices

D. Receiving documents, purchase requisitions, purchase orders, and invoices Receiving documents, purchase requisitions, purchase orders, and invoices all constitute paperwork for the purchasing function. By automating or reducing the amount of labor needed to generate each document, paperwork with supply partners can be reduced.

Which of the following is not part of a "quality at the source" effort? A. Capability analysis B. Single sourcing C. Immediate feedback D. Receiving inspection

D. Receiving inspection Quality at the source means doing it right the first time and, if something does go wrong, stopping the process and fixing it. Receiving inspection is an activity that is no longer necessary in a quality-centered organization.

Which of the following processes sets the projected backlog level at the product family level? A. Business planning B. Demand management C. Master scheduling D. S&OP

D. S&OP It is during S&OP that the overall supply levels are set, the inventory level is planned, and the projected backlog level is planned at the product family level within defined supply constraints. Master scheduling, business planning, and demand management are incorrect because S&OP takes place before master scheduling, after business planning, and after demand management provides input.

Which process analysis tool is used to identify correlations between data points? A. Gantt chart B. Cause-and-effect diagram C. P-chart D. Scatter diagram

D. Scatter diagram A scatter diagram uses x and y axes so that correlations between data points can be seen.

An overload condition has been identified in the current period in spite of having a well-balanced final assembly schedule and material plan. What is the first action to be taken by production? A. Delay orders that caused the overload. B. Adjust capacity planning parameters. C. Determine the reason for the overload. D. Schedule overtime to get back on schedule.

D. Schedule overtime to get back on schedule. The immediate need is to resolve the existing overload using overtime.

What inventory data is used by MRP? A. Gross requirements B. Planned order releases C. Net requirements D. Scheduled receipts

D. Scheduled receipts Inventory data used by MRP are scheduled receipts and on-hand amounts. The other answers are incorrect because gross requirements come from the master production schedule or are calculated by MRP from higher level requirements; and because MRP calculates both net requirements and planned order releases.

Which of the following is an integral part of the continuous improvement process in a pull production environment? A. Actual production to plan B. Product capability analysis C. Direct labor report D. Scrap report

D. Scrap report Scrap is an indicator that improvement is required.

Which example is the most sustainable according to the waste hierarchy? A. Disposing of both recyclable and non-recyclable plastic rather than wasting energy cleaning them B. Burning waste oil in an incinerator that produces electricity C. Sending batteries to a processing center that specializes in disposal of batteries D. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics

D. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics Recycling is higher on the waste hierarchy than recovery or disposal.

Which of the following would not be considered an operational function within a distribution environment? A. Picking customer orders B. Determining safety stock levels C. Forecasting demand D. Setting inventory levels

D. Setting inventory levels Setting inventory levels is a tactical planning function that takes place during the sales and operations planning process.

Which of the following is a key principle of lean purchasing?. A. All packaging is returned to the supplier. B. Suppliers stock inventory at their location. C. Blanket orders are used. D. Single-source suppliers are used.

D. Single-source suppliers are used. All of these may be used in a lean environment, but most will not be possible without the key element of single-source supplier partnerships.

Long-term agreements with suppliers may include which of the following types of special arrangements? A. Additional complexities to paperwork systems B. Clauses preventing either party from early contract exit C. A supplier's certification of the buyer's use of the product D. Specially designed returnable containers

D. Specially designed returnable containers A long-range supplier contracts could specify collaborative tools such as reusable bins. Contracts should have exit clauses. Paperwork should be simplified. Supplier certification certifies that the supplier meets certain predetermined standards.

What is the most appropriate unit of measure for capacity requirements planning for a job shop? A. Dollars B. Pieces C. Product family units D. Standard hours

D. Standard hours In a job shop, a critical component of cost and control is managing production to meet the standard hours originally assigned to product production.

A company that makes products with multiple options is experiencing a temporary increase in sales. Which of the following inventories should be increased? A. Work in process B. Finished goods C. Raw materials D. Subassemblies

D. Subassemblies Increasing the subassemblies will allow flexibility to cover demand for various options and maintain lead times.

S&OP fundamentals include which of the following? A. Disaggregating volume into a master schedule and product family planning B. Product family planning and mix planning C. Supply and demand planning and mix planning D. Supply and demand planning and product family planning

D. Supply and demand planning and product family planning Supply and demand planning and product family planning are fundamental to S&OP. Disaggregating volume into a master schedule and mix planning are fundamental to master scheduling, not S&OP.

Which statement about information and process technology is true? A. The learning curve should not affect investment decisions. B. ERP systems are more important to pull systems than push systems. C. Information infrastructure requirements in push and pull systems are the same. D. Technology should be selected on the basis of the competitive advantage it conveys.

D. Technology should be selected on the basis of the competitive advantage it conveys. One of the selection criteria for technology should be whether it conveys an advantage that is significant and hard to copy. An ERP provides organizational benefit by providing access to accurate and current data. The learning curve should be a consideration since it will affect the payback analysis. Push and pull systems do require different types of technology.

Which of the following statements about the final assembly schedule (FAS) is true? A. The FAS includes only final operations. B. The FAS is the same as the production plan. C. The FAS is the same as the master production schedule. D. The FAS is separate from the master production schedule and serves a completely different purpose.

D. The FAS is separate from the master production schedule and serves a completely different purpose. The FAS plans and controls final assembly, which is different from the master production schedule. It is typically driven by customer demand, not the forecast, and is for end items.

Which of the following is most true in a production environment with products that are subject to cyclical, random, seasonal, and trend types of demand? A. Finished goods inventory is a demand buffer. B. Forecasting is primarily based on historical demand. C. Temporary help is used to vary capacity. D. The hybrid production strategy is used to vary capacity.

D. The hybrid production strategy is used to vary capacity. Since it is a combination of the level and chase methods, the hybrid strategy can vary capacity in response to all types of demand variability.

What is the purpose of using flow path lines on a process flowchart? A. The lines ensure that no reverse flows or pseudo operations exist in the process. B. The line weight represents the cost of non-value-added operations. C. Solid lines indicate the primary path, and dashed lines indicate alternate routings. D. The lines graphically differentiate among value-added and non-value-added processes.

D. The lines graphically differentiate among value-added and non-value-added processes. The lines show the non-value-added processes so that as improvements occur these processes can be eliminated and the flow path will be straighter.

What is the main difference between the logistics resource requirements plan (LRRP) and the logistics capacity plan? A. The logistics capacity plan is concerned with labor force changes. B. The logistics capacity plan addresses the number and size of distribution centers. C. The logistics capacity plan uses a monthly planning horizon. D. The logistics capacity plan is at the item level.

D. The logistics capacity plan is at the item level. Logistics capacity plans are more detailed and address a shorter planning horizon than the LRRP. The logistics capacity plan is at the item level while the LRRP is at the product-family level.

Which of the following validations is most likely to be performed for measuring master scheduling performance as it relates to sales and operations planning in a make-to-stock company? A. Available-to-promise shows inventory for promising customer orders. B. The inventory plan supports the finished goods portion of the business plan. C. The bottleneck work center has a safety capacity to absorb unplanned demand. D. The master schedule equals the production plan quantity.

D. The master schedule equals the production plan quantity. The master production schedule must closely match the production plan.

Which of the following is the best reason for performing master scheduling at the narrowest point of the product structure? A. Any higher point contains unknown customer order uniqueness. B. Planning is more accurate due to aggregation of bill-of-material levels. C. Any other point adversely affects material requirements planning. D. There are fewer items to master-schedule at the narrowest point.

D. There are fewer items to master-schedule at the narrowest point. There are fewer items to schedule at this point.

What is the role of top management in the sales and operations planning (S&OP) process? A. To make the final decisions after the meeting B. To provide the information used in the process C. To develop the production plan D. To commit to the process and the results

D. To commit to the process and the results Top management's role is to support the S&OP process and agree to the results.

Having decision support capability enables alternate scenarios to be evaluated in order to develop and then maintain a valid master schedule. A. To initiate the task and hand it off to the next team B. To assist in the completion of the task C. To report on progress on the task to project stakeholders D. To confirm that a task has been satisfactorily completed

D. To confirm that a task has been satisfactorily completed The R in the RACI acronym denotes the "responsible" role. This person may or may not perform the task, but the individual is responsible for confirming that the task has been satisfactorily completed

Which of the following distribution lead time elements is a determinant of when a truck is loaded during the daily schedule for delivery of goods to a particular store? A. Hours to load trailer B. Hours to offload trailer C. Hours before goods spoil D. Transportation distance

D. Transportation distance The essential lead time element in this scenario is how long it will take the delivery to move between facilities. The minimum of spoil hours must at least be equal to the transportation lead time.

What can be used to help ensure that demand management inputs are as insightful and timely as possible? A. Relying only on aggregated forecasts B. Focusing on historical sales data C. Getting external market information using electronic data interchange (EDI) D. Using customer relationship management software

D. Using customer relationship management software Customer relationship management software can be used to secure more accurate insights into the timely needs and preferences of customers rather than relying only on historical data or projections. EDI is used primarily for data transfers from internal or supply chain partners, and this is not what is generally meant by external market information.

Under which of the following conditions is it most necessary to perform bottom-up replanning of an overloaded key work center? A. When the overload is due to utilization B. When the overload is due to efficiency C. When the overload exceeds standard hours D. When the overload exceeds rated capacity

D. When the overload exceeds rated capacity If load exceeds rated capacity, the work center cannot produce the desired load.

If an annual contract is in place, the supplier is notified of the delivery amount required by means of: A. a blanket order. B. an advance shipment notification. C. a purchase order. D. a release.

D. a release. Monthly, weekly, or daily quantities needed are communicated via releases, which may be in the form of a kanban.

Compared to infinite capacity planning, the advanced planning and scheduling technique: A. validates the master production schedule. B. limits the plan to critical resources only. C. uses a longer planning horizon. D. bases schedules on achievable operations within a set time period.

D. bases schedules on achievable operations within a set time period. An advanced planning and scheduling tool uses priority rules to determine what orders will be produced in what time periods, and it takes capacity constraints into account.

The final assembly schedule (FAS) is differentiated from the master production schedule (MPS) because demand: A. may be satisfied from finished goods. B. is configured per customer order. C. is defined by a bill of material. D. consists solely of shippable end items.

D. consists solely of shippable end items. The FAS is only for shippable items.

Low-level codes are maintained by the bill of material system because they: A. simplify the maintenance process when a make part is changed to a buy part. B. are unknown until the material requirements planning explosion process is completed. C. simplify the update process when phantom levels are included in the bill of material. D. enable the material requirements planning explosion to be performed more accurately.

D. enable the material requirements planning explosion to be performed more accurately. The low-level code enables the explosion process to more effectively compute total requirements for items.

The information determined by a perpetual inventory system when an issue transaction is processed is the: A. issue quantity. B. issue location. C. beginning balance D. ending balance.

D. ending balance. A perpetual inventory system maintains the current/ending balance on a transaction-by-transaction basis.

All of the following are sources of demand that should be considered in sales and operations planning (S&OP) except: A. interplant demands family. B. customer order backlog family. C. service part requirements family. D. firm planned orders family

D. firm planned orders family Firm planned orders are a planning convention used in master scheduling. They are not used in the calculation of S&OP.

Workplace organization refers to: A. changing from a hierarchical to a matrix structure to support a pull system. B. having operations organized in a sequential and synchronous flow. C. consolidation of management levels through employee empowerment. D. having a clean area with a place for everything and everything in its place.

D. having a clean area with a place for everything and everything in its place. Workplace organization refers to the arrangement of tools, equipment, materials, and supplies according to their frequency of use.

"Getting the right goods or services to the right place at the right time and in the desired condition" best defines: A. operations management. B. procurement. C. supply chain management. D. logistics.

D. logistics. Logistics is the process of obtaining, producing, and distributing material and product in the proper place and the proper quantities.

When product life cycle is a consideration, the production environment likely to have the most supplier partnerships is: A. engineer-to-order. B. make-to-order. C. assemble-to-order. D. make-to-stock.

D. make-to-stock. Make-to-stock environments have high volumes and the greatest need for single sources and strong relationships that focus on product life cycle improvements.

Capacity requirements planning (CRP) directly interfaces with: A. rough-cut capacity planning (RCCP). B. work center finite scheduling. C. master production scheduling (MPS). D. material requirements planning (MRP).

D. material requirements planning (MRP). CRP directly interfaces with MRP.

The bill of distribution defines the: A. communication channels between the distribution centers and the customer locations. B. departments and relationships in the distribution functions of the firm. C. linkage between master schedule items and the stock keeping units. D. planned channels of inventory flow to the point of the customer interface.

D. planned channels of inventory flow to the point of the customer interface. The bill of distribution, synonymous with distribution network structure, by definition encompasses the planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customers.

Reducing the levels on the bill of material reduces: A. schedule flexibility. B. material costs. C. work in process. D. production reporting activities.

D. production reporting activities. Reducing the amount of subassemblies within the bill of material reduces the times reporting has to be done.

In master scheduling, hedging refers to a practice that A. provides safety capacity to protect against work center overload only B. provides safety lead time, and provides safety capacity to protect against work center overload only C. provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only D. provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only

D. provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only Hedging is a quantity of stock to protect against uncertainty of demand; it has the dimensions of timing and amount. The hedge may be either a mix hedge or a volume hedge. The other answers are incorrect because hedging is not related to safety capacity; hedging does use safety lead times to protect against late deliveries but does not use safety capacity; and hedging does provide safety inventory in case volume or option mixes are greater than forecast, but it also provides safety lead times to protect against late deliveries.

In the sales and operations planning process, the responsibility for the finished goods inventory levels belongs to: A. finance. B. master scheduling. C. manufacturing. D. sales and marketing.

D. sales and marketing. Even though everyone shares some responsibility, the forecast coming from sales and marketing is the basis for the production schedule that is generated. Missing the forecast means a possible increase in inventory costs.

A company is required to provide lot traceability for all of its products. This means that the company must be able to: A. provide a listing of all raw materials used in the product. B. show exactly where each lot is stored in the warehouse. C. track every step of the process through the manufacturing facility. D. track every step of the process from supplier to customer.

D. track every step of the process from supplier to customer. Lot traceability is the ability to identify the lot or batch number of products in terms of one or all of the following: its composition, purchased parts, manufacturing date, shipped items.