ISDS 3115 Exam 3

What is typical time horizon for aggregate planning?

3 to18 months

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A. subcontracting B. Price cuts or discounts C. Advertising D. Promotion E. Counter seasonal products or services

A

Which of the following aggregate planning strategies is a demand option? A. Changing price B. Subcontracting C. using part time workers D. Changing inventory levels E. Varying production levels

A

Which one of the following is not a benefit of JIT implementation? A. Variability increase B. cost reduction C. Rework reduction D. Rapid throughput E. Quality improvement

A

Which of the following statements about aggregate planning is TRUE?

A pure chase strategy allows lower inventories when compared to a pure level scheduling

Which of the following statements about the basic EOQ model is true? -If the annual demand were to double, the number of orders per year would increase -If the carrying cost were to increase, the EOQ would fall -If the annual demand were to double, the EOQ would increase -if the ordering cost were to double the EOQ would rise - All are true

All statements are true

Revenue management is MOST likely to be used in which of following situations?

An airline attempting to fill "perishable" seats at maximum revenue

ABC analysis divided on-hand inventory into three classes, generally based upon what?

Annual dollar volume

which of the following aggregate planning options attempts to manipulate product or service demand? A. Inventories B. Price cuts C. Part-time workers D. overtime/idle time E. subcontracting

B

Which of the following statements about quantity discounts is FALSE? A. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. B. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. C. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D. The larger annual demand, the less attractive a discount schedule will be. E. The smaller the ordering cost, the less attractive a discount schedule will be.

D

Which of these is among the demand options of aggregate planning? A. Changing inventory levels B. Subcontracting C. Varying workforce D. Back ordering during high demand periods E. Varying production rates through overtime or idle time

D

Which of these statements about the production order quantity model is FALSE? A. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is non instantaneous. B. Because receipt is non instantaneous, some units are used immediately, not stored in inventory. C. Average inventory is less than one-half of the production order quantity. D. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E. None of the above is false.

D

Which of the following would NOT generally be a motive for a firm to hold inventories? A. to hedge against inflation B. take advantage of quantity discounts C. to decouple various parts of the production process D. to minimize holding cost

D. to minimize holding cost

a furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing what?

Drop Shipping

Which of the following are elements of inventory holding costs? A) housing costs B) material handling costs C) investment costs D) pilferage, scrap, and obsolescence E) All of the above are elements of inventory holding cost.

E

Which of the following are true regarding the steps to reducing setup time? A. The cycle of steps is repeated until setup time is reduced to under a minute B. the first step involves performing as much setup preparation as possible while the process/machine is operating C. the standardization of both tooling and work procedures is advantageous to setup time reduction D. move material closer and improve material handling are done before operator training. E. all of the above

E

Which of the following is NOT a goal of JIT partnership? A. obtain improved quality and reliability B. removal of in-plant inventory C. removal of unnecessary activities D. removal of in-transit inventory E. all of the above are goals of JIT partnership

E

Which of the following is an advantage of the postponement technique? A. reduction in automation B. Early customization C. Better quality of product D. Reduction in training cost E. Reduction in inventory investment

E

Which of the following is consistent with the pure chase strategy? A. vary production levels to meet demand requirements B. vary workforce to meet demand requirements C. vary production levels and work force to meet demand requirements D. little to no use of inventory to meet demand requirements E. all of the above

E

Which of the following statements about the basic EOQ model is true? A. If annual demand were to double, the number of orders per year would increase B. If the ordering cost were to double, the EOQ would rise C. If the carrying cost were to increase, the EOQ would rise D. If annual demand were to double, the EOQ would increase E. All of the above statement are true

E

the bullwhip effect: A. Occurs as orders are relayed from the retailer to distributor to wholesalers to manufactures B. occurs because of distortions in information in the supply chain C. increases the costs associated with inventory in the supply chain D. results in increasing fluctuations at each step of the sequence E. All of the above

E

A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of of which of the following? A. current transformation B. Keirestsu C. Horizontal integration D. Backward Integration E. Forward Integration

E. Forward Integration

True/False: Because service firms do not inventory their output, a pure chase strategy is not appropriate.

False

True/False: the supply chain management opportunity called postponement involves delaying to avoid accumulation of inventory at the customer's site.

False

Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which waste?

Inventory

Which choice best describes level scheduling?

Inventory goes up or down to buffer the difference between demand and production

Which of the following statements regarding the production order quantity model is true?

It relaxes the assumption that all the order quantity is received at one time

JIT makes quality cheaper because:

JIT prevents long runs of defects.

which of the following lot-sizing techniques results in the lowest holding costs?

Lot-for-lot

to use revenue management strategies, a business should have which combination of costs?

Low variable cost and high fixed cost

which of the following statements regarding aggregate planning is true?

Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon

Local optimization is a supply-chain complication best described as:

Optimizing one's local area without full knowledge of supply chain needs.

the transfer of some of what are traditional internal activities resources of a firm to outside vendors is:

Outsourcing

Aggregate planning for service firms that provide intangible output deals mainly with:

Planning for human resources requirements and managing demand

Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of what?

Postponement

What is the practice of keeping a product generic as long as possible before customizing?

Postponement

Which of the following aggregate planning options attempts to manipulate product or service demand?

Price cuts

In level scheduling, what is kept uniform from month to month?

Production/workforce levels

what is generally found in most lean environments?

Pull System

Which of the following is a characteristic of a JIT partnership?

Removal of incoming inspection

which of the following should be higher in P system than Q system? Order size Lead time Safety stock Order spacing, Demand

Safety stock

Which of the following statements regarding MRP in services is TRUE?

Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills of material and scheduling

Dependence on an external source of supply is found in which aggregate planning strategy?

Subcontracting

Dependence on an external source of supply is found in which of the aggregate planning strategies?

Subcontracting

In the service sector, which of the following aggregate planning strategies might direct your client to competitor?

Subcontracting

Which of the following statements is true regarding the leverage of supply chain savings?

Supply chain savings exert more leverage as the firm's net profit margin decrease

A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor, assumes the large size is trend, not a one time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of what?

The Bull whip effect

Which of the following statements is TRUE about the kanban system?

The customer workstation signals to the supplier workstation when production is needed

ABC analysis is based upon the principle that:

There are usually a few critical items, and many items that are less critical

An advantage of the fixed-period inventory system is that:

There is no physical count of inventory items when an item is withdrawn

what term is used to describe outsourcing of logistics?

Third-party logistics (3PL)

The two most basic inventory questions answered by the typical inventory are:

Timing of orders and order quantity

Aggregate planning would entail which production aspects at BMW for a 12 month period?

Total number of cars to produce

True/ False: Savings in the supply chain exert more leverage as the firm's net profit margin decreases.

True

True/False: A fast-food retailer that acquired manufacturer would be practicing backward integration.

True

True/False: Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

True

True/False: Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

True

True/False: The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

True

True/False: the reorder point is the inventory level at which action is taken to replenish the stocked item.

True

Which action is consistent with the use of level scheduling?

Use inventory to meet demand requirements

Low-level coding means that:

a component item is coded at the lowest level at which is appears in the BOM structure

Vertical integration appears particularly advantageous when the organization has:

a large market share

What directly results form disaggregation of an aggregate plan?

a master production schedule

what best describes a gross material requirements plan?

a schedule that shows total demand for an item and when it must be ordered form a supplier or when production must be started

the fixed-period inventory system requires more safety stock than fixed quantity system because:

a stock out can occur during the review period as well as during the lead time

Revenue (or yield) management is best described as:

allocation of scarce resources to customers at prices that will maximize revenue

Enterprise resource planning (ERP):

automates and integrates the majority of business processes

Disaggregation:

breaks the aggregate plan into greater detail

The purpose of safety stock is to:

control the likelihood of a stockout due to variable demand and/or lead time

effective use of MRP and other dependent demand models does not require which of the following

cost of individual components

which of the following statements regarding control of service inventories is true?

effective control of all good leaving the facility is one applicable technique

which of the following is TRUE regarding JIT inventory?

it is the minimum inventory necessary to keep a perfect system running

Characteristics of JIT partnerships do not include:

large lot sizes to save on set up costs and to gain quantity discounts

Top executives tent to focus their attention on which type of forecasts?

long-range

which of the following is NOT an advantage of level scheduling?

matching production exactly with sales.

The objective of aggregate planning is to meet forecast demand while ______ over the planning period.

minimizing cost

Aggregate planning for service firms that provide intangible output deals mainly with

planning for human resource requirements and managing demand

Which of the following statements regarding a pull system is TRUE?

problems become more obvious

In MRP, the number of units projected to be available at the beginning of each time period refers to:

projected on hand

which of the following would most likely fall under the scope of only an operations manager?

setting inventory levels

The proper quantity of safety stock is typically determined by:

setting the level of safety stock so that a given stockout risk is not exceeded

How can a reduction of in-transit inventory be encouraged?

supplier location near plants

Service level is:

the probability of not stocking out and calculated as the cost of a shortage divided by (the cost of shortage + the cost of overage) for single-period models.

which of the following statements is TRUE about MRP (material requirement planning) plan when using lot-for-lot ordering?

the quantity of gross requirements for a child item is equal to the quantity of planned order releases multiplied by the number of child items use in the parent assembly

what tool is particularly useful in reducing system nervousness in a MRP system?

time fences

manufacturing cycle time is best defined as the:

time from raw materials receipt to finished product exit.

Which of the following would NOT generally be a motive for firm to hold inventories?

to minimize holding costs

Most inventory models attempt to minimize:

total inventory-bases costs

Which of these aggregate planning strategies is a capacity option?

using part-time workers

which of the following is not consistent with level scheduling ?

varying production levels and/or work force to meet demand requirements

which of the following aggregate planning strategies is known to lower employee morale?

varying work force size by hiring and layoffs

All except which of the following statements are about ABC analysis are true?

ABC analysis suggest that all items require the same high degree of control

which one of the following distribution systems offers speed and reliability when emergency suppliers are needed overseas?

Airfreights

Which of the following statements about ABC analysis is FALSE? A. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B. In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers. C. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls. D. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. E. All of the above statements are true.

D

What is one of the demand options of aggregate planning?

Back-ordering during high demand periods

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed what?

Backward integration

Kanban is associated with all EXPECT which of the following? A. small lot sizes B. Moving inventory only as needed C. Increased material handling D. signals, such as cards, lights, or flags E. reductions in inventory

C

Which of these aggregate planning strategies is a capacity option?

Changing inventory levels

Which aggregate planning strategy is a demand option?

Changing price

Concerning relationships with suppliers, what combination is critical to success if JIT?

Close relationships with trust